UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 20202022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                                   to                                   
Commission file number: 1-11884
ROYAL CARIBBEAN CRUISES LTD.
(Exact name of registrant as specified in its charter)
Republic of Liberia
(State or other jurisdiction of
incorporation or organization)
98-0081645
(I.R.S. Employer Identification No.)
1050 Caribbean Way, Miami, Florida 33132
(Address of principal executive offices) (zip code)
(305) 539-6000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $.01 per shareRCLNew York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes     No 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes     No 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes     No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes     No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer 
Accelerated filer 
Non-accelerated filer 
Smaller reporting company 
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes   No ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐    No 
The aggregate market value of the registrant's common stock at June 30, 20202022 (based upon the closing sale price of the common stock on the New York Stock Exchange on June 30, 2020)2022) held by those persons deemed by the registrant to be non-affiliates was approximately $10.5$8.1 billion. Shares of the registrant's common stock held by each executive officer and director and by each entity or person that, to the registrant's knowledge, owned 10% or more of the registrant's outstanding common stock as of June 30, 2020 have been excluded from this number in that these persons may be deemed affiliates of the registrant. This determination of possible affiliate status is not necessarily a conclusive determination for other purposes.
There were 237,535,138255,350,697 shares of common stock outstanding as of February 22, 2021.20, 2023.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Definitive Proxy Statement relating to its 20212023 Annual Meeting of Shareholders are incorporated by reference in Part III, Items 10-14 of this Annual Report on Form 10-K as indicated herein.

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ROYAL CARIBBEAN CRUISES LTD.
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PART I

As used in this Annual Report on Form 10-K, the terms “Royal Caribbean,” "Royal"Royal Caribbean Group," the “Company,” “we,” “our” and “us” refer to Royal Caribbean Cruises Ltd. and, depending on the context, Royal Caribbean Cruises Ltd.’s consolidated subsidiaries and/or affiliates. The terms “Royal Caribbean International,” “Celebrity Cruises,” “Azamara” and “Silversea Cruises” refer to our wholly owned global cruise brands. Throughout this Annual Report on Form 10-K, we also refer to our partner brands in which we hold an ownership interest, including “TUI Cruises,” and “Hapag-Lloyd Cruises.” However, because these partner brands are unconsolidated investments, our operating results and other disclosures herein do not include these brands unless otherwise specified. In accordance with cruise vacation industry practice, the term “berths” is determined based on double occupancy per cabin even though many cabins can accommodate three or more passengers.
This Annual Report on Form 10-K also includes trademarks, trade names and service marks of other companies. Use or display by us of other parties’ trademarks, trade names or service marks is not intended to and does not imply a relationship with, or endorsement or sponsorship of us by, these other parties other than as described herein.


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Item 1. Business.
General
We are a globalone of the leading cruise company.companies in the world. We controlown and operate fourthree global cruise brands: Royal Caribbean International, Celebrity Cruises Azamara and Silversea Cruises (collectively, our "Global Brands"). We also own a 50% joint venture interest in TUI Cruises GmbH ("TUIC"), thatwhich operates the German brands TUI Cruises and Hapag-Lloyd Cruises (collectively, our "Partner Brands"). We account for our investments in our Partner Brands under the equity method of accounting. Together, our Global Brands and our Partner Brands operatehave a combined totalfleet of 6164 ships in the cruise vacation industry with an aggregate capacity of approximately 137,930150,005 berths as of December 31, 2020.2022.
Our ships operate onoffer a selection of worldwide itineraries that call on approximatelymore than 1,000 destinations on all seven continents. In addition to our headquarters in Miami, Florida, we have offices and a network of international representatives around the world, which primarily focus on sales and market development.
We compete principally by operating valued brands that offer exceptional service provided by our crew and on the basis of innovation and quality of ships, variety of itineraries, choice of destinations and price. We believe that our commitment to build state-of-the-art ships and to invest in the maintenance and upgrade of our fleet to, among other things, incorporate many of our latest signature innovations, allows us to continue to attract new and loyal repeat guests.
On January 19, 2021, we announced that we entered into a definitive agreement to sell the Azamara brand, including its three-ship fleet and associated intellectual property, to Sycamore Partners for $201 million. The transaction is subject to customary conditions and is expected to close in the first quarter of 2021.
Royal Caribbean was founded in 1968 as a partnership. Its corporate structure has evolved over the years and, the current parent corporation, Royal Caribbean Cruises Ltd., was incorporated on July 23, 1985 in the Republic of Liberia under the Business Corporation Act of Liberia.
COVID-19
The disruptions to our operations resulting from the COVID-19 pandemic (“COVID-19”) have had, and continue to have,As a material negative impact on our financial condition and results of operations. The global efforts to contain the spread of the disease have resulted in travel restrictions and created significant uncertainty regarding worldwide port closures and availability. As partresult of the global containment effort,pandemic impact of COVID-19, we implemented a voluntary suspension ofpaused our Global Brands'guest cruise operations beginningin March 13, 2020 which has been extended through at least April 30, 2021, for most of ourand began resuming guest cruise operations. As of February 23, 2021, four of our ships were operating with guests onboard.
On and effective as of October 30, 2020, the U.S. Centers for Disease Control and Prevention ("CDC") issued a Framework for Conditional Sailing Order (the “Conditional Order”) that will conditionally permit cruise ship passenger operations in U.S. waters under certain conditions and using a phased approach. The Conditional Order will remain2021, with our full fleet in effect until the earlier of (1) the expiration of the Secretary of Health and Human Services’ declaration that COVID-19 constitutes a public health emergency, (2) the rescission or modificationservice by the CDC Director of the Conditional Order based on specific public health or other considerations, or (3) November 1, 2021. See June 2022.Business - Regulation for further details on the Conditional Order.
Our resumption of operations will include a staggered return of the fleet to service, which will include:
Bringing the fleet from layup status to fully operational;
Bringing crew back to an appropriate staffing level and expected reduced load factors for a period of time; and
Implementing health and safety protocols on ships as they resume operations and while protocols are required.

We are working with both the CDC and the Healthy Sail Panel ("HSP"), formed in June 2020 by us and Norwegian Cruise Line Holdings Ltd. and composed of leading experts in relevant fields, including epidemiology, infectious diseases, public policy and regulation, engineering and general health safety, to prepare and develop our plan to meet the framework for the Conditional Order.
While the Conditional Order represents an important step in our return to service, many uncertainties remain as to the specifics, timing and costs of administering and implementing the requirements of the Conditional Order, some of which may be significant. Further, the Conditional Order contemplates that the CDC may issue additional requirements through technical instructions or orders as needed and that the phases described above will be further determined based on public health considerations, including the trajectory of the pandemic and the ability of cruise ship operators to successfully employ measures that mitigate the risk of COVID-19. Based on our assessment of these conditions or for other reasons, we may determine it necessary to further extend our voluntary suspension of our Global Brands’ cruise sailings which currently extends through at least April 30, 2021, for most of our cruise operations.

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We have undertaken several proactive measures to mitigate the financial and operational impacts of COVID-19, including significant reduction of capital expenditures and operating expenses as well as the issuance of debt and shares of our common stock. Given the current environment, we intend to continue to prioritize our financial recovery and bolster liquidity through cash conservation and additional financing sources, which may include the issuance of new debt (including convertible debt), refinancing of existing debt, amortization deferrals under our export-credit backed debt facilities and issuance of common stock, to ensure that we are well positioned for recovery. Additionally, we agreed with certainfurther enhancement of our lenders that we will not pay dividends or engage in stock repurchases until the end of the third quarter of 2022. See Part II. Item 7. Management's Discussionfinancial results and Analysisliquidity. - Critical Accounting Policies and Recent Developments: COVID-19 and Note 1. General to our consolidated financial statements under Item 1. Financial Statements for further details on the impact of COVID-19 on our financial condition and results of operations.
Our Global Brands
Our Global Brands include Royal Caribbean International, Celebrity Cruises, Azamara, and Silversea Cruises. We believe our Global Brands possess the versatility to enter multiple cruise market segments within the cruise vacation industry. Although each of our Global Brands has its own marketing style, as well as ships and crews of various sizes, the nature of the products sold and services delivered by our Global Brands share a common base (i.e., the sale and provision of cruise vacations). Our Global Brands also offer similar itineraries as well as similar cost and revenue components. The itineraries of Global Brands are subject to resumption of our operations and local restrictions. In addition, our Global Brands have historically sourced passengers from similar markets around the world and operated in similar economic environments with a significant degree of commercial overlap. As a result, we strategically manage our Global Brands as a single business with the ultimate objective of maximizing long-term shareholder value.
Royal Caribbean International
Royal Caribbean International is positioned to competethe world's largest cruise brand. The brand competes in both the contemporary and premium segments of the cruise vacation industry. The brandindustry and appeals to families with children of all ages, as well as both older and younger couples, providingcouples. Royal Caribbean International offers cruises and land destinations that generally feature a casual ambiance, as well as a variety of activities and entertainment venues. We believe that the quality of the Royal Caribbean International brand allows it to achieve market coverage that is among the broadest of any of the major cruise brands in the cruise vacation industry. Royal Caribbean International’s strategy is to attract an array of vacationing guests by offering a wide variety of itineraries to destinations worldwide, including Alaska, Asia, Australia, the Bahamas, Bermuda, Canada, the Caribbean, Europe, the Panama Canal and New Zealand, with cruise lengths generally ranging from two to 2419 nights. Royal Caribbean International offers multiple innovative options for onboard dining, entertainment and other onboard activities. Because of the brand’s ability to deliver extensive and innovative product offerings at an excellent value to consumers, we believe Royal Caribbean International is well positioned to attract new consumers to cruising and to continue to bring loyal repeat guests back for their next vacation.
Royal Caribbean International operates 2426 ships with an aggregate capacity of approximately 84,20094,100 berths. Additionally, as of December 31, 2020,2022, Royal Caribbean International has sixhad four ships on order with an aggregate capacity of approximately 32,40022,500 berths. TheseThe ships consist Odyssey of the Seas, which is expected to be delivered in early 2021, Wonder of the Seas and our sixth Oasis-class ship, which are expected to be delivered in the first quarter of 2022 and the second quarter of 2024, respectively, andon order include the first three ships of a new generation of vessels, known as the Icon-class, and our sixth Oasis-class ship, Utopia of the Seas. The first Icon-class whichship, Icon of the Seas, is expected to be delivered in the fourth quarter of 2023 and enter service in the first quarter of 2024, and the second and third Icon-class ships, are expected to be delivered in the third quarter of 2023, and the second quarters of 2025 and 2026, respectively.
TheUtopia of the Seas is expected delivery dates for all of our ships on order are subject to changebe delivered in the eventsecond quarter of shipyard construction delays. See Part I. Item 1A. 2024.
Risk Factors
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for further discussion on the impact of COVID-19 on shipyard operations.
Celebrity Cruises
Celebrity Cruises is positioned within the luxury segment of the cruise vacation industry. Celebrity Cruises’ strategy is to target affluent consumers by delivering a destination-rich experience on upscale ships that offer, among other things, luxurious accommodations, refined design-forward spaces,culinary excellence, world-class service, luxurious spaces and culinary excellence.accommodations, and holistic wellness experiences. Celebrity Cruises offers a range of itineraries to destinations, including Alaska, Asia, Australia, Bermuda, Canada, the Caribbean, Europe, the Galapagos Islands, Hawaii, New Zealand, the Panama Canal and South America, with cruise lengths ranging from twothree to 18 nights.
Celebrity Cruises operates 1415 ships with an aggregate capacity of approximately 29,220 berths, including the brand's newest ship Celebrity Apex, which was delivered in the first quarter of 2020.32,465 berths. Additionally, as of December 31, 2020, we have two ships2022, Celebrity Cruises had one Edge-class ship on order with an aggregate capacity of approximately 6,5003,250 berths. These ships consist of two Edge-class ships, includingThis ship, Celebrity BeyondAscent and a fourth ship in the class, which are, is expected to be delivered in the second quarter of 2022 and in the fourth quarter of 2023, respectively.2023. In addition, as of December 31, 2020, we have an agreement in place with Chantiers de l’Atlantique to build an additional Edge-class ship with capacity of approximately 3,250 berths, estimated for delivery in 2025, which is contingent upon completion ofif certain conditions precedent and financing.are met.

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Silversea Cruises
Silversea Cruise Holding Ltd. ("Silversea Cruises")Cruises is an ultra-luxury and expedition cruise line. On July 9, 2020, we acquired the remaining 33.3% interest in Silversea Cruises that we did not already own (the "noncontrolling interest") from Heritage Cruise Holding Ltd. ("Heritage"). As a result of the acquisition of the noncontrolling interest, Silversea Cruises is now a wholly owned cruise brand.
Silversea Cruises, formed in the early 1990s, is positioned as an ultra-luxury cruise line with smaller ships, high standards of accommodations, fine dining, personalized service and exotic itineraries. Silversea Cruises delivers distinctive destination experiences by visiting unique and remote destinations, including the Galapagos Islands, Antarctica and the Arctic with cruise itineraries generally ranging from sixfive to 24 nights.
Silversea Cruises operates nine11 ships, with an aggregate capacity of approximately 3,3504,150 berths, including the brand's newest shipsship, Silver Origin and Silver MoonEndeavour, which were deliveredwas acquired in the secondthird quarter of 2022 and commenced operations in the fourth quartersquarter of 2020, respectively. As2022. Additionally, as of December 31, 2020,2022, Silversea Cruises has threehad on order two ships on orderof a new generation, known as the Evolution-class, with an aggregate capacity of approximately 1,750 berths. The ships1,460 berths, which are expected to be delivered in the fourth quarter of 2021, and in the firstsecond quarters of 2023 and 2024, respectively.
Azamara
On January 19, 2021, we announced that we entered into a definitive agreement to sell the Azamara brand, including its three-ship fleet with an aggregate capacityThe expected delivery dates for all of approximately 2,100 berths and associated intellectual property, to Sycamore Partners for $201 million. The transaction isour ships on order are subject to customary conditions and is expected to closechange in the first quarterevent of 2021.shipyard construction delays or in the event we agree to scope changes which impact the delivery timelines. See Part I. Item 1A. Risk Factors for further discussion on shipyard operations.
Our Partner Brands
Our Global Brands are complemented by our interest in TUIC, our 50%-owned joint venture that operates the German brands TUI Cruises and Hapag-Lloyd Cruises (collectively, our "Partner Brands").
TUIC is a joint venture owned 50% by us and 50% by TUI AG, a German tourism company, which is designed to serve the contemporary and premium segments of the German cruise market by offering products tailored for German guests. All onboard activities, services, shore excursions and menu offerings are designed to suit the preferences of this target market.
TUI Cruises operates seven ships, with an aggregate capacity of approximately 17,700 berthsberths. Additionally, as of December 31, 2020. Additionally,2022, TUI Cruises hashad three ships on order with an aggregate capacity of approximately 11,100 berths, that are expected to be delivered in the second quarter of 2023,2024, the thirdfourth quarter of 2024 and the firstsecond quarter of 2026, respectively.
On June 30, 2020, TUIC acquired Hapag-Lloyd Cruises, a luxury and expedition brand for German-speaking guests, from TUI AG for approximately €1.2 billion, or $1.3 billion, as of the purchase date. Hapag-Lloyd Cruises operates two luxury liners and twothree smaller expedition ships, with an aggregate capacity of approximately 1,360 berths1,590 berths. Hapag-Lloyd Cruises did not have any ships on order as of December 31, 2020. 2022.
Refer to Note 1. General and Note 87. Other Assets to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for further details.
Pullmantur
Pullmantur Holdings S.L ("Pullmantur Holdings") is a joint venture owned 49% by us and 51% by Cruises Investment Holdings S.A., an affiliate of Springwater Capital LLC. In 2020, Pullmantur Holdings and certain of its subsidiaries filed for reorganization under the terms of the Spanish insolvency laws due to the negative impact of the COVID-19 pandemic on the companies. Refer to Note 8. Other Assets to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for further information regarding Pullmantur's reorganization filing and its impact to the Company.
Industry
The cruising industry has been considered a well-established vacation sector in the North American, European and Australian markets and a developing sector in several other emerging markets. Although the industry is currently experiencing challenges brought on by the COVID-19 pandemic, weWe believe that cruising will continue to be a popular vacation choice in the long-term due to its inherent value, extensive itineraries and variety of shipboard and shoreside activities.

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As part of the global effort to contain the spread of COVID-19, the The Company and other industry participants voluntarily suspended operations in March of 2020 resulting in a limited number of cruises being takenand gradually resumed full operations starting in the past year.second half of 2021 through the first half of 2022. As a result, representativecomparative information ofregarding market penetration and other indicators are not availablemeaningful for 2020.2020, 2021, and 2022. For the five year period prior to 2020, industry data indicated that market penetration rates were still low and that a significant portion of cruise

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guests carried in those years were first-time cruisers. We believe this presents an opportunity for operational and financial recovery and long-term growth for the industry when it resumes operations.industry.
The following table detailsDuring the five year period from 2015 through 2019, industry market penetration rates for North America, Europe and Asia/Pacific for the five years prior to 2020 computed(computed based on the number of annual cruise guests as a percentage of the total population:
Year (1)
North America(2)(3)
Europe(2)(4)
Asia/Pacific(2)(5)
20153.36%1.25%0.08%
20163.43%1.23%0.11%
20173.56%1.28%0.15%
20183.87%1.38%0.16%
20193.89%1.41%0.20%

(1)Historically, we have reported annual comparable informationpopulation) grew from 3.36% to 3.89% for relevant comparisonsNorth America, from 1.25% to other periods.1.41% for Europe, and from 0.08% to 0.20% for Asia/Pacific. The 2020 suspension of global cruise operations as a result of COVID-19 does not allow for a meaningful comparison to prior years' information and as suchincreased penetration shows the 2020 data has been excluded from this table.
(2)Source: Our estimates are based on a combination of data obtained from publicly available sources includingcontinued growth potential in the International Monetary Fund, United Nations, Department of Economic and Social Affairs, Cruise Lines International Association ("CLIA") and G.P. Wild. In addition, our estimates incorporate our own analysis utilizingmarkets most served by the same publicly available cruise industry data as a base.
(3)Our estimates include the United States and Canada.
(4)Our estimates include European countries relevant to the industry (most notably: the Nordics, Germany, France, Italy, Spain and the United Kingdom).
(5)Our estimates include Southeast Asia (most notably: Singapore, Thailand and the Philippines), East Asia (most notably: China and Japan), South Asia (most notably: India) and Oceania (most notably: Australia and New Zealand) regions.

industry.
The global cruise fleet was served by a weighted average of approximately 579,000634,000 berths during 20192022 with approximately 354359 ships at the end of 2019.2022. As of December 31, 2019,2022, there were approximately 6763 ships on order with an estimated 159,000143,000 berths that wereare expected to be placed in service in the global cruise market through 2024,2028, not taking into account ships taken out of service or ordered during these periods. We believe that, starting in 2020, cruiseCruise ships in the industry were taken out of service at an accelerated rate and new ship orders were deferred due to global cruise operation restrictions in 2020 and limited sailings in 2021 and 2022 resulting from the COVID-19 pandemic. The global cruise industry carried approximately 30.030 million cruise guests in 2019 and approximately 28.5 million in 2018.
The following table details the growth in global weighted average berths and the global,percentage of North American, European and Asia/Pacific cruise guests for 2022 and for each of the five years prior to the impact of COVID-19 in 2020 (in thousands, except berth data):from 2015 through 2019:
Year (1)
Year (1)
Weighted-Average
Supply of
Berths
Marketed
Globally(2)
Royal Caribbean Group Total Berths(3)
Global
Cruise
Guests(2)
North American Cruise Guests(2)(4)
European Cruise Guests(2)(5)
Asia/Pacific Cruise Guests(2)(6)
Year (1)
Weighted-Average
Supply of
Berths
Marketed
Globally(2)
Royal Caribbean Group Total Berths(3)
North American Cruise Guests(2)(4)
European Cruise Guests(2)(5)
Asia/Pacific Cruise Guests(2)(6)
Other Cruise Guests(2)
20152015469,000112,70023,00012,0046,5873,1292015469,000112,70052%29%14%5%
20162016493,000123,27024,00012,2746,5124,4662016493,000123,27051%27%19%3%
20172017515,000124,07026,70012,8656,7795,4152017515,000124,07048%25%20%7%
20182018546,000135,52028,50014,0627,3435,6852018546,000135,52049%26%20%5%
20192019579,000141,57030,00014,2467,5547,3172019579,000141,57047%25%24%4%
20222022634,000150,00565%28%2%5%


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(1)Historically, we have reported annual comparable information for relevant comparisons to othercomparability across periods. The 2020 suspension of global cruise operations as a result of COVID-19 doesand the gradual resumption of full operations starting in the second half of 2021 through the first half of 2022 do not allow for a meaningful comparison to prior years' information and, as such, the 2020 and 2021 data has been excluded from this table.
(2)Source: OurThe estimates of the number of global cruise guests and the weighted-average supply of berths marketed globally are based on a combination of data that we obtain from various publicly available cruise industry trade information sources. We use data obtained from Seatrade Insider, Cruise Industry News and company press releases to estimate weighted-average supply of berths and CLIA and G.P. Wild to estimate cruise guest information. For 2022, cruise guest information includes data through the third quarter of 2022. In addition, our estimates incorporate our own analysis utilizing the same publicly available cruise industry data as a base.
(3)Total berths include our berths related to our Global Brands and Partner Brands.
(4)Our estimates include the United States and Canada.
(5)Our estimates include European countries relevant to the industry (most notably: the Nordics, Germany, France, Italy, Spain and the United Kingdom).
(6)Our estimates include Southeast Asia (most notably: Singapore, Thailand and the Philippines), East Asia (most(pre-2022, most notably: China and Japan), South Asia (most notably: India) and Oceania (most notably: Australia and New Zealand) regions.
North America
Industry The decrease in Asia/Pacific cruise guests have been primarily sourced from North America, which represented approximately 47% of global cruise guests in 2019. The compound annual growth rate in cruise guests sourced from this market was approximately 4% from 20152019 to 2019.
Europe
Industry cruise guests sourced from Europe represented approximately 25% of global cruise guests in 2019. The compound annual growth rate in cruise guests sourced from this market was approximately 3% from 2015 to 2019.
Asia/Pacific
Industry cruise guests sourced from the Asia/Pacific region represented approximately 24% of global cruise guests in 2019. The compound annual growth rate in cruise guests sourced from this market was approximately 24% from 2015 to 2019.2022 is partly driven by China remaining closed given its continued COVID-19 restrictions.
Competition
We compete with a number of cruise lines.lines and other land-based vacations. Our principal competitors are Carnival Corporation & plc, which owns, among other brands, Aida Cruises, Carnival Cruise Line, Costa Cruises, Cunard Line, Holland America Line, P&O Cruises, Princess Cruises and Seabourn; Disney Cruise Line; MSC Cruises; and Norwegian

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Cruise Line Holdings Ltd, which owns Norwegian Cruise Line, Oceania Cruises, and Regent Seven Seas Cruises.Cruises; and Virgin Voyages. Cruise lines also compete with other vacation alternatives such as land-based resort hotels, internet-based alternative lodging sites and sightseeing destinations for consumers’ leisure time. The COVID-19 pandemic, related restrictions and general economic conditions have significantly affected companies within the vacation market which may result in a changed competitive landscape by the time we return to service.
Operating FocusStrategies
Our principal operating strategies remain consistent withmission is to deliver the best vacation experiences to our historical strategies, yet have been affected by the vast impact that the COVID-19 pandemic has had, and will continue to have, on our Company's operations. While our cruise operations remain suspended, we have and willguests, responsibly. We continue to prioritize those operating strategies that reducesupport this mission as well as operating strategies that support our capital and operating expenditures, enhance our liquidity and support the healthy and safe return to cruising globally for guests, crewfinancial recovery and the communities visited, including for some time afterfurther enhancement of our financial results and liquidity. We strive to execute these strategies in a socially and environmentally responsible manner, working with our various business and community partners as we resumebuild toward a more sustainable cruise operations.industry.
Our Company's operating focus isstrategies are as follows:
deliver the best vacation experiences to our guests, responsibly;
protect the health, safety and security of our guests and employees,employees;
support the healthy return of cruising globally along withdeepen our industry partners, including national and local governments and regulators, the communitiescustomer relationships in which we operate, other cruise companies, shipyards,order to enhance our guests and trade partners,revenues;
focus on cost control and efficiency, ensure adequate cash and liquidity, manage our capital expenditures and strengthen our balance sheet, with the overall goals of sustaining our operations and being well positioned for recovery, and, in the long-term, maximizing our return on invested capital and shareholder value,value;
protect the environment in which our vessels and organization operate, with a focus on decarbonization;

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invest in our workforce in order to better serve our global guest base and grow our business, and promote gender equality, diversity and inclusion,
strengthen our consumer engagement in order to enhance our revenues,inclusion;
increase the awareness and market penetration of our brands globally,globally;
strategically invest in our fleet through the upgrade and maintenance of existing ships and the transfer of key innovations, while prudently expanding our fleet with new state-of-the-art cruise ships,ships;
capitalize on the portability and flexibility of our ships by deploying them into those markets and itineraries that provide opportunities to optimize returns, while continuing our focus on existing key markets,markets;
provide extraordinary destination experiences and state-of-the-art port facilities to our guests,guests;
continue to integrate digital technologicaldeploy technology capabilities and advanced uses of data and analytics and artificial intelligence into our operations to servicedeliver innovative customer preferences and expectations in an innovative manner,experiences as well as to create operational efficiencies andthat enhance employee satisfaction,satisfaction; and
maintain strong relationships with travel agencies, which continue to be the principal industry distribution channel,advisors, while enhancing our consumer outreach programs.and e-commerce programs
Safety, security and health policies
We are committed to protecting the health, safety and security of our guests, employees and others working on our behalf. Our efforts in these areas are managed by our dedicated Safety, Security, Environment, Medical and Public Health Department which isseveral departments within the Company that are responsible for all of our maritime safety, global security, environmental stewardship and medical/public health activities; overseen byactivities. We also have a dedicated committee of our Board of Directors, the Safety, Environment, Sustainability and Health Committee, which is responsible for reviewing and monitoring our overall strategies, policies and programs that impact the safety and health of our board of directorsguests and informed by a Maritime Advisory Board of experts.crew. Refer to the Regulation - Safety and Security Regulations section below for further information.
Support the healthy return of cruisingConsumer engagement
We continueplace a strong focus on identifying the needs of our guests and creating product features and innovations that our customers value. We are focused on targeting and acquiring high-value guests by better understanding consumer data and insights to work and collaborate with the Healthy Sail Panel, epidemiological and policy experts, health authorities and various governments around the globe to ensure a healthy and safe return to cruising for guests, crew and the communities visited. We work in close partnership andcreate communication strategies that resonate with our contracted shipyardstarget audiences.
We target customers at important consumer decision points and identify underlying needs for which guests are willing to carefully address our newbuild delivery delayspay a premium. We rely on various programs and work towards a safetechnologies during the cruise-planning, cruising and effective shipyard working environment in the midst of COVID-19.after-cruise periods aimed at increasing ticket prices, onboard revenues and occupancy. We have established flexible cruise pricing and booking programs (e.g. Cruise with Confidence, Best Price Guaranteeexpect to strategically invest in projects on our ships that we believe drive marketability, profitability and all-inclusive pricing) that present our guests with options and value as we anticipate our return to service. The travel agency community has been a vital partner in our success, and we are committed to assistimprove the industry during this challenging time with essential financial relief (e.g., the RCL CARES program).guest experience.

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Focus on cost control and efficiency, capital expenditure reductions,allocation, adequate cash and liquidity and managing ofimproving our balance sheet
We have taken significant actions to reduce operating and capital expenses during the suspension of our global cruise operations. Given the current environment, we continue to prioritize and bolster liquidity through cash conservation and additional financing sources while managing our balance sheet to ensure that we are well positioned for recovery. We are focused on leveraging our scale and shifting our resources behind our Royal Caribbean International, Celebrity Cruises and Silversea brands. Additionally, we agreed with certain of our lenders that we will not pay dividends or engage in stock repurchases until the end of the third quarter of 2022.
We are focused on maintaining a strong liquidity position and a balanced debt maturity profile, while making progress towards achieving an unsecured balance sheet, obtaining cost efficiencies including lowering interest expense, and returningreducing leverage. For example, in early 2023, we extended our revolving credit facility with our key relationship banks to investment grade credit metrics.ensure adequate liquidity on a going-forward basis. We believe these strategies enhance our ability to achieve our overall goal of maximizing our return on invested capital and long-term shareholder value.
Protect the environment
We are focused on the environmental health of the marine environment and communities in which we operate. This includes reducingour Destination Net Zero strategy, and our partnership with the World Wildlife Fund, which together aim to reduce our carbon footprint, raise awareness about ocean conservation among guests and crew, and support ocean conservation projects around the world.
Destination Net Zero is our decarbonization strategy that focuses on how to achieve net zero emissions by 2050 and deliver a net zero capable ship by 2035. This strategy also includes achieving reductions on our carbon intensity by double digits by 2025, compared to 2019. Destination Net Zero’s four-pronged approach includes the modernization of our global brands fleet through the introduction of new energy-efficient and alternatively fueled vessels, continued investment in energy and carbon efficiencies included in the design of our new capacity, our ongoing energy management program on our existing fleet and theefficiency programs, development of alternative fuel and alternative power solutions, and optimized deployment and integration of strategic shore-based supply chains. While we continue to develop our roadmap to Destination Net Zero, it is already clear that our strategy will require new technologies.fuels and technologies that are not available today. Refer to Item 1A. Risk Factors - “Our sustainability activities, including environmental, social and governance (ESG) matters, could result in reputational risks, increased costs and other risks” for a discussion of the risks associated with our environmental initiatives.
Our long-term partnership with the World Wildlife Fund focuses on greenhouse gas ("GHG") reduction strategies, sustainable sourcing of food supplies, waste management, sustainable destinations and guest education on ocean conservation issues, including climate change, which supports onboard conservation efforts such as our reduced use of plastics and increased sourcing of sustainable seafood.plastics. We are also committed to water qualityassessing and management projects onboard andmanaging potential impacts related to our operations in the communities in which we operate.
To achieve our carbon intensity goals, we have invested and plan to continue investing in energy and carbon efficient technologies included in the design of our new vessels, our ongoing fleet energy management program and other technologies. These investments include installation costs related to advanced emissions purification systems ("AEP") and other technologies that are expected to reduce fuel consumption and carbon footprint.

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We believe in transparent reporting on our environmental and sustainability stewardship, as well as our corporatesocial and governance efforts, and have annually publishpublished a Sustainability Report.Report since 2008. This report, the current version of which is accessible on our corporate website, highlights our progress with regards to those environmental, social and socialgovernance aspects of our business that we believe are most significant to our organization and stakeholders. In addition to providing an overview on our sustainability efforts, the report complies withreferences the guidelines of the Global Reporting Initiative and is aligned with the Sustainable Accounting Standards Boards Industry Standards for Cruise Lines. We continue to ensurework on an initial report following the report is as complete and accurate as possible.recommendations of the Task Force on Climate Related Financial Disclosures (TCFD), which we plan to file in 2023. Our corporate website also provides information about our environmental performance goals and sustainability initiatives. The foregoing information contained on our website is not part of any of these reports and is not incorporated by reference herein or in any other report or document we file with the Securities and Exchange Commission. Refer to the Regulation - Environmental Regulations section below for further information.
Investing in our workforce and promoting gender equality, diversity and inclusion
We believe that our employees, both shipboard and shoreside, are a critical success factor for our business. We strive to identify, hire, develop, motivate and retain the best employees, who provide our guests with extraordinary vacations. Our ability to attract, engage, and retain key employees has been and will remain critical to our success. Our Talent and Compensation Committee of our Board of Directors oversees the Company's human capital management strategies, including initiatives for talent diversity, equity and inclusion, talent management, and corporate culture.
We focus on providing our employees with a competitive compensation structure, development opportunities, and other personal and professional growth opportunities in order to strengthen and support our human capital. We also select, develop and have strategies to retain high performing leaders to advance the enterprise now and in the future. To that end, we pay special attention to identifying high performing potential leaders and developing bench strength so these leaders can assume leadership roles throughout the organization.

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We strive to maintain a work environment that reinforces collaboration, motivation and innovation, and believe that maintaining a strong employee-focused culture is beneficial to the growth and expansion of our business. We support the equal representation of women in all levels. We foster diversity and inclusion among our broad employee base. Refer to the Human Capital section below for further information.
Consumer engagement
We place a strong focus on identifying the needs of our guests and creating product features and innovations that our customers value. We are focused on targeting high-value guests by better understanding consumer data and insights to create communication strategies that resonate with our target audiences.
We target customers across all touch points and identify underlying needs for which guests are willing to pay a premium. We rely on various programs and technologies during the cruise-planning, cruising and after-cruise periods aimed at increasing ticket prices, onboard revenues and occupancy. We have and expect to strategically invest in onboard projects on our ships that we believe drive marketability, profitability and improve the guest experience.
Global awareness and market penetration
We increase brand awareness and market penetration of our cruise brands in various ways, including the use of communication strategies and marketing campaigns designed to emphasize the qualities of each brand, and to broaden the awareness of the brand, especially among target groups. Our marketing strategies include the use of travel agencies,advisors, traditional media, mobile and digital media as well as social media, influencers and brand websites. Our brands engage past and potential guests by collaborating with travel partners and through call centers, international offices and international representatives. In addition, our Global Brands target repeat guests with exclusive benefits offered through their respective loyalty programs.
We sell and market our Global Brands Royal Caribbean International, Celebrity Cruises, Azamara and Silversea Cruises, to guests outside of the United States and Canada through the combined efforts of internationally focused internal resources and a network of independent international representatives located throughout the world. Historically,While the majority of our focus has been to primarily source guests for our Global Brands come from North America. We will continue to expand our focus on sellingAmerica, we also sell and marketingmarket our cruise brands to guests in countries outside of North America by tailoring itineraries and onboard product offerings to the cultural characteristics and preferences of our international guests. In addition, we explore opportunities that may arise to acquire or develop brands tailored to specific markets.
Passenger ticket revenues generated by sales originating in countries outside of the United States were approximately 35% of total passenger ticket revenues in 2019, and 39% in 2018. International guests have grown from approximately 2.5 million in 2015 to approximately 2.6 million in 2019. Refer to Item 1A. Risk Factors - “Conducting business globally may resultresults in increased costs and other risks” for a discussion of the risks associated with our international operations.
FleetDelivery of state-of-the-art cruise ships, and fleet upgrade and maintenance
We place a strong focus on innovation, which we seek to achieve by introducing new concepts on our new ships and continuously making improvements to our existing fleet, through modernization projectssuch as large-scale atriums, double hulls for increased safety, and key technological improvements. Several of these innovations have become signature elements ofadvanced steel structures. We are expanding our brands. For the Royal Caribbean International brand,

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we introduced the “Royal Promenade” (a boulevard with shopping, dininginnovation efforts to cover multiple fronts, including naval and entertainment venues) and interior balconies on the Oasis class ships and a two-level family suite on Symphony of the Seas. For the Celebrity Cruises brand, we enhanced many of the brand'sarchitectural design, guest facing features, through the introduction of the Solstice class ships. More recently, with the introduction of Celebrity Edge, we introduced the "Magic Carpet" (a cantilevered, floating platform that reaches a height of 13 stories above sea level and can serve as a dining venue, full bar and platform for live music) and newly designed staterooms with an "Infinite Veranda" where, with the touch of a button, the veranda becomes part of the entire living space.
As part of the newbuild and modernization programs, we also seek to bring innovations in the areas of safety, reliability and energy efficiency, to our fleet.sustainability, and safety.
We are committed to building state-of-the-art ships at a moderate growth rate and we believe our success in this area provides us with a competitive advantage. Our newer vessels traditionally generate higher revenue yield premiums and are more efficient and environmentally friendly to operate than older vessels.
In 2023, we will introduce three new vessels to our fleet, including Royal Caribbean International’s new flagship – Icon of the Seas, Celebrity Cruises – Celebrity Ascent, and Silversea Cruises – Silver Nova. Each of these vessels will represent the latest hardware for their respective brands and both Icon of the Seas and Silver Nova are the first vessels of a new class. For Royal Caribbean International, new features on Icon of the Seas include a dedicated family neighborhood called “Surfside”, a pool deck featuring the largest swimming pool and waterpark at sea, and the “Aquadome” showcasing the tallest waterfall at sea in an 82-foot-tall dome. For Celebrity Cruises, Celebrity Ascent will represent an evolution of Celebrity Beyond and will build on the success that the Edge series of ships has brought to market. For Silversea, Silver Nova will be amongst our most environmentally friendly and energy efficient ships to date.
As of December 31, 2020,2022, our Global Brands and Partner Brands have 1510 ships on order. Refer to the Operationssection below for further information on our ships on order. As we further develop our Newbuild program, we continue to utilize each vessel as an opportunity to pilot new technology towards Destination Net Zero.
In addition, we regularly evaluate opportunities to order new ships, purchase existing ships or sell ships in our current fleet while ensuring that we remain focused on the returns we generate on invested capital and maintaining a high level of discipline on capital spending and operating leverage.
We have undertaken measures to mitigate the financial and operational impacts of COVID-19, such as the reduction of our capital expenditures by delaying or deferring newbuild deliveries and the modernization of our ships. The expected capital expenditures for 2021 are $2.1 billion and are mostly related to newbuild projects which have committed financing. During 2021, the Company expects the delivery of Odyssey of the Seas and Silver Dawn during the first and fourth quarter, respectively. In 2022, the Company has two ship deliveries scheduled, both with committed financing: Wonder of the Seas and Celebrity Beyond. Excluding the newbuilds, the capital expenditures for 2022 will depend on the Company’s schedule to return to operation. Moreover, COVID-19 has impacted shipyard operations which has resulted in delivery delays for newbuilds. The exact duration of the ship delivery delays is currently under discussion with the impacted shipyards.
During 2020, we disposed of Celebrity Xperience, Majesty of the Seas and Empress of the Seas. Additionally, we entered into a definitive agreement to sell the Azamara brand which includes three vessels: Azamara Journey, Azamara Quest and Azamara Pursuit. These six ships represent approximately 5.2% of our 2019 capacity. During 2020, we also disposed of the following ships which were previously chartered to Pullmantur: Zenith, Monarch, Horizon, Sovereign.
Markets and itineraries
In an effort to penetrate untapped markets, diversify our consumer base and respond to changing economic and geopolitical market conditions, we continue to seek opportunities to deploy ships to new, and stronger markets and itineraries throughout the world. The portability of our ships allows us to deploy our ships to meet demand within our existing and new cruise markets. We make deployment decisions generally 18 to 28 months in advance, with the goal of optimizing the overall profitability of our portfolio. Additionally, the infrastructure investments we have made to create a flexible global sourcing model have made our brands relevant in a number of markets around the world, which allows us to be opportunistic and source the highest yielding guests for our itineraries.
Our ships offer a wide selection of itineraries that call on more thanover 1,000 destinations in 126over 120 countries, spanning across all seven continents. We are focused on obtaining the best possiblemaximizing long-term shareholder returns by operating in established

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markets while growing our presence in developing markets. New capacity has allowed usour brands to expand into new markets and itineraries. Our brands have expanded their mix of itineraries while strengthening our abilityin an effort to further penetrate the Asian and Australian markets. The acquisition of Silversea Cruises added more than 500 new destinations allowing us to expand and enhance our selection of exotic itineraries.
As we plan for our brands' return to service, we are developing new and attractive itineraries that will allow us to resume our operations on a staggered basis. We are also responding quickly toaddress changes in market demand, as observed in our new bookings.demand.
Destination experiences and port facilities
Additionally, inIn order to provide unique destination experiences to our guests, we have investedand continue to invest in our private land destinations. For instance, inIn 2018, we announced our Perfect Day Island Collection, an initiative to develop a series of private island destinations around the world. The first island in the collection, Perfect Day at CocoCay, opened in Spring 2019 and includes a wide range of attractions, such as a full water park, zip line course, freshwater pools, helium balloon ride, splash pads and wavea beach club. In 2023, we plan to expand Perfect Day at CocoCay with the delivery of Hideaway Beach, an elevated, adults-only experience. Additionally, we are planning to introduce a new product, our Royal Beach Club offering, which will offer an exclusive and freshwater pool.branded experience at high volume ports. As a result of the operational disruptions caused by the COVID-19 pandemic, and in an effort to bolster our liquidity, we have delayed previously announced Perfect Day site openings and are reassessing their timing as well as the timing of our complementary Royal Beach Club offering portfolio. We are also reassessing our investment in other destinations.

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continue to evaluate opportunities to develop additional destinations across the globe.
In an effort to secure desirable berthing facilities for our ships, and to provide new or enhanced cruise destinations for our guests, we have actively assisted or invested in the development or enhancement of certain port facilities and infrastructure, including mixed-use commercial properties, located in strategic ports of call.call, and reduction of our environmental impacts. For instance, ain November 2022, we opened in Galveston, Texas our new Net Zero homeport cruise terminal, of approximately 170,000 square feet was completed at PortMiami in Miami, Florida in 2018. We have delayed the expected completion of our new homeportfirst cruise terminal in Galveston, Texas until 2022.facility to generate 100% of its needed energy through on-site solar panels.
Generally, we collaborate with local, private or governmental entities by providing management and/or financial assistance and often enter into long-term port usage arrangements. Our participation in these efforts is generallymost often accomplished via investments with the relevant government authority and/or various other strategic partnerships established to develop and/or operate the port facilities, by providing direct development and management expertise or in certain limited circumstances, by providing direct or indirect financial support. In exchange for our involvement, we generally secure preferential berthing rights for our ships.
Technological capabilities
Technology is a pervasive part of virtually every business process we use to support our strategic focusoperating strategies and provide a quality experience to our customers before, during and after their cruise. Technology also plays a critical role in the measures and protocols that we have developed and will continue to develop to mitigate COVID-19operating on our cruise ships. For example, through the deployment of our innovative electronic safety drill ("Muster 2.0") program, we have added convenience, allowed for physical distancing, and improved our guests experience regarding the mandatory safety briefing. Additionally, through the in-app messaging technology we are enhancing guest check-in to support education, testing and screening information prior to embarkation, and to support onboard detection contingency scenarios and protocols, and most importantly promote the health and safety of guests and crew.
In past years, weWe have continued to integrate digital capabilities into our operations and have increased our focus in bringing in data analytics and artificial intelligence into our processes. For example,processes to provide better insights on how to model our maintenance or operational actions. Also, we have continued the deployment ofcontinue to develop tools to enhance our innovative guest journey solutions acrossguests' digital experience and grow onboard revenue, by making it easier for our fleet from online check-inguests to port embarkation to onboard cruise experience.plan and maximize their next vacation through our websites and apps. At the same time, we are investingpartnered with SpaceX to launch Starlink, the next generation in shipboard operational technology to facilitate casino play, hotel maintenance, as well as the optimization of marine maintenance.connectivity, unlocking an improved guest experience. In concert with our destination focus, our island technology solutions are now enabling our guests to remain connected with WiFi access, order food and beveragebeverages as well as take advantage of all the island based activities with the same ease as onboard our ships.
Investments in our core platforms, as well as the trade and direct distribution channels, are delivering the benefit of more modernized solutions with scalability and faster self-service response times while also deploying new features such as flight packages and additional promotional offer capabilities.
Cyber security and data privacy are an ongoing focus, and we have made and will continue to make investments to protect our customer data, intellectual property and global operations.
Travel agencyadvisor support, and consumer outreach, and e-commerce
Travel agenciesadvisors continue to be the primary sourcea significant sourcing channel of ticket salesrevenues for our ships. We believe in the value of this distribution channel and invest in maintaining strong relationships with our travel partners. To accomplish this goal, we seek to ensure that ourmaintain competitive commission rates and incentive structures remain competitive with the marketplace. We continuously work with travel agenciesadvisors to sell upgrades and add-ons such as air and pre-cruise purchases to improve the retention and profitability

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of the channel. We provide brand dedicated sales representatives who serve as consultants to our travel partners. We also provide trained customer service representatives, call centers and online training tools.
At the onset of the COVID-19 pandemic, we launched the RCL CARES program which provided dedicated financial guidance as travel advisors navigated government relief benefits, including small business loans and the Paycheck Protection Program. During December 2020, we announced the Pay it Forward program which made available $40 million in the form of interest free commercial loans for qualifying travel agencies to begin their recovery efforts. Our Pay it Forward program launched in February 2021.
In addition, weWe continue to operate our Consumer Outreach department, which provides consumers 24-hour access to our vacation planners and customer service agents in our call centers. In addition, we maintain andcenters, as well as invest in our websites, including mobile applications and mobile websites. We enable our guests to communicate and book with us through various channels such as phone, web, chat, text message, and/or email.
We also have an Onboard Cruise Sales department Additionally, we continue to helpadvance our e-commerce capabilities and the vacation shopping experience for our guests. In addition to offering a simplified booking experience, we leverage the mobile application for onboard experiences such as WiFi, beverages, shore excursions, and specialty dining – enabling guests to book their next cruise vacations while onboard our ships.vacation end-to-end.
Guest Services
We offer to handle virtually all travel aspects related to guest reservations and transportation, including arranging

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facilitating guest pre- and post-hotel stay arrangements and air transportation.
Royal Caribbean International, Celebrity Cruises Azamara and Silversea Cruises offer recognition and status upgrades to their guests through their loyalty programs, Crown & Anchor Society, Captain’s Club, Le Club Voyage and Venetian Society, respectively, to encourage repeat business. Crown & Anchor Society has approximately 17.017.8 million members worldwide. Captain’s Club Le Club Voyage and Venetian Society have approximately 5.25.4 million members combined worldwide. Members are recognized through increasing membership status by accumulating cruise points or credits, depending on the brand, which may be redeemed on future sailings. Members are awarded points or credits in proportion to the number of cruise days and stateroom category. The loyalty programs provide tiers of membership benefits which entitle guests to upgraded experiences and recognition relative to the status achieved once the guests have accumulated the number of cruise points or credits specified for each tier. In addition, upon achieving a certain level of cruise points or credits, the Crown & Anchor Society and Captain’s Club members benefit from reciprocal membership benefits across all of ourbetween the loyalty programs. Examples of the benefits available under our loyalty programs include, but are not limited to, priority ship embarkation, priority waitlist for shore excursions, complimentary laundry service, complimentary Internet, booklets with onboardinternet, digital discount offers,vouchers, upgraded bathroom amenities, private seating on the pool deck, ship tours and, in the case of our most loyal guests who have achieved the highest levels of cruise points or credits, complimentary cruise days.cruises. We regularly work to enhance each of our loyalty programs by adding new features and amenities in order to reward our repeat guests.

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Operations
Cruise Ships and Itineraries
As of December 31, 2020,2022, our Global Brands and Partner Brands collectively operated 6164 ships with a selection of worldwide itineraries that call on more than 1,000 destinations.destinations in over 120 countries.
The following table presents summary information concerning ships that we expect will be in our fleet in 20212023 under our Global Brands and Partner Brands. The
ShipYear Ship
Built
Year ship entered service / will enter serviceApproximate
Berths
Royal Caribbean International
Icon of the Seas (1)
202320245,600
Wonder of the Seas202220225,700
Odyssey of the Seas202120214,200
Spectrum of the Seas201920194,150
Symphony of the Seas201820185,500
Harmony of the Seas201620165,500
Ovation of the Seas201620164,150
Anthem of the Seas201520154,150
Quantum of the Seas201420144,150
Allure of the Seas201020105,500
Oasis of the Seas200920095,600
Independence of the Seas200820083,850

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ShipYear Ship
Built
Year ship entered service / will enter serviceApproximate
Berths
Liberty of the Seas200720073,800
Freedom of the Seas200620063,950
Jewel of the Seas200420042,200
Mariner of the Seas200320033,350
Serenade of the Seas200320032,150
Navigator of the Seas200220023,400
Brilliance of the Seas200220022,150
Adventure of the Seas200120013,350
Radiance of the Seas200120012,150
Explorer of the Seas200020003,300
Voyager of the Seas199919993,450
Vision of the Seas199819982,050
Enchantment of the Seas199719972,300
Rhapsody of the Seas199719972,050
Grandeur of the Seas199619962,000
Celebrity Cruises  
Celebrity Ascent202320233,250
Celebrity Beyond202220223,250
Celebrity Apex202020202,900
Celebrity Flora20192019100
Celebrity Edge201820182,900
Celebrity Reflection201220123,050
Celebrity Silhouette201120112,900
Celebrity Eclipse201020102,850
Celebrity Equinox200920092,850
Celebrity Solstice200820082,850
Celebrity Xploration2007201615
Celebrity Constellation200220022,200
Celebrity Summit200120012,200
Celebrity Infinity200120012,150
Celebrity Xpedition2001200450
Celebrity Millennium200020002,200
Silversea Cruises
Silver Nova20232023730
Silver Endeavour20212022200
Silver Dawn20212022600
Silver Origin20202020100
Silver Moon20202020600
Silver Muse20172017600
Silver Spirit20092009600
Silver Whisper20012001400
Silver Shadow20002000400
Silver Wind19951995250
Silver Cloud19941994250

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ShipYear Ship
Built
Year ship entered service / will enter serviceApproximate
Berths
Silver Explorer19892008150
TUI Cruises
Mein Schiff 2201920192,900
Mein Schiff 1201820182,900
Mein Schiff 6201720172,500
Mein Schiff 5201620162,500
Mein Schiff 4201520152,500
Mein Schiff 3201420142,500
Mein Schiff Herz199720111,900
Hapag-Lloyd
Hanseatic Spirit20212021230
Hanseatic Inspiration20192019230
Hanseatic Nature20192019230
Europa 220132013500
Europa19991999400
Total159,585

(1)Azamara Pursuit, Azamara QuestIcon of the Seas is and Azamara Journey are not listed due to the definitive agreement to sell the Azamara brand, announced on January 19, 2021 and expected to closebe delivered in the fourth quarter of 2023 and is expected to commence cruise revenue operations in the first quarter of 2021.
ShipYear Ship
Built
Year Ship
In Service or Delivered, if after 2020(1)
Approximate
Berths
Royal Caribbean International
Odyssey of the Seas202120214,200
Spectrum of the Seas201920194,150
Symphony of the Seas201820185,500
Harmony of the Seas201620165,500
Ovation of the Seas201620164,150
Anthem of the Seas201520154,150
Quantum of the Seas201420144,150
Allure of the Seas201020105,500
Oasis of the Seas200920095,600
Independence of the Seas200820083,850
Liberty of the Seas200720073,800
Freedom of the Seas200620063,950
Jewel of the Seas200420042,200
Mariner of the Seas200320033,350
Serenade of the Seas200320032,150
Navigator of the Seas200220023,400
Brilliance of the Seas200220022,150
Adventure of the Seas200120013,350
Radiance of the Seas200120012,150
Explorer of the Seas200020003,300
Voyager of the Seas199919993,450
Vision of the Seas199819982,050
Enchantment of the Seas199719972,300
Rhapsody of the Seas199719972,050
Grandeur of the Seas199619962,000
Celebrity Cruises  
Celebrity Apex202020202,900
Celebrity Flora20192019100
Celebrity Edge201820182,900
Celebrity Reflection201220123,050
Celebrity Silhouette201120112,900

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ShipYear Ship
Built
Year Ship
In Service or Delivered, if after 2020(1)
Approximate
Berths
Celebrity Eclipse201020102,850
Celebrity Equinox200920092,850
Celebrity Solstice200820082,850
Celebrity Xploration2007201620
Celebrity Constellation200220022,200
Celebrity Summit200120012,200
Celebrity Infinity200120012,150
Celebrity Xpedition2001200450
Celebrity Millennium200020002,200
Silversea Cruises
Silver Dawn20212021550
Silver Origin20202020100
Silver Moon20202020600
Silver Muse20172017600
Silver Spirit20092009600
Silver Whisper20012001400
Silver Shadow20002000400
Silver Wind19951995250
Silver Cloud19941994250
Silver Explorer19892008150
TUI Cruises
Mein Schiff 2(2)
201920192,900
Mein Schiff 1201820182,900
Mein Schiff 6201720172,500
Mein Schiff 5201620162,500
Mein Schiff 4201520152,500
Mein Schiff 3201420142,500
Mein Schiff Herz199720111,900
Hapag-Lloyd
Hanseatic Spirit20212021230
Hanseatic Inspiration20192019230
Hanseatic Nature20182018230
Europa 220132013500
Europa19991999400
Total140,810

(1)The year a ship entered service refers to the year in which the ship commenced cruise revenue operations for the brand. If after 2020, the date reflects the year of expected delivery into the brand.
(2)TUI Cruises' newbuild entered service as Mein Schiff 2 in February 2019 and the existing Mein Schiff 2 was renamed Mein Schiff Herz.2024.

As of December 31, 2020,2022, our Global Brands and our Partner Brands have 1510 ships on order. ThreeTwo ships on order are being built in Germany by Meyer Werft GmbH, four are being built in Finland by Meyer Turku shipyard, fourtwo are being built in France by Chantiers de l’Atlantique threeand two are being built in Italy by Fincantieri and one is being built in Norway by Vard Fincateieri. COVID-19 has impacted shipyard operations which have and will continue to result in delays of our

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previously contracted ship deliveries.Fincantieri. As of December 31, 2020,2022, the dates that the ships on order are expected to be delivered, subject to change in the event of construction delays, and their approximate berths are as follows:

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ShipShipyardExpected DeliveryApproximate
Berths
Royal Caribbean International —  
Oasis-class:  
WonderUtopia of the SeasChantiers de l’Atlantique1st Quarter 20225,700
   UnnamedChantiers de l’Atlantique2nd Quarter 20245,700
Quantum-class:
Odyssey of the SeasMeyer Werft1st Quarter 20214,200
Icon-class:
UnnamedIcon of the SeasMeyer Turku Oy3rd4th Quarter 20235,600
UnnamedMeyer Turku Oy2nd Quarter 20255,600
UnnamedMeyer Turku Oy2nd Quarter 20265,600
Celebrity Cruises —
Edge-class:
Celebrity BeyondChantiers de l’Atlantique2nd Quarter 20223,250
UnnamedAscentChantiers de l’Atlantique4th Quarter 20233,250
Silversea Cruises (1)
Muse-class:
Silver DawnFincantieri4th Quarter 2021550
Evolution-class:
UnnamedSilver NovaMeyer Werft1st2nd Quarter 20222023600730
UnnamedSilver RayMeyer Werft1st2nd Quarter 20232024600730
TUI Cruises (50% joint venture) —  
Mein Schiff 7Meyer Turku Oy2nd Quarter 202320242,900
UnnamedFincantieri3rd4th Quarter 20244,100
UnnamedFincantieri1st2nd Quarter 20264,100
Hapag-Lloyd Cruises (50% joint venture) —
Hanseatic SpiritVard Fincantieri2nd Quarter 2021230
Total Berths51,98038,310

(1)The revenue impact from Silversea Cruises' new ships will be recognized on a three month reporting lag from when the ships enter service. Refer to Note 1. General to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for further information.
In addition, as of December 31, 2020, 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.
Seasonality
Our revenues have historically been seasonal based on the demand for cruises. Demand is typically strongest for cruises during the Northern Hemisphere’s summer months and holidays. In order to mitigate the impact of the winter weather in the Northern Hemisphere and to capitalize on the summer season in the Southern Hemisphere, our brands have focused on deployment in the Caribbean, Asia and Australia during that period.
Passengers and Capacity
Selected statistical information is shown in the following table (see Financial Presentation- Description of Certain Line Items and Selected Operational and Financial Metrics under Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, for definitions). Passengers Carried, Passenger Cruise Days, Available Passenger Cruise Days and Occupancy reflect the impact of our 2020 suspension of operations during parts of 2020 and 2021 due to the COVID-19 pandemic and the gradual resumption of full operations starting the second half of 2021 through the first half of 2022:

Year Ended December 31, (3)
20222021 (1)(3)2020 (2)2019 (2)2018 (2)
Passengers Carried5,536,3351,030,4031,295,1446,553,8656,084,201
Passenger Cruise Days35,051,9355,802,5828,697,89344,803,95341,853,052
Available Passenger Cruise Days (APCD)41,197,65011,767,4418,539,90341,432,45138,425,304
Occupancy85.1%49.3%101.9%108.1%108.9%


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pandemic:
Year Ended December 31,
2020(1)2019 (1)2018 (2)20172016 (3)
Passengers Carried1,295,1446,553,8656,084,2015,768,4965,754,747
Passenger Cruise Days8,697,89344,803,95341,853,05240,033,52740,250,557
Available Passenger Cruise Days (APCD)8,539,90341,432,45138,425,30436,930,93937,844,644
Occupancy101.9%108.1%108.9%108.4%106.4%

(1)As a result    Due to the elimination of the Silversea Cruises three-month reporting lag in October of 2021, we includedinclude Silversea Cruises' metrics from October 1, 2020 through June 30, 2021 and October 1 through December 31, 2021 in the year ended December 31, 2021. The year ended December 31, 2021 does not include July, August, and September 2021 statistics as Silversea Cruises' results of operations from October 1, 2019 through September 30, 2020for those months are included within Other (expense) income in our consolidated statements of comprehensive loss for the twelve monthsyear ended December 31, 2020, and from October 1, 2018 through September 30, 2019 for the twelve months ended December 31, 2019, respectively.2021. Refer to Note 1. General and Note 11. Redeemable Noncontrolling Interest to our consolidated financial statements under Item 8. Financial Statementsand Supplementary Data for more information on the three-month reporting lag and the Silversea Cruises acquisition.
(2)We acquired a controlling interest in Silversea Cruises on July 31, 2018 and report their results on a three-month reporting lag. As a result, these amounts include only August and September 2018 amounts for Silversea Cruises. Refer to Note 1. General and Note 11. Redeemable Noncontrolling Interest to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for more information on the three-month reporting lag and the Silversea Cruises acquisition.lag.
(3)These amounts do not(2) Due to the three-month reporting lag effective through September 30, 2021, we include November and December 2015 amounts for Pullmantur as the net Pullmantur result for those months was included within Other expenseSilversea Cruises' metrics from October 1, 2019 through September 30, 2020 in our consolidated statements of comprehensive income (loss) for the year ended December 31, 2016, as a result2020, from October 1, 2018 through September 30, 2019 in the year ended December 31, 2019, and from August 1, 2018 through September 30, 2018 in the year ended December 31, 2018.
(3)    For the year ended December, 31, 2021, we include Azamara Cruises' metrics through March 19, 2021, the effective sale date of the elimination of the Pullmantur two-month reporting lag,brand. Refer to Note 1. General to our consolidated financial statements under Item 8. Financial Statements and did not affect Gross Yields, Net Yields, Gross Cruise Costs, Net Cruise Costs and Net Cruise Costs Excluding Fuel. Additionally, effective August 2016, followingSupplementary Data for more information on the sale of our 51% interest in Pullmantur Holdings,the Azamara Cruises brand. For the years ended December 31, 2020, 2019, and 2018, we no longer include Pullmantur in these amounts.the full year of operations for Azamara Cruises.
Cruise Pricing
Our cruise ticket prices include accommodations and a wide variety of activities and amenities, including meals and entertainment. Prices vary depending on many factors including the destination, cruise length, stateroom category selected and the time of year the cruise takes place. Soon after our initial suspension of operations due to the occurrence of COVID-19, we established flexible cruise pricing programs (i.e. Cruise with Confidence, Best Price Guarantee and all-inclusive pricing) that present our guests with options and value as we anticipate our return to service.
Although we grant credit terms in select markets mainly outside of the United States, our payment terms generally require an upfront deposit to confirm a reservation, with the balance due prior to the sailing. Our cruises are generally available for sale at least one year in advance and often more than two years in advance of sailing. During the selling period of a cruise, we continually monitor and adjust our cruise ticket prices for available guest staterooms based on demand, with the objective of maximizing net yields.
As our business has grown globally, our sale arrangements with travel agentsadvisors may vary. For instance, although our direct business has historically grown at a rapid pace, sale arrangements through travel agentadvisor charter and group sales are proportionately higher in the China market than in our other markets which are primarily through retail agency and direct sales.
We have developed and implemented enhancements to our reservations system that provide us and our travel partners with additional capabilities, making it easier to do business with us. For example, we offer air transportation to our guests through our air transportation program available in major cities around the world.
Passenger ticket revenues accounted for approximately 66%, 61% and 68% of total revenues in 2022, 2021 and 2020, and 72% of total revenues in 2019 and 2018.respectively.
Onboard Activities and Other Revenues
Our cruise brands offer modern fleets with a wide array of onboard services, amenities and activities which vary by brand and ship. While many onboard activities are included in the base price of a cruise, we realize additional revenues from, among other things, gaming, the sale of alcoholic and other beverages, Internetinternet and other telecommunication services, gift shop items, shore excursions, photography, spa/salon and fitness services, art auctions, retail shops and a wide variety of specialty restaurants and dining options. Many of these services are available for pre-booking prior to embarkation. These activities are offered either directly by us or by independent concessionaires from which we receive a percentage of their revenues. The all-inclusive pricing programs that we offer currently, add some of these onboard activity and other services to the base price of the cruise.

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In conjunction with our cruise vacations, we offer pre- and post-cruise hotel packages to our Royal Caribbean International, Celebrity Cruises Azamara and Silversea Cruises guests. We also offer cruise vacation protection coverage to guests in a number of markets, which provides guests with coverage for trip cancellation, medical protection and baggage protection. Onboard and other revenues accounted for approximately 34%, 39%, and 32% of total revenues in 2022, 2021, and 2020, and 28% of total revenues in 2019 and 2018.respectively.
Segment Reporting
We control and operate four cruise brands, Royal Caribbean International, Celebrity Cruises, Azamara, and Silversea Cruises. In addition, we have a 50% joint venture interest in TUIC, our 50%-owned joint venture that operates the German brands TUI Cruises and Hapag-Lloyd Cruises. We believe our brands possess the versatility to enter multiple cruise market segments within the cruise vacation industry. Although each of our brands has its own marketing style as well as ships and crews of various sizes, the nature of the products sold and services delivered by our brands share a common base (i.e., the sale and provision of cruise vacations). Our brands also have similar itineraries as well as similar cost and revenue components. In addition, our brands sourceGlobal

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Brands have historically sourced passengers from similar markets around the world and operateoperated in similar economic environments with a significant degree of commercial overlap. As a result, our brands have been aggregated as a single reportable segment based on the similarity of their economic characteristics, types of consumers, regulatory environment, maintenance requirements, supporting systems and processes as well as products and services provided. Our ChairmanPresident and Chief Executive Officer has been identified as the chief operating decision-maker and all significant operating decisions including the allocation of resources are based upon the analyses of the Company as one segment. (For financial information, see Item 8. Financial Statements and Supplementary Data.)
Human Capital
Our human capital strategies are continually evolving to provide a rewardingstrategy focuses on attracting, developing and fulfilling employee experience.retaining the best talent in the industry. Some key elements of these strategies include: assessing current and future talent needs; a diverse and inclusive workforce; robust opportunities for employee growth and development; support for health and well-being; and an active listening strategy to make sure voices are heard in order to facilitateand continuous improvement.improvement occurs. We review our human capital metrics and our diversity equity and inclusion (DEI) program with the Talent and Compensation Committee of our Board of Directors on a regular basis.
As of December 31, 2020,2022, our fourthree global cruise brands Royal Caribbean International, Celebrity Cruises, Azamara, and Silversea Cruises, employed approximately 85,000 employees.102,500 employees spanning across our shipboard fleet and shoreside locations. Our shoreside workforce, including employees who work at our private destinations, consisted of approximately 6,9008,100 full time and 100 part-time employees. Our shipboard workforce consisted of 78,00094,300 employees, and as of December 31, 2020,2022, approximately 89% of our shipboard employees88% were covered by collective bargaining agreements. Due to the pause in our cruise operations in 2020, we repatriated the majority of our shipboard employees to their home countries, and as a result, we ended the year with approximately 87% less employees onboard our ships compared with 2019.
The following table details the distribution of our workforce by employee type and region as of December 31, 2020:2022:

Employee Type(1)
Employee Type(1)
U.S. Based EmployeesInternational Employees
Employee Type(1)
U.S. Based EmployeesInternational Employees
Shoreside Operations(1)Shoreside Operations(1)4,0002,000Shoreside Operations(1)4,1003,000
Shipboard EmployeesShipboard Employees 78,000Shipboard Employees94,300
Private Destinations(2)
Private Destinations(2)
 1,000
Private Destinations (2)
1,100

(1)    Includes full time and part timepart-time employees.
(2)    Private Destinations includes Coco Cay, Labadee and Galapagos based employees.

As a global operation, we take great pride in the broad diversity of our workforce and the value that it brings to our company. Our shoreside workforce is gender diverse with 53%58% female representation. Our shipboard workforce is comprised of employees from 120 plusapproximately 139 countries. The majority of our shipboard workforce comes from the Philippines (29%(30%), Indonesia (16%(18%) and India (14%). Our shoreside workforce is primarily based out of the U.S. (69%(57%), Philippines (10%(21%), Mexico (7%), and U.K. (5%) and China (4%).






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The following table details the gender distribution of our workforce by employee location as of December 31, 2020:2022:
Employee LocationMaleFemale
Shoreside - U.S.44%56%
Shoreside - International41%59%
Shipboard78%22%


Employee LocationMaleFemaleUnidentified
Shoreside - U.S.43%57% 
Shoreside - International47%52%1%
Shipboard79%21% 
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Our U.S. shoreside workforce is ethnically diverse with 54% of our employeesapproximately 55% comprised of non-White ethnic groups.

U.S. Shoreside Representation by Ethnicity% of Total U.S. Shoreside Population
White46%42%
Hispanic37%40%
African American11%9%
Asian5%
Others(1)
1%4%

(1)    No other individual category is greater than 1%.
(1)    American Indians and Pacific Islanders make up approximately 1% of our U.S. shoreside population.
In addition, weWe offer a variety of learning and development programs to our workforce, which includes a combination of instructor led (classroom and virtual) and web based (self-learning) courses. In 2020,2022, our workforce spentinvested approximately 12.5 million hours in traininglearning programs across a variety of areas ranging from Ethics, Compliance, Data Analysis, Business Software and Tools, Finance/Accounting, Professional Development,development, Project Management Skills,skills, Cyber Security, Leadership and Safety/Security. In total, our workforce completed over 560,000approximately 1.2 million courses within our learning management systems.
The Company has created a 24/7 care platform provided at no-cost that allows for employees and their families to get confidential assistance with stress management, relationships, financial concerns or legal concerns. Through this assistance program, we offer:
Short-term Professional Counseling - providing support for personal and emotional issues through telephone, video or in-person sessions.
Family Support Services - connectingWe run our employees with advisors that can provide them resources to assist with family planning, parenting, childcare, eldercare, home care support and more.
Legal Support Services - providing general guidance and referrals to professionals to answer legal questions surrounding divorce, custody, adoption, real estate, debt, bankruptcy, landlord/tenant issues, and more.
Financial Support Services - providing general guidance and referrals to professionals to answer financial questions about budgeting, debt management, tax issues, and more.
LifeWorks Digital Wellbeing Website - granting access to an online platform containing hundreds of articles, resources, webinars and tools to help employees better manage overall well-being.
Further, our Disaster Relief program provides emergency funding to employees who have been directly impacted by natural disasters. All shipboard and shoreside employees are eligible for assistance from this fund.
Finally, COVID-19 has had and continues to have a tremendous impact on our business. During 2020, our offices closed and our crew were repatriated off our ships to their home countries. In response, we ramped up our listening strategy through frequentemployee pulse surveys to understand our employees' needs and concerns and help them navigate the crisis. We continue to run our pulse surveys every quarterperiodically to understand and positively impact our employees’ experience. In 2020,2022, our shoreside employee engagement scores remained high and were higher than the prior 3-year average.above most global industry benchmarks.
Insurance
We maintain insurance on the hull and machinery of our ships, with insured values generally equal to the net book value of each ship. This coverage is maintained with reputable insurance underwriters from the British, Scandinavian, French, United States and other reputable international insurance markets.

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We are members of four Protection and Indemnity ("P&I") clubs, which are part of a worldwide group of 1312 P&I clubs, known as the International Group of P&I Clubs (the “IG”). Liabilities, costs and expenses for illness and injury to crew, guest injury, pollution and other third-party claims in connection with our cruise activities are covered by our P&I clubs, subject to the clubs’ rules and the limits of coverage determined by the IG. P&I coverage provided by the clubs is on a mutual basis and we are subject to additional premium calls in the event of a catastrophic loss incurred by any member of the 1312 P&I clubs, whereby the reinsurance limits purchased by the IG are exhausted. We are also subject to additional premium calls based on investment and underwriting shortfalls experienced by our own individual insurers.
We maintain war risk insurance for legal liability to crew, guests and other third parties as well as for loss or damage to our vessels arising from acts of war, including invasion, insurrection, terrorism, rebellion, piracy and hijacking. Our primary war risk coverage is provided by a Norwegian war risk insurance association and our excess war risk insurance is provided by our four P&I clubs. Consistent with most marine war risk policies, our coverage is subject to cancellation in the event of a change in risk. In the event of a war between major powers, our primary policies terminate after thirty days’ notice and our excess policies terminate immediately. Our excess policies are also subject to cancellation after a notice period of seven days in the event of other changes in risk. These notice periods allow for premiums to be renegotiated based on changes in risk.
Insurance coverage for other exposures, such as shoreside property and casualty, passenger off-vessel, directors and officers and network security and privacy, are maintained with various global insurance companies.
We do not carry business interruption insurance for our ships based on our evaluation of the risks involved and protective measures already in place, as compared to the cost of insurance.
All insurance coverage is subject to certain limitations, exclusions and deductible levels. In addition, in certain circumstances, we either self-insure or co-insure a portion of these risks. Premiums charged by insurance carriers, including carriers in the maritime insurance industry, increase or decrease from time to time and tend to be cyclical in nature. These cycles are impacted both by our own loss experience and by losses incurred in direct and reinsurance markets. We historically have been able to obtain insurance coverage in amounts and at premiums we have deemed to be commercially acceptable. No assurance can be given that affordable and secure insurance markets will be available to us in the future, particularly for war risk insurance.

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Trademarks
We own a number of registered trademarks related to the Royal Caribbean International, Celebrity Cruises Azamara and Silversea Cruises cruise brands. The registered trademarks include the name “Royal Caribbean International” and its crown and anchor logo, the name “Celebrity Cruises” and its “X” logo, the name “Azamara” and its "open world" and "star logo", the name “Silversea Cruises” and its logo, and the names of various cruise ships, ship venues and other marketing programs. We believe our largest brands' trademarks are widely recognized throughout the world and have considerable value. The duration of trademark registrations varies from country to country. However, trademarks are generally valid and may be renewed indefinitely as long as they are in use and/or their registrations are properly maintained.
Regulation
Our ships are regulated by various international, national, state and local laws, regulations and treaties in force in the jurisdictions in which they operate. In addition, our ships are registered in the Bahamas, Cyprus, Malta or in the case of our ships operating in the Galapagos Islands, Ecuador. Each ship is subject to regulations issued by its country of registry, including regulations issued pursuant to international treaties governing the safety of our ships, guests and crew as well as environmental protection. Each country of registry conducts periodic inspections to verify compliance with these regulations as discussed more fully below. Ships operating out of ports of call around the world are also subject to inspection by the maritime authorities of that country for compliance with international treaties and local regulations. Additionally, ships operating out of the United States ports are subject to inspection by the United States Coast Guard for compliance with international treaties and by the United States Public Health Service for sanitary and health conditions. Our ships are also subject to similar inspections pursuant to the laws and regulations of various other countries our ships visit.
We believe that we are in material compliance with all the regulations applicable to our ships and that we have all licenses necessary to conduct our business. Health, safety, security, environmental and financial responsibility issues are, and we believe will continue to be, an area of focus by the relevant government authorities in the United States and internationally. From time to time, various regulatory and legislative changes may be proposedimplemented that could impact our operations and subject us to increasing compliance costs in the future.

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CDC Framework for Conditional Sailing Order
On and effective as of October 30, 2020, the CDC issued a Framework for Conditional Sailing Order (the “Conditional Order”) that will conditionally permit cruise ship passenger operations in U.S. waters under certain conditions and using a phased approach. The Conditional Order will remain in effect until the earlier of (1) the expiration of the Secretary of Health and Human Services’ declaration that COVID-19 constitutes a public health emergency, (2) the rescission or modification by the CDC Director of the Conditional Order based on specific public health or other considerations, or (3) November 1, 2021.
All phases listed below are outlined in the Conditional Order; however, only the first phase listed is detailed in the Conditional Order. The remaining phases are currently pending approval by the CDC for distribution to all cruise lines prior to being detailed in the CDC's Phase 2 Technical Instructions.
Establishment of laboratory testing of crew and guests onboard cruise ships in U.S. waters and upon embarkation and disembarkation;
Simulated voyages designed to test a cruise ship operators’ ability to mitigate COVID-19 on cruise ships;
Meeting and maintaining requirements for a Conditional Sailing Certificate, which include, among other things, implementing the required testing protocols, a prohibition on offering itineraries longer than seven days, and the demonstration at each port where a ship intends to dock of approval with U.S. port and local health authorities, which requires medical care agreements addressing evacuation to onshore hospitals, housing agreements with onshore facilities for isolation and quarantine of COVID-19 cases, and port agreements to limit the number of cruise ships at any single port; and
A return to passenger voyages in a manner that mitigates the risk of COVID-19 introduction, transmission, or spread among passengers and crew onboard ships and ashore to communities.
We are working with both the CDC and the HSP, to implement the requirements of the Conditional Order and establish a comprehensive set of health and safety measures at every step of the guest journey with rigorous protocols. We are also designing itineraries where we will be able to control the vacation experience in compliance with the health and safety protocols contained in the Conditional Order.
While the Conditional Order represents an important step in our return to service, many uncertainties remain as to the specifics, timing and costs of administering and implementing the requirements of the Conditional Order, some of which may be material to our results of operations. Further, the Conditional Order contemplates that the CDC may issue additional requirements through technical instructions or orders as needed and that the phases described above will be further determined based on public health considerations, including the trajectory of the pandemic and the ability of cruise ships operators to successfully employ measures that mitigate the risk of COVID-19.
Our resumption of operations will include a staggered return of the fleet to service which will include:
Bringing the fleet from layup status to fully operational;
Bringing crew back to an appropriate staffing level and expected reduced load factors for a period of time; and
Implementation of the health and safety protocols on ships as they resume operations.
We are also reviewing and assessing the uncertainties relating to the Conditional Order’s requirements. Based on our assessment of these conditions or for other reasons, we may determine it necessary to further extend our voluntary suspension of our Global Brands’ cruise sailings.
Safety and Security Regulations
Our ships are required to comply with international safety standards defined in the International Convention for Safety of Life at Sea (“SOLAS”), which, among other things, establishesestablish requirements for ship design, structural features, materials, construction, lifesaving equipment and safe management and operation of ships to ensurefor guest and crew safety. The SOLAS standards are revised from time to time and incorporated in our ship design and operation, as applicable. The latest enhancements include the addition of the Polar Code which sets goal-based standards for ships operating in the polar region as well as damage stability requirements for new designs and operational measures for existing vessels. Compliance with these modified standards have not historically had a material effect on our operating costs. SOLAS incorporates the International Safety Management Code (“ISM Code”), which provides an international standard for the safe management and operation of ships and for pollution prevention. The ISM Code is mandatory for all vessels, including passenger vessel operators.
All of our operations and ships are regularly audited by various national authorities, and we are required to maintain the relevant certificates of compliance with the ISM Code.

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TableAdditionally, we are required to meet, and we fully comply with, the provisions outlined in the Standards of Contents
Training, Certification, and Watchkeeping for Seafarers (STCW). This convention sets the training and competency standards for all our crew who are responsible for operating the vessels or who have designated roles in ensuring the safety of our guests and crew during an emergency. Regulatory bodies routinely check that our crews’ training credentials are up-to-date and assess competency by observing safety and emergency drills. As amendments are made to STCW, we ensure that our crew training is updated accordingly.
Our ships are subject to various security requirements, including the International Ship and Port Facility Security Code (“ISPS Code”), which is part of SOLAS, and the U.S. Maritime Transportation Security Act of 2002 (“MTSA”), which applies to ships that operate in U.S. ports. In order to satisfy these security requirements, we implement security measures, conduct vessel security assessments, and develop security plans. The security plans for all of our ships have been submitted to and approved by the Recognized Security Organization on behalf of the ships' flag state and are in compliance with the ISPS Code and the MTSA.
The Cruise Vessel Security and Safety Act of 2010, which applies to passenger vessels which embark or include port stops within the United States, requires the implementation of certain safety design features as well as the establishment of

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practices for the reporting of and dealing with allegations of crime. The cruise industry supported this legislation and we believe that our internal standards are generally as strict or stricter than the law requires. Some provisions of the act call for regulations which have not been finalized. We do not expect the pending regulations willto have a material impact to our operations.
Environmental Regulations
We are subject to various international and national laws and regulations relating to environmental protection. Under such laws and regulations, we are generally prohibited from discharging materials other than food waste into the waterways. We have made, and will continue to make, capital and other expenditures to comply with environmental laws and regulations. From time to time, environmental and other regulators consider more stringent regulations, which may affect our operations and increase our compliance costs. We believe that the impact of ships on the global environment will continue to be an area of focus by the relevant authorities throughout the world and, accordingly, may subject us to increasing compliance costs in the future, including the items described below.
Our ships are subject to the International Maritime Organization’s (‘‘IMO’’) regulations under the International Convention for the Prevention of Pollution from Ships (the ‘‘MARPOL Regulations’’) and the International Convention for the Control and Management of Ships Ballast Water and Sediments (Ballast Water Management Convention), in addition to other regional and national regulations such as EU Directives and the US Vessel General Permit, which includes requirements designed to minimize pollution by oil, sewage, garbage, air emissions and the transfer of non-native/non-indigenous species. We have obtained the relevant international compliance certificates relating to oil, sewage, air pollution prevention and ballast water for all of our ships.
Emissions
The MARPOL Regulations imposed reduced global limitations on the sulfur content of emissions emitted by ships operating worldwide to 0.5% as of January 1, 2020, which was reduced from 3.5%. We do not expect thatfor this increased limitation willto have a material impact to our results of operations largely due to a number of mitigating steps we have taken over the last several years, including equipping all of our new ships delivered during or aftersince 2014 with advanced emissions purificationAdvanced Emissions Purification ("AEP") systems covering all engines and actively developing and installing AEP systems on the majority of our remaining fleet.fleet; resulting in 70% of our fleet being equipped with AEP systems. In addition, the majority of our ships on order are being delivered with Liquified Natural Gas ("LNG") technology that meet all sulfur requirements. These efforts will provide us with additional operational and deployment flexibility.
The MARPOL Regulations also establish special Emission Control Areas (‘‘ECAs’’("ECAs") with additional stringent limitations on sulfur emissions in thesecertain geographical areas. There are four established ECAs and one additional ECA being established beginning in May of 2025 that restrict sulfur emissions: the Baltic Sea, the North Sea/English Channel, certain waters surrounding the North American coast, and the waters surrounding Puerto Rico and the U.S. Virgin Islands (the “Caribbean ECA”"Caribbean ECA"). and the Mediterranean Sea. Ships operating in these sulfur ECAs have beenare required to reduce their emissions sulfur content to 0.1%. This reduction has not, hadand with the addition of the new ECA will not, have a significant impact on our results of operations to date due to the mitigating steps described above.
We continue to implement our AEP system strategy for both our ships on order and our existing fleet. As our new ships are delivered and additional existing ships are retrofitted with AEP systems, they will provide us with additional operational and deployment flexibility.
Additionally, all new ships operating within the North American and U.S. Caribbean Sea ECA that began construction on or after January 1, 2016, and North and Baltic Sea ships constructed on or after January 1, 2021 are required to meet more stringent nitrogen oxide emission limits. We comply with these rules for those relevant ships in service. As an added measure, all of our ships under construction are being built to comply with these rules. The rules have not had and are not expected to have a significant impact to our operations or costs.
RecentlyBeginning in 2018 and 2019, respectively, the European Union (EU) and IMO both implemented requirements for ships to monitor and report their carbon emissions. Compliance with these regulations have not materially impacted our costs or results of operations. However, the legislations contemplate the enactment of further obligations and restrictions focused on reducing carbon emissions from ships. The EU has proposed a series of significant carbon reforms under its Fit for 55 package designed to meet its 2030 emission goals, which would require us, among other things, to increase the use of low carbon fuel onboard our vessels, connectivity to shore power, and to purchase carbon allowances. The Fit for 55 Package includes proposals for the EU Emission Trading System (ETS), and the FuelEU Maritime initiative. The ETS’s current proposed structure will subject ship operators to the program, and will impose requirements to purchase carbon emission allowances beginning in 2024 for 40% of our emissions within Europe, growing to 70% in 2025, and to 100% by 2026. The FuelEU Maritime initiative, still under development, currently proposes requirements on fuel mix of 2-6% lower carbon fuels beginning in 2024 to 2026 and connecting to shore power by 2030. If enacted, the Fit for 55 proposals could individually and collectively have a material adverse effect on our business and results of operations due to increased costs

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associated with compliance and modified itineraries in the affected regions. The impact of the regulation is uncertain as elements of the proposals have not been finalized and the costs of ETS allowances will depend on future markets.
In November of 2020, IMO approved draft amendments to the MARPOL convention that will require ships, beginning in 2023, to combine a technical and an operational approach (Energy Efficiency Existing Ship Index ("EEXI") and Carbon Intensity Indicator)Indicator ("CII")) to reduce their carbon intensity in line with the ambition of the Initial IMO GHG Strategy, which aims to reduce carbon intensity of international shipping by 40% by 2030 as compared to 2008. While there is still a considerable amount of work ahead before theseThe approved framework for the EEXI and CII amendments can be implemented, we believe the amendments couldare not expected to have a material impact on our operations, however IMO is expected to review the CII framework in 2026, which could result in further requirements which could lead to changes to our itinerary flexibility for some of our ships depending on the technical andfinal operational approaches used (suchmeasures needed to comply. Furthermore, the IMO is also considering various other measures, including a possible fuel standard or a global market-based measures, such as speed optimization, engine power reduction, etc.).

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Tablecarbon taxes, that would reduce greenhouse gas emissions even further. While the exact impact is uncertain at this time as the proposals have yet to be finalized, the global nature of Contents
Effective July 1, 2015, the European Commission adopted legislation that requires cruise ship operators with ships visiting portsregulation could result in the European Unionincreased compliance costs. We will continue to monitor and report onbe engaged in the ship’s annual carbon dioxide emissions starting in 2018. Additionally, in 2019, the IMO's monitoring and reporting system (IMO data and collection system), which is applicable to all ship itineraries, entered into force. While compliance with these regulations did not materially impact our costs or results of operations, the legislations contemplate further obligations and restrictions which could ultimately result in additional costs or charges associated with carbon dioxide emissions.discussions.
Ballast Water
The IMO Ballast Water Management Convention, which came ininto effect in 2017, requires ships that carry and discharge ballast water to meet specific discharge standards by installing Ballast Water Treatment Systems by 2023. Compliance with this regulation has not had a material effect on our results of operations and we do not expect the continuing compliance with this regulation to have a material effect on our results of operations.
Refer to Item 1A. Risk Factors - "Environmental, labor, health and safety, financial responsibility and other maritime regulations could affect operations and increase costs" for further discussion of the risks associated with the regulations discussed above.
Consumer Financial Responsibility Regulations
We are required to obtain certificates from the United States Federal Maritime Commission relating to our ability to satisfy liability in cases of non-performance of obligations to guests, as well as casualty and personal injury. As a condition to obtaining the required certificates, we generally arrange through our insurers for the provision of surety for our ship-operating companies. The required amount of the surety bonds for non-performance of obligations to guests is currently $32.0$32 million per operator and is subject to additional consumer price index based adjustments.
We are also required by the United Kingdom, Norway, Finland, Iceland and the Baltics to establish our financial responsibility for any liability resulting from the non-performance of our obligations to guests from these jurisdictions. In the United Kingdom we are currently required by the Association of British Travel Agents to provide performance bonds totaling approximately £110 million.in varying amounts during the course of the year, up to £154 million during the peak season. Additionally, we wereare required by the Civil Aviation Authority to provide performance bonds totaling £16.6£35 million. TheWe maintain with the Norwegian Travel Guarantee Fund requires us to maintain performance bonds in varying amounts during the course of the year to cover our financial responsibility in Norway, Finland, Iceland and the Baltics.
Certain other jurisdictions also require that we establish financial responsibility to our guests resulting from the non-performance of our obligations; however, the related amounts do not have a material effect on our costs.
Taxation of the Company
The following is a summary of our principal taxes, exemptions and special regimes. In addition to or instead of income taxation, virtually all jurisdictions where our ships call impose some tax or fee, or both, based on guest headcount, tonnage or some other measure. We also collect and remit value added tax (VAT) or sales tax in many jurisdictions where we operate.
Our consolidated operations are primarily foreign corporations engaged in the owning and operating of passenger cruise ships in international transportation.
U.S. Income Taxation
The following is a discussion of the application of the U.S. federal and state income tax laws to us and is based on the current provisions of the U.S. Internal Revenue Code, Treasury Department regulations, administrative rulings, court decisions and the relevant state tax laws, regulations, rulings and court decisions of the states where we have business operations. All of the foregoing is subject to change, and any such change could affect the accuracy of this discussion.

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Application of Section 883 of the Internal Revenue Code
We,Royal Caribbean Cruises Ltd., Celebrity Cruises, Inc. and Silversea Cruises Ltd. are engaged in a trade or business in the United States, and many of our ship-owning subsidiaries, depending upon the itineraries of their ships, receive income from sources within the United States. Additionally,Silversea Cruises Ltd. and our United Kingdom tonnage tax company is a ship-operating companyare classified as a disregarded entityentities, or divisions for U.S. federal income tax purposes that may earn U.S. source income. Under Section 883 of the Internal Revenue Code, certain foreign corporations may exclude from gross income (and effectively from branch profits tax as such earnings do not give rise to effectively connected earnings and profits) U.S. source income derived from or incidental to the international operation of a ship or ships, including income from the leasing of such ships.
A foreign corporation will qualify for the benefits of Section 883 if, in relevant part: (1) the foreign country in which the foreign corporation is organized grants an equivalent exemption to corporations organized in the United States; and (2) the stock of the corporation (or the direct or indirect corporate parent thereof) is “primarily and regularly traded on an

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established securities market” in the United States. In the opinion of our U.S. tax counsel, Faegre Drinker Biddle & Reath LLP, based on the representations and assumptions set forth in that opinion, we,Royal Caribbean Cruises Ltd., including Silversea Cruises Ltd., Celebrity Cruises Inc., Silversea Cruises Ltd. and relevant ship-owning subsidiaries with U.S. source shipping income qualify for the benefits of Section 883 because weRoyal Caribbean Cruises Ltd. and each of those subsidiaries are incorporated in Liberia, or Bahamas, which areis a qualifying countries,country, and our common stock is primarily and regularly traded on an established securities market in the United States (i.e., we are a "publicly traded"“publicly traded” corporation). If, in the future, (1) Liberia or Bahamas no longer qualifyqualifies as an equivalent exemption jurisdictions,jurisdiction, and we do not reincorporate in a jurisdiction that does qualify for the exemption, or (2) we fail to qualify as a publicly traded corporation, we and all of our ship-owning or operating subsidiaries that rely on Section 883 to exclude qualifying income from gross income would be subject to U.S. federal income tax on their U.S. source shipping income and income from activities incidental thereto.
We believe that most of our income and the income of our ship-owning subsidiaries, including our U.K. tonnage tax company which is considered a division for U.S. tax purposes, is derived from or incidental to the international operation of a ship or ships and, therefore, is exempt from taxation under Section 883.
Regulations under Section 883 list activities that are not considered by the Internal Revenue Service to be incidental to the international operation of ships including the sale of air and land transportation, shore excursions and pre- and post-cruise tours. Our income from these activities that is earned from sources within the United States will be subject to U.S. taxation.
Taxation in the Absence of an Exemption Under Section 883
If we,Royal Caribbean Cruises Ltd., the operator of our vessels, Celebrity Cruises Inc., Silversea Cruises Ltd., or our ship-owning subsidiaries were to fail to meet the requirements of Section 883 of the Internal Revenue Code, or if the provision was repealed, then, as explained below, such companies would be subject to U.S. income taxation on a portion of their income derived from or incidental to the international operation of our ships.
Because we,Royal Caribbean Cruises Ltd. and Celebrity Cruises Inc. and Silversea Cruises Ltd. conduct a trade or business in the United States, we,Royal Caribbean Cruises Ltd., including Silversea Cruises Ltd., and Celebrity Cruises Inc. and Silversea Cruises Ltd. would be taxable at regular corporate rates on our separate company taxable income (i.e., without regard to the income of our ship-owning subsidiaries) on income which is effectively connected with our U.S. trade or business (generally only income from U.S. sources). In addition, if any of our earnings and profits effectively connected with our U.S. trade or business were withdrawn, or were deemed to have been withdrawn, from our U.S. trade or business, those withdrawn amounts would be subject to a “branch profits” tax at the rate of 30%. We,Royal Caribbean Cruises Ltd., which includes Silversea Cruises Ltd. for tax purposes, and Celebrity Cruises Inc. and Silversea Cruises Ltd. would also be potentially subject to tax on portions of certain interest paid by us at rates of up to 30%.
If Section 883 were not available to our ship-owning subsidiaries, each such subsidiary would be subject to a special 4% tax on its U.S. source gross transportation income, if any, each year because it does not have a fixed place of business in the United States and its income is derived from the leasing of a ship.
Other United States Taxation
We,Royal Caribbean Cruises Ltd., which includes Silversea Cruises Ltd., and Celebrity Cruises Inc. and Silversea Cruises Ltd. earn U.S. source income from activities not considered incidental to international shipping. The tax on such income is not material to our results of operation for all years presented.



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State Taxation
We,Royal Caribbean Cruises Ltd., Celebrity Cruises Inc., Silversea Cruises Ltd. and certain of our subsidiaries are subject to various U.S. state income taxes which are generally imposed on each state’s portion of the U.S. source income subject to federal income taxes. Additionally, the state of Alaska subjects an allocated portion of the total income of companies doing business in Alaska and certain other affiliated companies to Alaska corporate state income taxes and also imposes a 33% tax on adjusted gross income from onboard gambling activities conducted in Alaska waters. This did not have a material impact to our results of operations for all years presented.
Maltese and Spanish Income Taxation
Effective July 31, 2016, we sold 51% of our interest in Pullmantur Holdings S.L. ("Pullmantur Holdings"), the parent company of the Pullmantur brand. We account for our retained investment under the equity method of accounting. There was no tax impact to us as a result of this sale transaction. The Pullmantur group continues to be subject to the tax laws of Spain and Malta, among others.
Under the sale agreement, we remain responsible for pre-sale tax matters with respect to years that are still open under the statute of limitations.

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United Kingdom Income Taxation
During the year ended December 31, 2020,2022, we operated 1715 ships under the United Kingdom tonnage tax regime (“U.K. tonnage tax”).
Companies subject to U.K. tonnage tax pay a corporate tax on a notional profit determined with reference to the net tonnage of qualifying vessels. The requirements for a company to qualify for the U.K. tonnage tax regime include being subject to U.K. corporate income tax, operating qualifying ships, which are strategically and commercially managed in the United Kingdom, and fulfilling a seafarer training requirement.
Relevant shipping profits include income from the operation of qualifying ships and from shipping related activities. Our U.K. income from non-shipping activities which do not qualify under the U.K. tonnage tax regime and which are not considered significant, remain subject to regular U.K. corporate income tax.
Chinese Taxation
Our U.K. tonnage tax company operates ships in international transportation in China. The income earned from this operation is exempt from taxation in China under the U.K./China double tax treaty and other circulars addressing indirect taxes. Changes to or failure to qualify for the treaty or circular could cause us to lose the benefits provided which would have a material impact on our results of operations. Our Chinese income from non-shipping activities or from shipping activities not qualifying for treaty or circular protection and which are considered insignificant, remain subject to Chinese taxation.
Other Taxation
We and certain of our subsidiaries are subject to value-added and other indirect taxes most of which are reclaimable, zero-rated or exempt.
In December 2022, the European Union announced it would implement the Organization for Economic Co-operation Development’s (OECD’s) 15% Global Minimum Tax initiative (known as “Pillar 2”). If enacted, these rules generally impose a 15% corporate minimum tax on large multi-national companies, and we expect to be in scope of the rules beginning in 2025. The OECD model rules provide an exclusion for “International Shipping Income,” and certain ancillary income, for which certain of our earnings may be eligible. We are still pending final guidance on several material open technical issues and assessing the impact on our financial statements.
Website Access to Reports
We make available, free of charge, access to our Annual Reports, all quarterly and current reports and all amendments to those reports, as soon as reasonably practicable after such reports are electronically filed with or furnished to the Securities and Exchange Commission through our website at www.rclcorporate.comwww.rclinvestor.com. The information contained on our website is not a part of any of these reports and is not incorporated by reference herein.

Information About our Executive Officers
As of February 26, 2021,23, 2023, our executive officers are:
NameAgePosition
Richard D. FainJason T. Liberty7347Chairman,President and Chief Executive Officer and Director
Jason T. LibertyNaftali Holtz45Executive Vice President, Chief Financial Officer
Michael W. Bayley6264President and Chief Executive Officer, Royal Caribbean International
Lisa Lutoff-Perlo6365President and Chief Executive Officer, Celebrity Cruises
Roberto Martinoli68President and Chief Executive Officer, Silversea Cruises
Harri U. Kulovaara6870Executive Vice President, Maritime
Bradley H. SteinR. Alexander Lake65Senior Vice President, General Counsel, Chief Compliance Officer
Henry L. Pujol5351Senior Vice President, Chief AccountingLegal Officer
Naftali Holtz43Senior Vice President, Finance and Secretary

Richard D. FainJason T. Liberty has served as a director since 1981 and as our ChairmanPresident and Chief Executive Officer since 1988.January 2022. Mr. Fain is a recognized industry leader, having participated in shipping for over 40 years and having held a number of prominent industry positions, such as Chairman of the Cruise Lines International Association (CLIA), the largest cruise industry trade association. He currently serves on the University of Miami Board of Trustees as well as the National Board of the Posse Foundation. He is former chairman of the University of Miami Board of Trustees, Miami Business Forum, the Greater Miami Convention and Visitors Bureau, and the United Way of Miami-Dade.
Jason T. Liberty has been employed byheld several roles since joining the Company since 2005 and hasin 2005. Most recently, Mr. Liberty served as Executive Vice President and Chief Financial Officer since February 2017. From May 20132017 and, prior to February 2017, he servedthat, as Senior Vice President and Chief Financial Officer. Since February 2017, Mr. Liberty has overseen the Company’s Treasury, Accounting, Corporate, Strategic and Revenue Planning, Corporate Development, Deployment, Internal Audit and Investor Relations

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functions. Since May 2018, in addition to the above functions, he has also overseen the Company’s Information Technology, Supply Chain, Risk Management, Legal and Port Operations functions. Mr. Liberty has overseen our Silversea Cruises investmentOfficer since 2019. Prior to2013. Before his role as Chief Financial Officer, Mr. Liberty served as Senior Vice President, Strategy and Finance from September 2012 through May 2013, overseeing the Company’s Corporate and Strategic Planning, Treasury, Investor Relations and Deployment functions. Prior to this, Mr. Liberty served, from 2010 through 2012,2013; as Vice President of Corporate and Revenue Planning and, from 2008 to 2010 through 2012; and as Vice President of Corporate

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and Strategic Planning.Planning from 2008 to 2010. Before joining Royal Caribbean, Mr. Liberty was a Senior Manager at the international public accounting firm of KPMG LLP. Mr. Liberty currently serves on the Board of Directors of WNS Holdings.
Naftali Holtz has served as Chief Financial Officer since January 2022. In his role as Chief Financial Officer, Mr. Holtz is responsible for overseeing the company’s financial planning and analysis, corporate strategy, treasury, corporate tax matters, investor relations, investments, internal audit, accounting and financial reporting. Prior to his role as Chief Financial Officer, Mr. Holtz served as Senior Vice President of Finance, responsible for financial planning and analysis, risk management and treasury. Mr. Holtz worked for Goldman Sachs as a Managing Director and Head of Lodging and Leisure Investment Banking before joining Royal Caribbean Group in 2019. Mr. Holtz is also a veteran of the Israeli Air Force.
Michael W. Bayley has served as President and Chief Executive Officer of Royal Caribbean International since December 2014. Prior to this, he served as President and Chief Executive Officer of Celebrity Cruises since August 2012. Mr. Bayley has been employed by Royal Caribbean for over 3040 years, having started as an Assistant Purser onboard one of the Company’s ships. He has served in a number of roles including as Executive Vice President, Operations from February 2012 until August 2012. Other positions Mr. Bayley has held include Executive Vice President, International from May 2010 until February 2012; Senior Vice President, International from December 2007 to May 2010; Senior Vice President, Hotel Operations for Royal Caribbean International; and Chairman and Managing Director of Island Cruises.
Lisa Lutoff-Perlo has served as President and Chief Executive Officer of Celebrity Cruises since December 2014 and has been with the company since 1985. She also leads the Company’s Global Marine Organization. Ms. Lutoff-Perlo was the Executive Vice President, Operations of Royal Caribbean International from 2012 to 2014; Senior Vice President, Hotel Operations of Celebrity Cruises from 2007 to 2012; and Vice President, Onboard Revenue of Celebrity Cruises from 2005 to 2007. Ms. Lutoff-Perlo held various senior positions in sales and marketing with Royal Caribbean International from 1985 to 2005. Ms. Lutoff-Perlo currently serves on the Board of Directors of AutoNation and is Vice Chair for United Way of Broward County.
Roberto Martinoli has served as President and Chief Executive Officer of Silversea Cruises since 2016. Before joining Silversea, Mr. Martinoli was the Chairman and Chief Executive Officer of Grandi Navi Veloci from 2010 to 2016, President and Chief Operating Officer of Norwegian Cruise Line from 2007 to 2010, Executive Vice President of Operations at Carnival Cruise Lines from 2000 to 2007 and Senior Vice President at Costa Crociere from 1997 to 2000.
Harri U. Kulovaara has served as Executive Vice President, Maritime since January 2005. Mr. Kulovaara is responsible for fleet design and newbuild operations. Mr. Kulovaara also chairs our Maritime Safety Advisory Board. Mr. Kulovaara has been employed with Royal Caribbean since 1995 in a variety of positions, including Senior Vice President, Marine Operations, and Senior Vice President, Quality Assurance. Mr. Kulovaara is a naval architect and engineer.
Bradley H. SteinR. Alexander Lake has served as General CounselChief Legal Officer and Corporate Secretary of the Company since 2006. HeJune 2021, in which role he has alsoglobal responsibility for the Company's legal and compliance functions. Mr. Lake joined the Company from World Fuel Services Corporation, a global energy services company, where he spent over 17 years leading the legal, regulatory and compliance areas, serving most recently as Executive Vice President, Chief Legal Officer and Corporate Secretary from 2017 to 2021. Prior to World Fuel Services, Mr. Lake served as Senior Vice PresidentAssistant General Counsel at America Online Latin America, Inc. and Chief Compliance Officer of the Company since February 2009 and February 2011, respectively. Mr. Stein has been with Royal Caribbean since 1992. Before joining Royal Caribbean, Mr. Stein workedpracticed as a corporate lawyer in private practiceleading law firms in New York and Miami.
Henry L. Pujol has served as Senior Vice President, Chief Accounting Officer of the Company since May 2013. Mr. Pujol originally joined Royal Caribbean in 2004 as Assistant Controller and was promoted to Corporate Controller in May 2007. Before joining Royal Caribbean, Mr. Pujol was a Senior Manager at the international public accounting firm of KPMG LLP.
Naftali Holtz has served as Senior Vice President, Finance of the Royal Caribbean since 2019. Before joining Royal Caribbean, Mr. Holtz worked in investment banking at Goldman Sachs and was most recently Managing Director, Head of Lodging and Leisure Investment Banking.

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Item 1A. Risk Factors
The risk factors set forth below and elsewhere in this Annual Report on Form 10-K are important factors that could cause actual results to differ from expected or historical results. It is not possible to predict or identify all such risks. There may be additional risks that we consider not to be material, or which are not known, and any of these risks could have the effects set forth below.affect our operations. The ordering of the risk factors set forth below is not intended to reflect any Company indication of prioritya risk's potential likelihood or likelihood.magnitude. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for a cautionary note regarding forward-looking statements.
COVID-19Macroeconomic, Business, Market and FinancialOperational Risks
The COVID-19 pandemic has had,Adverse economic or other conditions could reduce the demand for cruises and willpassenger spending, adversely impacting our operating results, cash flows and financial condition including impairing the value of our goodwill, ships, trademarks and other assets and potentially affecting other critical accounting estimates where the impact may be material to our operating results.
Demand for cruises is affected by international, national, and local economic conditions. Weak or uncertain economic conditions may impact consumer confidence and pose a risk as vacationers postpone or reduce discretionary spending. This, in turn, may result in cruise booking slowdowns, decreased cruise prices and lower onboard revenues. Given the global nature of our business, we are exposed to many different economies, and our business could be negatively impacted by challenging conditions in any of the markets in which we operate, and/or related reactions by our competitors in such markets.
Our operating costs could increase due to market forces and economic or geopolitical factors beyond our control.
Our operating costs, including fuel, food, payroll and benefits, airfare, taxes, insurance, and security costs, can be and have been subject to increases due to market forces and economic or geopolitical conditions or other factors beyond our control, including global inflationary pressures, which have increased our operating costs. Increases in these operating costs have affected, and may continue to adversely affect, our future profitability.
In particular, increases in fuel prices have and could continue to materially and adversely affect our business as fuel prices impact not only our fuel costs, but also some of our other expenses, such as crew travel, freight, and commodity prices. Mandatory fuel restrictions may also create uncertainty related to the price and availability of certain fuel types potentially impacting operating costs.
Price increases for commercial airline services for our guests or major changes or reduction in commercial airline services and/or availability could adversely impact the demand for cruises and undermine our ability to provide reasonably priced vacation packages to our guests.
Many of our guests depend on scheduled commercial airline services to transport them to or from the ports where our cruises embark or disembark. Increases in the price of airfare would increase the overall price of the cruise vacation to our guests, which may adversely impact demand for our cruises. In addition, changes in the availability and/or regulations governing commercial airline services could adversely affect our guests’ ability to obtain air travel, as well as our ability to transfer our guests to or from our cruise ships, which could adversely affect our results of operations.
Terrorist attacks, war, and other similar events could have a material adverse impact on our business and results of operations.
We are susceptible to a wide range of adverse events, including terrorist attacks, war, conflicts, civil unrest and other hostilities. The occurrence of these events or an escalation in the frequency or severity of them, and the resulting political instability, travel restrictions and advisories and concerns over safety and security aspects of traveling or the fear of any of the foregoing, have had, and could have in the future, a significant adverse impact on demand and pricing in the travel and vacation industry. These events could also result in additional security measures taken by local authorities which have, and may in the future, impact access to ports and/or destinations. In addition, such events have led, and could lead, to disruptions, instability and volatility in global markets, supply chains and industries, increased operating costs, such as fuel and food, and disruptions affecting our newbuild construction and fleet modernization efforts, any of which could materially and adversely impact our business and results of operations. Further, such events could have the effect of heightening the other risks we have described in this report, any of which also could materially and adversely affect our business and results of operations.
Disease outbreaks and an increase in concern about the risk of illness could adversely impact our business and results of operations, and may cause significant disruptions, create new risks, and exacerbate existing risks.
Disease outbreaks and increased concern related to illness when traveling to, from, and on our ships such as COVID-19 could cause a drop in demand for cruises, guest cancellations, travel restrictions, an unavailability of ports and/or destinations, cruise cancellations, ship redeployments and an inability to source our crew, provisions or supplies from certain places. In addition, we may be subject to increased concerns that cruises are more susceptible than other vacation alternatives to the spread of COVID-19 andinfectious diseases. For example, the unprecedented responses by governments and other authorities to control and contain the disease, has caused significant disruptions, created new risks, and exacerbated existing risksCOVID-19 outbreak,
including related variants, led to our business.
We have been, and will continue to be, negatively impacted by the COVID-19 pandemic, including impacts that resulted from actions taken in response to the outbreak. Examples of these include, but are not limited to: travel bans and cruising advisories and the resulting temporaryvoluntary suspension of our Global Brands'global cruise operations whichstarting in March 2020. While we have resumed our global cruise operations, there is expected to continue through at least April 30, 2021, for most ofno assurance that our cruise operations; restrictions on the movementoperations will continue uninterrupted. In response to disease outbreaks, our industry, including our passengers and gathering of people; social distancing measures; shelter-in-place/stay-at-home orders; and disruptions to businesses in our supply chain. In addition to the imposed restrictions affecting our business, the extent, duration, and magnitude of the COVID-19 pandemic’s effect on the economy and consumer demand for cruising and travel is still rapidly fluctuating and difficult to predict. As such, these impacts may persist for an extended period of time or even become more pronounced, even after we are permitted to and/or begin to resume operations.
The COVID-19 pandemic also has elevated risks affecting significant parts of our business:
Operations: Due to the global public health circumstances, we have decided to extend the suspension of sailings of our Global Brands' fleet through at least April 30, 2021, for most of our cruise operations. It is uncertain as to whether we will need to suspend additional sailings and to what extent, and upon the conclusion of such suspensions, we expect a gradual return to normal sailings. The suspension of sailings and the expected reduction in demand for future cruising once we resume sailing has led to a significant decline in our revenues and cash inflows, which has required us to take cost and capital expenditure containment actions. Consequently, we have reduced and furloughed our workforce, with approximately 23% of our U.S. shoreside employee base being impacted and, except for the minimum safe manning shipboard crew, required to operate the ships during the suspension of operations, our shipboard crew were notified that their contracts would end early and they would be notified about new assignments when operations resume in the future. As a result of these actions, we may be challenged in rebuilding our workforce which could further delay our returnsubject to service. In addition, we have reduced our planned capital spending through 2021, which may negatively impact our execution of planned growth strategies, particularly as it relates to investments in our ships, technology, and our expansion of land-based developments. Furthermore, we have taken actions to monitor and mitigate changes in our supply chain, and port destination availability, which may strain relationships with our vendors and port partners. On September 21, 2020, the HSP submitted its report on recommendations to the CDC, which includes more than 70 detailed recommendations to protect the publicenhanced health and safety of guests, crew andrequirements in the communities where cruise ships call. On October 30, 2020, the CDC issued the Conditional Order, which replaced the “no sail” order that expired on October 31, 2020. While the Conditional Order represents an important step in our return to service, many uncertainties remain as to the specifics and timing of implementation, administration and costs of the requirements of the Conditional Order, some offuture which may be significant. Further, the Conditional Order contemplates that the CDCcostly and take a significant amount of time to implement across our fleet. For example, local governments may issue additional requirements through technical instructions establish their own set of rules for self-quarantines and/or orders as needed and that the phases requiredrequire proof of individuals' health status or vaccination prior to resume operations will be further determined based on public health considerations, including the trajectory of the pandemic and the ability of the Company and other cruise ship operators to successfully employ measures that mitigate the risk of COVID-19. In addition, the Conditional Order contains requirements that could negatively impact our results of operations, such as: laboratory testing of crew members and guests; simulated voyages; and the certification process, including implementing the required testing protocols, the prohibition on itineraries longer than seven days, and the demonstration at each port where a ship intends to dock of approval with U.S. port and local health authorities, which requires medical care agreements addressing evacuation to onshore hospitals, housing agreements with onshore facilities for isolation and quarantine of COVID-19 cases, and port agreements to limit the number of cruise ships at any single port. Our ability to meet the requirements under the Conditional Order will determine the timing and implementation of our plans to return to service which we expect to be gradual. We are currently reviewing and assessing the uncertainties relating to the Conditional Order’s requirements and are in dialogue with the CDC.or upon visiting. Based on our assessment of these conditionsrequirements and recommendations, or for other reasons, we may determine

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it necessary to extend our voluntary suspensioncancel or modify certain of our Global Brands’ cruise sailings which currently extends through at least April 30, 2021, for mostsailings. The impact of any of these factors could have a material adverse effect on our business and results of operations. In addition, any operating or health protocols that we may develop or that may be required by law in the future in response to infectious diseases may be costly to develop and implement and may be less effective than we expected in reducing the risk of infection and spread of such disease on our cruise operations. It is difficultships, all of which will negatively impact our operations and expose us to reputational and legal risks.
Incidents on ships, at port facilities, land destinations and/or affecting the cruise vacation industry in general, and the associated negative media coverage and publicity, have affected and could continue to affect our reputation and impact our sales and results of operations.
Cruise ships, private destinations, port facilities and shore excursions operated and/or offered by us and third parties may be susceptible to the risk of accidents, illnesses, mechanical failures, environmental incidents and other incidents which could bring into question safety, health, security and vacation satisfaction and negatively impact our sales, operations and reputation. Incidents involving cruise ships, and, in particular the safety, health and security of guests and crew and the media coverage thereof, including those related to the COVID-19 pandemic, have impacted and could continue to impact demand for our cruises and pricing in the industry. In particular, we cannot predict the impact on our financial performance and the public’s concern regarding the health and safety of travel, especially by cruise ship, and related decreases in demand for travel and cruising. Moreover, our ability to meetattract and retain guests and crew depends, in part, upon the requirementsperception and reputation of our company and our brands and the public’s concerns regarding the health and safety of travel generally, as well as regarding the cruising industry and our ships specifically. Our reputation and our business could also be damaged by continued or additional negative publicity regarding the cruise industry in general, including publicity regarding the spread of contagious disease such as COVID-19, over-tourism in key ports and destinations and the potentially adverse environmental impacts of cruising. The considerable expansion in the use of social and digital media has compounded the potential scope and reach of any negative publicity. In addition, incidents involving cruise ships may result in additional costs to our business, increasing government or other regulatory oversight and, in certain cases, potential litigation.
Significant weather, climate events and/or natural disasters could adversely impact our business and results of operations.
Natural disasters (e.g., earthquakes, volcanos, wildfires), weather and/or climate events (including hurricanes and typhoons) could impact our source markets and operations resulting in travel restrictions, guest cancellations, an inability to source our crew or our provisions and supplies from certain places. We are often forced to alter itineraries and occasionally cancel a cruise or a series of cruises or to redeploy our ships due to these types of events, which could have an adverse effect on our sales, operating costs and profitability in the current and future periods. Increases in the frequency, severity or duration of these types of events could exacerbate their impact and disrupt our operations or make certain destinations less desirable or unavailable impacting our revenues and profitability further. Any of the Conditional Orderforegoing could have an adverse impact on our results of operations and on industry performance.
Our sustainability activities, including environmental, social and governance (ESG) matters, could result in reputational risks, increased costs and other risks.
Customers, investors, lenders, regulators and other industry stakeholders have placed increasing importance on corporate ESG practices and on the implications and social cost of their investments, which could cause us to incur additional costs and changes to our operations. If our ESG practices or disclosures do not meet stakeholders' evolving expectations and standards, our customer and employee retention, our access to certain types of capital, including export credit financing, and our brands and reputation may be negatively impacted, which could affect our business operations and financial condition. We could also incur additional costs and require additional resources to monitor, report and comply with various ESG practices, which could increase our operating costs and affect our results of operations and financial condition.
In addition, from time to time, we communicate certain initiatives regarding climate change and other ESG matters. We could fail or be perceived to fail to achieve such initiatives, which may negatively affect our reputation. The future adoption of new technology or processes to achieve the initiatives could also result in the impairment of existing assets.
Our reliance on shipyards, their subcontractors and our suppliers to implement our newbuild and ship upgrade programs and to repair and maintain our ships exposes us to risks which could adversely impact our business.
We rely on shipyards, their subcontractors and our suppliers to effectively construct our new ships and to repair, maintain, and upgrade our existing ships on a timely basis and in a cost effective manner. There are a limited number of shipyards with the capability
and capacity to build, repair, maintain and/or upgrade our ships. As such, any disruptions affecting the newbuild or fleet modernization supply chain will adversely impact our business as there are limited substitutes.
Suspensions and/or slowdowns of work at shipyards, have impacted and could continue to impact our ability to construct new ships as planned, our ability to timely and cost-effectively procure new capacity, and our ability to execute scheduled drydocks and/or fleet modernizations. For instance, the effects of the COVID-19 pandemic on the shipyards, their subcontractors, and our suppliers have resulted in delays in our previously scheduled ship deliveries. Variations from our plan could have a significant negative impact on our business operations and financial condition.
Building, repairing, maintaining and/or upgrading a ship is sophisticated work that involves significant risks. Material increases in commodity and raw material prices, and other cost pressures impacting the construction of a new ship, such as the cost of labor and financing, could adversely impact the shipyard’s ability to build the ship on a cost-effective basis. We may be impacted if shipyards, their subcontractors, and/or our suppliers encounter financial difficulties, supply chain, technical or design problems when building or repairing a ship. These problems have impacted and may in the future impact the timely delivery or cost of new ships or the ability of shipyards to repair and upgrade our fleet in accordance with our needs or expectations. In addition, delays, mechanical faults and/or unforeseen incidents may result in cancellation of cruises or delays of new ship orders or necessitate unscheduled drydocks. Such events could result in lost revenue, increased operating expenses, or both, and thus adversely affect our results of operations.
An increase in capacity worldwide or excess capacity in a particular market could adversely impact our cruise sales and/or pricing.
Although our ships can be redeployed, cruise sales and/or pricing may be impacted by the introduction of new ships into the marketplace, reductions in cruise capacity, overall market growth and deployment decisions of ourselves and our competitors. As of December 31, 2022, a total of 63 new ships with approximately 143,000 berths were on order for delivery through 2028 in the cruise industry, including 10 ships currently scheduled to be delivered to our Global and Partner Brands. The further net growth in capacity from these new ships and future orders, without an increase in the cruise industry’s demand and/or share of the vacation market, could depress cruise prices and impede our ability to achieve yield improvement.
In addition, to the extent that we or our competitors deploy ships to a particular itinerary/region and the resulting capacity in that region exceeds the demand, it may negatively affect our pricing and profitability. Any of the foregoing could have an adverse impact on our results of operations, cash flows and financial condition, including potentially impairing the value of our ships and other assets.
Unavailability of ports of call may adversely affect our results of operations.
We believe that port destinations are a major reason why guests choose to go on a particular cruise or on a cruise vacation. The availability of ports and destinations is affected by a number of factors, including industry demand and competition for key ports and destinations, existing capacity constraints, constraints related to the size of certain ships, security, financial limitations on port development, exclusivity arrangements that ports may have with our competitors, geopolitical developments, local governmental regulations, environmental regulations, and governmental response to disease outbreaks. Higher fuel costs associated with compliance, somealso may adversely impact the destinations on certain of our itineraries as they become too costly to include.
In addition, certain ports and destinations have faced a surge of both cruise and non-cruise tourism which, in certain cases, has fueled anti-tourism sentiments and related countermeasures to limit the volume of tourists allowed in these destinations. In certain destinations, countermeasures to limit the volume of tourists have been contemplated and/or put into effect, including proposed limits on cruise ships and cruise passengers, which could limit the itinerary and destination options we can offer our passengers going forward.
Increased demand and competition for key ports of call or destinations, limitations on the availability or feasibility of use of specific ports of call and/or constraints on the availability of shore excursions and other service providers at such ports or destinations could adversely affect our operations and financial results.
We may lose business to competitors throughout the vacation market.
We operate in the vacation market and cruising is one of many alternatives for people choosing a vacation. We, therefore, risk losing business not only to other cruise lines, but also to other vacation operators, which provide other leisure options, including hotels, resorts, internet-based alternative lodging sites and package holidays and tours.
We face significant competition from other cruise lines on the basis of cruise pricing, travel advisor preference and also in terms of the nature of ships, services and destinations that we offer to guests. Our revenues are sensitive to the actions of other cruise lines in many areas including pricing, scheduling, capacity and promotions, which can have a substantial adverse impact not only on our revenues, but also on overall industry revenues.
In the event that we do not effectively market or differentiate our cruise brands from our competitors or otherwise compete effectively with other vacation alternatives and new or existing cruise companies, our results of operations and financial position could be significant.adversely affected.
If we are unable to satisfyappropriately manage our cost and capital allocation strategies with our goal of satisfying guest expectations, it may adversely impact our business success.
We strive to provide high quality products and deliver high quality services. There can be no assurance that we can successfully balance these goals with our cost management and capital allocation strategies. Our business also requires us to make capital allocation decisions across a broad scope of investment options with varying return profiles and time horizons for value realization. These include significant capital investment decisions such as ordering new ships, upgrading our existing fleet, enhancing our technology and/or data capabilities and expanding our portfolio of land-based assets, based on expected market preferences, competition and projected demand. There can be no assurance that our strategies will be successful, which could adversely impact our business, financial condition and results of operations. For example, our ownership and operation of older tonnage, in particular during the requirementsbusiness disruption caused by COVID-19, has resulted in impaired asset values due to expected returns less than the carrying value of the Conditional Orderassets.
Our attempts to expand our operationsbusiness into new markets and new ventures may not be negatively impacted and we could be exposed to reputational and legal risks. Due to the unprecedented and uncertain nature of the COVID-19 pandemic and CDC or Department of State guidance, it is difficult to predict the impact of further disruptions and their magnitude. The impact of further disruptions may depend on how they coincide with the timing of when wesuccessful.
We opportunistically seek to resume sailing. In addition, we have never previously experienced a complete cessationgrow our business through, among other things, expansion into new destinations or source markets and establishment of our cruising operations, and as a consequence, our ability to predict the impact of such a cessation on our brands and future prospects is limited and such impact is uncertain.
Results of Operations: Our suspensions of sailings have materially impacted the results of our operations. We have incurred and will continue to incur significant costs associated with cancellations as we accommodate passengers with refunds and future cruise credits; as well as continuing to assist our crew with their return home, food, housing, and medical needs. In addition, although cruise operations are currently suspended, we have incurred and will likely continue to incur significant overhead costs associated with layup of our fleet and enhanced COVID-19 related sanitation procedures. As we cannot control adverse media coverage and we cannot predict exactly when we will resume sailing operations, we are experiencing and may continue to experience weak demand for cruising for an indeterminable length of time and we cannot predict when we will return to pre-outbreak demand or fare pricing or if we will return to such levels in the foreseeable future. In turn, these negative impactsnew ventures complementary to our financial performance have resulted and may continuecurrent offerings. These attempts to result in impairments ofexpand our long-lived and intangible assets, which has influenced our decision making relating to early disposal, sale or retirement of assets. For the twelve months ended December 31, 2020, we incurred impairment charges and credit losses of $1.6 billion related to the impairment of goodwill and trademarks and trade names attributable to our Silversea Cruises reporting unit, and long-lived assets as well as credit losses on mostly receivables related to our sale of property and equipment. Following the resumption of operations, our Global Brands and our Partner Brands may be subject to the continued impact of the COVID-19 pandemic. Our Partner Brands, TUI Cruises and Hapag-Lloyd Cruises, resumed limited cruise operations outside of the U.S. in July 2020 with cruises of short durations, with reduced occupancies and with limited or no ports of call. Additionally, any future profitability will be impacted by increased debt service costs as a result of our liquidity actions.
Liquidity: The suspension of our sailings and the reduction in demand for future cruising has adversely impacted our liquidity as we have experienced a significantbusiness increase in refunds of customer deposits while cash inflows from new or existing bookings on future sailings has reduced sharply. As a result, we have taken actions to increase our liquidity through a combination of capital and operating expense reductions and financing activities. During the year ended December 31, 2020, we executed and amended various financing arrangements, which have resulted in $10.2 billion of incremental liquidity, including:
a $0.6 billion increase in the capacity available under our revolving credit facilities;
additional liquidity of $6.7 billion through the issuance of new debt, net of repayments, and the securing of a one-year $700 million commitment for a 364-day term loan facility;
£300.0 million, or $409.9 million, based on exchange rates as of December 31, 2020, of available and issued liquidity under an unsecured government commercial paper program with the Bank of England;
the deferral of $0.9 billion of existing debt amortization under our export-credit backed ship debt facilities through April 2021; and
the issuance of 22.6 million shares of common stock for approximately $1.6 billion
We also agreed with certain of our lenders that we will not pay dividends or engage in stock repurchases until the end of the third quarter of 2022. Thereafter, in the event we declare a dividend or engage in stock repurchases we will need to repay the amounts deferred under our export credit facilities. On August 24, 2020, Moody’s downgraded our senior unsecured rating from Ba2 to B2, and on August 31, 2020, S&P Global downgraded our senior unsecured rating from BB to B+. On August 24, 2020, Moody’s also downgraded the Silversea Notes from Baa3 to Ba2 and on August 31, 2020, S&P downgraded Silversea Cruises' Notes from BBB- to BB and, as a result, certain covenants of the indenture governing the Silversea Notes have been reinstated. These downgrades reduce our ability to incur secured indebtedness by reducing the amount of indebtedness that we are permitted to secure, and may negatively impact our access to, and cost of debt financing. On February 25, 2021, S&P Global further downgraded our senior unsecured rating from B+ to B, and downgraded our $3.32 billion Senior Secured Notes and Silversea Notes from BB to BB-. This downgrade has no further impact on the terms of the notes. As of December 31, 2020, we obtained an interim debt service deferral and financial covenant holiday under certain of our export-credit backed loan facilities to generate a cumulative $0.9 billion of incremental liquidity during the 12 month period ended April 2021 which is to be repaid

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over a period of four years after the 12-month deferral period. During the first quarter of 2021, we amended our export credit facilities to defer $0.8 billion of amortization payments due under these export facilities. The deferred amounts will be repayable semi-annually over a five-year period starting in April 2022. Our ability to raise additional financing, whether or not secured, could be limited if our credit rating is further downgraded, and/or if we fail to comply with applicable covenants governing our outstanding indebtedness, and/or if overall financial market conditions worsen. Additionally, due to the complexity of the pandemic’s impact to the economyour business, require significant levels of investment and uncertainty of its duration, we cannot guarantee that assumptions used to projectcan strain our liquidity needs will be correct, which may result in the need for additional financing and/or may result in the inability to satisfy covenants required by our current credit facilities. If we continue to raise additional funds through equity or convertible debt issuances, our shareholders could experience dilution of their ownership interest,management, personnel, operations and these securities could have rights, preferences, and privileges that are superior to that of holders of our ordinary shares. If we raise additional funds by issuing debt, we may be subject to additional limitations on our operations due to restrictive covenants, which may be more restrictive than the covenants in our existing debt agreements, and we may be required to further encumber our assets. Also, as a result of our additional debt issuances, we will require a significant amount of cash to service our debt and sustain operations. Our ability to generate cash depends on factors beyond our control andsystems. In addition, we may be unable to repayexecute our attempts to expand our business. There can be no assurance that these business expansion efforts will develop as anticipated or repurchase debt at maturity. If adequate funds arethat we will succeed, and if we do not, available on acceptable terms, or at all, we may be unable to fundrecover our investment, which could adversely impact our business, financial condition and results of operations.
Risks associated with our development and operation of key land-based destination projects may adversely impact our business or results of operations.
We have invested, either directly or indirectly through joint ventures and partnerships, in a growing portfolio of key land-based projects including port and terminal facilities, private destinations and multi-brand destination projects. These investments can increase our exposure to certain key risks depending on the scope, location, and the ownership and management structure of these projects. These risks include susceptibility to weather events, exposure to local political/regulatory developments and policies, logistical challenges and human resource and labor risks and safety, environmental, and health risks, including challenges posed by the COVID-19 pandemic and its effects locally where we have these projects and relationships.
Our reliance on travel advisors to sell and market our cruises exposes us to certain risks which could adversely impact our business.
We rely on travel advisors to generate bookings for our ships. Accordingly, we must maintain competitive commission rates and incentive structures. If we fail to offer competitive compensation packages or fail to maintain our relationships, these agencies may be incentivized to sell cruises offered by our competitors, which could adversely impact our operating results. Our reliance on third-party sellers is particularly pronounced in certain markets. In addition, the travel advisor community is sensitive to economic conditions that impact discretionary income of consumers. Significant disruptions, such as those caused by the COVID-19 pandemic, or contractions in the industry could reduce the number of travel advisors available for us to market and sell our cruises, which could have an adverse impact on our financial condition and results of operations. Additionally, the strength of our recovery from suspended operations could be delayed if we are not aligned and partnered with key travel advisors.
Business activities that involve our co-investments with third parties may subject us to additional risks.
Partnerships, joint ventures and other business structures involving our co-investments with third parties generally include some form of shared control over the operations of the business and create additional risks, including the possibility that other investors in such ventures become bankrupt or otherwise lack the financial resources to meet their obligations or could have or develop business interests, policies or objectives that are inconsistent with ours. In addition to financial risks, our co-investment activities have also presented managerial and operational risks and expose us to reputational or legal concerns. These or other issues related to our co-investments with third parties could adversely impact our operations or respondliquidity. Further, due to competitive pressures, anythe arrangements we have in place with our partners in these ventures, we are limited in our ability to control the strategy of these ventures, or their use of capital and other key factors to their results of operation, which could negativelyadversely affect our investments and impact our results of operations.


Past or pending business acquisitions or potential acquisitions that we may decide to pursue in the future carry inherent risks which could adversely impact our financial performance and condition.
The Company, from time to time, has engaged in acquisitions and may pursue acquisitions in the future, which are subject to, among other factors, the Company’s ability to identify attractive business opportunities and to negotiate favorable terms for such opportunities. Accordingly, the Company cannot make any assurances that potential acquisitions will be completed timely or at all, or that if completed, we would realize the anticipated benefits of such acquisitions. Acquisitions also carry inherent risks such as, among others: (i) the potential delay or failure of our efforts to successfully integrate business processes and realizing expected synergies; (ii) difficulty in aligning procedures, controls and/or policies; and (iii) future unknown liabilities and costs that may be associated with an acquisition. In addition, acquisitions may adversely impact our liquidity and/or debt levels, and the recognized value of goodwill and other intangible assets can be negatively affected by unforeseen events and/or circumstances, which may result in an impairment charge. Any of the foregoing events could adversely impact our financial condition and results of operations.
We rely on supply chain vendors and third-party service providers who are integral to the operations of our businesses. These vendors and service providers may be unable or unwilling to deliver on their commitments or may act in ways that could harm our business.
We rely on supply chain vendors to deliver key products to the operations of our businesses around the world. Any event impacting a vendor’s ability to deliver goods of the expected quality at the location and time needed could negatively impact our ability to deliver our cruise experience. Events impacting our supply chain could be caused by factors beyond the control of our suppliers or us, including inclement weather, natural disasters, new laws and regulations, labor actions, increased demand, problems in production or distribution, cybersecurity events, and/or disruptions in third-party logistics or transportation systems, including those caused by the COVID-19 pandemic. Any such interruptions to our supply chain could increase our costs and could limit the availability of products critical to our operations. In addition, increased regulation or stakeholder expectations regarding sourcing practices, or supplier conduct that does not meet such standards, could cause our operating costs to increase or result in publicity that negatively affects our reputation.
In order to achieve cost and operational efficiencies, we outsource to third-party vendors certain services that are integral to the operations of our global businesses, such as our onboard concessionaires, certain of our call center operations, guest port services, logistics distribution and operation of a large part of our information technology systems. We are subject to the risk that certain decisions are subject to the control of our third-party service providers and that these decisions may adversely affect our activities. A failure to adequately monitor a third-party service provider’s compliance with a service level agreement or regulatory or legal requirements could result in significant economic and reputational harm to us. There is also a risk the confidentiality, privacy and/or security of data held by third parties or communicated over third-party networks or platforms could become compromised.
The potential unavailability of insurance coverage, an inability to obtain insurance coverage at commercially reasonable rates or our failure to have coverage in sufficient amounts to cover our incurred losses may adversely affect our financial condition or results of operations.
We seek to maintain appropriate insurance coverage at commercially reasonable rates. We normally obtain insurance based on the cost of an asset rather than replacement value, and we also elect to self-insure, co-insure, or use deductibles in certain circumstances for certain risks such as loss of use of a ship or other business interruption. The limits of insurance coverage we purchase are based on the availability of the coverage, evaluation of our risk profile and cost of coverage. We do not carry business interruption insurance and accordingly we have no guaranteeinsurance coverage for loss of revenues or earnings from our ships or other operations. Accordingly, we are not protected against all risks and cannot be certain that financingour coverage will be adequate for liabilities actually incurred which could result in an unexpected decrease in our revenue and results of operations in the event of an incident
We are members of four Protection and Indemnity (“P&I”) clubs, which are part of a worldwide group of 12 P&I clubs, known as the International Group of P&I Clubs (the “IG”). P&I coverage provided by the clubs is on a mutual basis, and we are subject to additional premium calls in the event of a catastrophic loss incurred by any member of the 12 P&I clubs, whereby the reinsurance limits purchased by the IG are exhausted. We are also subject to additional premium calls based on investment and underwriting shortfalls experienced by our own individual insurers.
We cannot be certain that insurance and reinsurance coverage will be available to us and at commercially reasonable rates in the future or at all or, if available, that such financingit will be available with similar terms or terms that are commercially acceptablesufficient to us. Further,cover potential claims. Additionally, if any government agrees to provide us with disaster relief assistance,we or other assistance dueinsureds sustain significant losses, the result may be higher insurance premiums, cancellation of coverage, or the inability to the impactsobtain coverage. Such events could adversely affect our financial condition or results of the COVID-19 pandemic,operations.
Disruptions in our shoreside or shipboard operations or our information systems may adversely affect our results of operations.
Our principal executive office and principal shoreside operations are located in Florida, and we determine it is beneficial to seek such government assistance, ithave shoreside offices throughout the world. Actual or threatened natural disasters (e.g., hurricanes/typhoons, earthquakes, tornadoes, fires or floods),
municipal lockdowns, curfews, quarantines, or similar events in these locations may impose restrictionshave a material impact on executive compensation, share buybacks, dividends, prepaymentour business continuity, reputation and results of debt and other restrictions until the aid is repaidoperations. In addition, substantial or redeemed in full, whichrepeated information system failures, computer viruses or cyber attacks impacting our shoreside or shipboard operations could significantly limit our corporate activities and adversely impact our business. We do not generally carry business interruption insurance for our shoreside or shipboard operations or our information systems. As such, any losses or damages incurred by us could have an adverse impact on our results of operations.
Provisions of our Articles of Incorporation, By-Laws and operations. Liberian law could inhibit a change of control and may prevent efforts by our shareholders to change our management.
Certain provisions of our Articles of Incorporation and By-Laws and Liberian law may inhibit third parties from effectuating a change of control of the Company without approval from our board of directors which could result in the entrenchment of current management. These include provisions in our Articles of Incorporation that prevent third parties, other than A. Wilhelmsen AS and Cruise Associates and their permitted transferees, from acquiring beneficial ownership of more than 4.9% of our outstanding shares without the consent of our board of directors.
We cannot assure youmay not be able to achieve our fiscal 2025 financial and climate-related performance goals.
In November 2022, we announced that any more such disaster relief wouldwe are targeting certain financial and climate-related performance goals for fiscal 2025. Our ability to achieve these goals is dependent on a number of factors, including the other risk factors described in this section. If we are not able to achieve these goals, the price of our common stock and reputation may be available to us.negatively affected.
Financial Risks
We may not be able to obtain sufficient financing or capital for our needs or may not be able to do so on terms that are acceptable or consistent with our expectations.
To fund our capital expenditures (including new ship orders), operations and scheduled debt payments, we have historically relied on a combination of cash flows provided by operations, drawdowns under available credit facilities, the incurrence of additional indebtedness and the sale of equity or debt securities in private or public securities markets. Any circumstance or event which leads to a decrease in consumer cruise spending, such as worsening global economic conditions or significant incidents impacting the cruise industry, includingsuch as the COVID-19 pandemic, negatively affects our operating cash flows and currently, we have no cash flows from operations. In the caseflows. As result of the COVID-19 pandemic and the resulting suspension of our operations, these circumstanceswe have also resulted inexperienced credit rating downgrades. See “—Adverse worldwide economic or other conditions could result in prolonged reduction indowngrades, which have reduced our ability to incur secured indebtedness by reducing the demand for cruisesamount of indebtedness that we are permitted to secure, and passenger spending, adversely impacting our operating results, cash flows and financial condition including potentially impairing the value of our goodwill, ships, trademarks and other assets and potentially affecting other critical accounting estimates where the change may be material to our operating results” and “—Incidents on ships, at port facilities, land destinations and/or affecting the cruise vacation industry in general, and the associated negative media coverage and publicity, could affect our reputation andnegatively impact our salesaccess to, and resultscost of, operations” for more information.debt financing. Additionally, our ability to raise additional financing, whether or not secured, could be limited if our credit rating is further downgraded, and/or if we fail to comply with applicable covenants governing our outstanding indebtedness, and/or if overall financial market conditions worsen.
Our ability to access additional funding as and when needed, our ability to timely refinance and/or replace our outstanding debt securities and credit facilities on acceptable terms and our cost of funding will depend upon numerous factors including, but not limited to, the strength of the financial markets, global market conditions, including inflationary pressures, interest rate fluctuations, our recovery and financial performance, the recovery and performance of our industry in general and the size, scope and timing of our financial needs. In addition, even where financing commitments have been secured, significant disruptions in the capital and credit markets could cause our banking and other counterparties to breach their contractual obligations to us or could cause the conditions to the availability of such funding not to be satisfied. This could include failures of banks or other financial service companies to fund required borrowings under our loan agreements or to pay us amounts that may become due or return collateral that is refundable under our interest rate derivative contracts for hedging of fuel prices, interest rates and foreign currenciesinstruments or other agreements. If any of the foregoing occurs for a prolonged period of time it will have a long-term negative impact on our cash flows and our ability to meet our obligations cannot be guaranteed.financial obligations.
Our substantial debt requires a significant amount of cash to service and could adversely affect our financial condition.
We have a substantial amount of debt and significant debt service obligations. As of December 31, 2020,2022, we had total debt of $18.9$23.4 billion. Our substantial debt could have important negative consequences for us. For example, our substantial debt could requirehas required us to dedicate a large portion of our cash flow from operations to service debt and fund repayments on our debt, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes; increase our vulnerability to adverse general economic or industry conditions; limit our flexibility in planning for, or reacting to, changes in our business or the industry in which we operate; place us at a competitive disadvantage compared to our

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competitors that have less debt; make us more vulnerable to downturns in our business, the economy or the industry in which we operate, including the current downturn related to COVID-19; limit our ability to raise additional debt or equity capital in the future to satisfy our requirements relating to working capital, capital expenditures, development projects, strategic initiatives or other purposes; restrict us from making strategic acquisitions, introducing new technologies or exploiting business opportunities; limit or restrict our ability to obtain and maintain performance bonds to cover our financial responsibility requirements in various jurisdictions for non-performance of guest travel, casualty and personal injury; make it difficult for us to satisfy our obligations with respect to our debt; and increase our exposure to the risk of increased interest rates as certain of our borrowings are (and may be in the future) at a variable rate of interest.
Despite our leverage, we may incur more debt, which could adversely affect our business.
We may incur substantial additional debt in the future. Except for the restrictions under the indentures governing our Secured Notes (as defined below) and our 9.125% Senior Guaranteed Notes due 2023 (the “Unsecured Notes”) and certain of our other debt instruments, including our unsecured bank and export credit facilities, we are not restricted under the terms of our debt instruments from incurring additional debt. Although the indentures governing the Secured Notes, the Unsecured Notes, and certain of our other debt instruments, including our unsecured bank and export credit facilities, contain restrictions on the incurrence of additional debt, these restrictions are subject to a number of significant qualifications and exceptions, and under certain circumstances the amount of debt that could be incurred in compliance with these restrictions could be substantial. Our debt instruments do not and will not prevent us from incurring liabilities that do not constitute “Indebtedness” as defined therein. In the event that we execute and borrow under the $700M Liquidity Facility, the credit agreement that would govern the $700M Liquidity Facility would impose substantially similar restrictions (including the related qualifications and exceptions) as are set forth in the indenture governing the Unsecured Notes. If new debt is added to our existing debt levels, the related risks that we now face would increase. As of December 31, 2020, we have commitments for approximately $11.6 billion of debt to finance the purchase of 11 ships on order by our Royal Caribbean International, Celebrity Cruises and Silversea Cruises brands, 10 of which are guaranteed by the export credit agencies in the countries in which the ships are being built. The ultimate size of each facility will depend on the final contract price (including change orders and owner’s supply) as well as fluctuations in the EUR/USD exchange rate.
The terms of existing debt financing gives, and any future preferred equity or debt financing may give, holders of any preferred securities or debt securities rights that are senior to rights of our common shareholders or impose more stringent operating restrictions on our company.
The holders of our existing debt have rights, preferences and privileges senior to those of holders of our common stock in the event of liquidation. If we incur additional debt or raise equity through the issuance of preferred stock or convertible securities, the terms of the debt or the preferred stock issued may give the holders rights, preferences and privileges senior to those of holders of our common stock, particularly in the event of liquidation. The terms of the debt may also impose additional and more stringent restrictions on our operations. If we raise funds through the issuance of additional equity, the ownership percentage of our existing shareholders would be diluted. Debt or equity financing may not be available to us on acceptable terms.
We will require a significant amount of cash to service our debt and sustain our operations. Our ability to generate cash depends on many factors beyond our control, and we may not be able to generate cash required to service our debt.expenses.
Our ability to make future scheduled payments on our debt service obligations or refinance our debt depends on our future operating and financial performance and ability to generate cash. This will be affected by our ability to successfully implement our business strategy, as well as general economic, financial, competitive, regulatory and other factors beyond our control, such as the disruption caused by the COVID-19 pandemic. If we cannot generate sufficient cash to meet our debt service obligations or fund our other business needs, we may, among other things, need to refinance all or a portion of our debt, obtain additional financing, delay planned capital expenditures or sell assets. We cannot assure you that we will be able to generate sufficient cash through any of the foregoing. If we are not able to refinance any of our debt, obtain additional financing or sell assets on commercially reasonable terms or at all, we may not be able to satisfy our obligations with respect to our debt.
Our substantial debt could also result in other negative consequences for us. For example, it could increase our vulnerability to adverse general economic or industry conditions; limit our flexibility in planning for, or reacting to, changes in our business or the industry in which we operate; place us at a competitive disadvantage compared to our competitors that have less debt; make us more vulnerable to downturns in our business, the economy or the industry in which we operate; limit our ability to raise additional debt or equity capital in the future to satisfy our requirements relating to working capital, capital expenditures, development projects, strategic initiatives or other purposes; restrict us from making strategic acquisitions, introducing new technologies or exploiting business opportunities; limit or restrict our ability to obtain and maintain performance bonds to cover our financial responsibility requirements in various jurisdictions for non-performance of guest travel, casualty and personal injury; make it difficult for us to satisfy our obligations with respect to our debt; and increase our exposure to the risk of increased interest rates as certain of our borrowings are (and may in the future be) at a variable rate of interest.
Despite our leverage, we may incur more debt, which could adversely affect our business.
We may incur substantial additional debt in the future. Except for the restrictions under the indentures governing our Secured Notes, our Priority Guaranteed Notes, and certain of our other debt instruments, including our unsecured bank and export credit facilities, we are not restricted under the terms of our debt instruments from incurring additional debt. Although the indentures governing the Secured Notes, the Priority Guaranteed Notes, and certain of our other debt instruments, including our unsecured bank and export credit facilities, contain restrictions on the incurrence of additional debt, these restrictions are subject to a number of significant qualifications and exceptions, and under certain circumstances the amount of debt that could be incurred in compliance with these restrictions could be substantial. If new debt is added to our existing debt levels, the related risks that we now face would increase. Additionally, there is no guarantee that financing will be available in the future or that such financing will be available with similar terms or terms that are commercially acceptable to us. As of December 31, 2022, we have commitments for approximately $7.1 billion of debt to finance the purchase of 7 ships on order by our Royal Caribbean International, Celebrity Cruises and Silversea Cruises brands, all of which are guaranteed by the export credit agencies in the countries in which the ships are being built. The ultimate size of each facility will depend on the final contract price (including change orders and owner’s supply) as well as fluctuations in the EUR/USD exchange rate. Refer to Note 8. Debt to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for further information regarding our "Secured Notes" and "Priority Guaranteed Notes".
We are subject to restrictive debt covenants that may limit our ability to finance our future operations and capital needs and to pursue business opportunities and activities. In addition, if we fail to comply with any of these restrictions, it could have a material adverse effect on us.
Certain of our debt instruments, including our indentures and our unsecured bank and export credit facilities, limit our flexibility in operating our business. For example, certain of our loan agreements and indentures restrict or limit our and our subsidiaries’ ability to, among other things:things, incur or guarantee additional indebtedness; pay dividends or distributions on, or redeem or repurchase capital stock and make other restricted payments; make investments; consummate certain asset sales; engage in certain transactions with affiliates; grant or assume certain liens; and consolidate, merge or transfer all or substantially all of our assets. BothIn addition, both our export credit facilities and our non-export credit facilities contain covenants that require

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us, among other things, to maintain a minimum liquidity, a specified minimum fixed charge coverage ratio, of at least 1.25x and limit our net debt-to-capital ratioratio. In addition, our ECA facilities also require us to no more than 62.5%.maintain a minimum stockholders' equity. Refer to Note 98. Debtto our consolidated financial statements under Item 1.8. Financial Statements and Supplementary Data for further discussion on our covenants and existing waivers.
On August 24, 2020, Moody’s downgraded the Silversea Notes from Baa3 to Ba2 and on August 31, 2020, S&P Global downgraded Silversea Cruises' Notes from BBB- to BB and as a result, certain covenants of the indenture governing the Silversea Notes have been reinstated, the application of which had been previously suspended unless and until any such downgrade occurred. The reinstated covenants include, among other things, limitations on the ability of Silversea Cruises and its restricted subsidiaries to incur indebtedness, enter into transactions with affiliates (including Royal Caribbean and its subsidiaries that are not restricted subsidiaries of Silversea Cruises) and pay dividends and make other distributions from Silversea Cruises to Royal Caribbean, each of which may limit our ability to obtain funding and may decrease our operational and financial flexibility, including the ability to make upstream payments from Silversea Cruises and to provide funding support to Silversea Cruises. On February 25, 2021, S&P Global further downgraded the Silversea Cruises’ Notes from BB to BB-, which had no further impact with respect to the Silversea Cruises’ Notes. The Silversea Notes are guaranteed by the Company on a senior unsecured basis. Any event of default or acceleration of the indebtedness under the Silversea Notes could cause the borrowings under other of our debt instruments that contain cross-default provisions to be accelerated or become payable on demand.
All of these limitations are subject to significant exceptions and qualifications. Despite these exceptions and qualifications, we cannot assure you that the operating and financial restrictions and covenants in certain of our debt instruments will not adversely affect our ability to finance our future operations or capital needs or engage in other business activities that may be in our interest. Any future indebtedness may include similar or other restrictive terms.terms and we may be required to further encumber our assets. In addition, our ability to comply with these covenants and restrictions may be affected by events beyond our control. These include prevailing economic, financial and industry conditions. If we breach any of these covenants or restrictions, we could be in default under such indebtedness and certain of our other debt instruments, and the relevant debt holders or lenders could elect to declare the debt, together with accrued and unpaid interest and other fees, if any, immediately due and payable and proceed against any collateral securing that debt. If the debt under certain of our debt instruments that we enter into were to be accelerated, our liquid assets may be insufficient to repay in full such indebtedness. Borrowings under other debt instruments that contain cross-default provisions also may be accelerated or become payable on demand. In these circumstances, our assets may not be sufficient to repay in full that indebtedness and our other indebtedness then outstanding.
In addition, our ability to maintain our credit facilities may also be impacted by changes in our ownership base. More specifically, we may be required to prepay our bank financingnon-ECA and ECA facilities 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. 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, which would require us to offer to repurchase our public debt securities in the event of such change of control.
If we elect to settle conversions of our convertible notes if any, in shares of our common stock or a combination of cash and shares of our common stock, conversions of our convertible notes maywill result in substantialdilution for our existing shareholders. Furthermore, new equity or convertible debt issuances will also result in dilution for our existing shareholders.
In 2020, we issuedWe have an aggregate principal amount of $1.725$1.7 billion in convertible notes. The notes are convertibleoutstanding. If note holders elect to convert, the notes will be converted into our 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 13.8672 and 12.1212 shares of our common stock for our June and October 2020 issuances of convertible notes, respectively, which is equivalent to an initial conversion price of approximately $72.11 and $82.50 per share, respectively, subject to adjustment in certain circumstances. In connection with certain corporate events or if we issue a notice of tax redemption, we will, under certain circumstances, increase the conversion rate for holders of the convertible notes who convert their convertible notes in connection with such corporate event or whose convertible notes are called for tax redemption and who convert their convertible notes during the relevant redemption period.discretion. Prior to March 15, and2023, August 15, 2023, theand May 15, 2025, our convertible notes issued in June 2020, October 2020, and October convertible notes,August 2022, respectively, will be convertible at the option of holders during certain periods only upon satisfaction of certain conditions. Beyond those dates, 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. If we elect to settle conversionsConversions of our convertible notes if any, ininto shares of our common stock or a combination of common stock and cash, conversions of our convertible notes maywill result in significant dilution to our shareholders. Additionally, if we raise additional funds through equity or convertible debt issuances, our shareholders could experience dilution of their ownership interest, and these equity or convertible debt securities could have rights, preferences, and privileges that are superior to that of holders of our common stock.
We did not declare quarterly dividends on our common stock in the quartersquarter ended June 30, 2020, September 30, 2020 and December 31, 20202022 and do not expect to pay dividends on our common stock for the foreseeable future.
No cash dividends wereWe have not declared on our common stock duringa dividend since the quarters ended June 30, 2020, September 30, 2020 and December 31,first quarter of 2020. We expect that any income received from operations will be devoted to our future operations and recovery.

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We do not expect to pay cash dividends on our common stock for the foreseeable future due to our agreement with certain of our lenders not to pay dividends until the end of the third quarter 2022.future. In addition, in the event we thereafter declare a dividend, we will need to repay our Debt Deferral.amounts deferred under the export credit facilities. Payment of dividends would, in any case, depend upon our profitability at the time, cash available for those dividends, and other factors as our board of directors may consider relevant.
Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly
AIncreased regulatory oversight, and the phasing out of LIBOR may adversely affect the value of a portion of our indebtedness bears interest at variable rates that are linked to changing market interest rates. As a result, an increase in market interest rates would increase our interest expense and our debt service obligations. As of December 31, 2020, we had approximately $7.1 billion of indebtedness that bears interest at variable rates. This amount represented approximately 35.5% of our total indebtedness. As of December 31, 2020, a hypothetical 1% increase in prevailing interest rates would increase our forecasted 2021 interest expense by approximately $59.4 million.
In addition, on July 27, 2017, the United Kingdom’s Financial Conduct Authority, which regulates the London Interbank Offered Rate (“LIBOR”), announced that it will no longer persuade or compel banks to submit LIBOR rates after 2021. Also in 2017, the Alternative Reference Rates Committee, a steering committee comprised of, among other entities, large U.S. financial institutions, selected the Secured Overnight Financing Rate (“SOFR”) as the rate recommended to replace U.S. dollar LIBOR ("USD LIBOR"). SOFR measures the cost of borrowing cash overnight, backed by U.S. Treasury securities. SOFR is observed and backward-looking, which stands in contrast with LIBOR under the current methodology, which is an estimated forward-looking rate and relies, to some degree, on the expert judgment of submitting panel members. On December 4, 2020, ICE Benchmark Administration, the administrator of LIBOR, released a consultation disclosing its intent to ceaseThe publication of one-week and two-month USDcertain LIBOR settings ceased after December 31, 2021, but continue to publish the remaining tenors of USD LIBOR for an additional 18 months, through June 30, 2023. These remaining tenors of USD LIBOR—overnight, one-month, three-month, six-month and 12-months—encompass the tenors referenced in our borrowings and interest rate swaps. U.S. regulators continue to encourage banks to cease entering into new contracts that use USD LIBOR as auncertainty regarding alternative reference rate by December 31, 2021. However, uncertaintyrates remains as many market participants await a wider adoption of replacement products prior to the developmentcessation of term SOFR products, i.e., forward-looking rates, and benchmark providers are developing indices that might co-exist with SOFR. Ifthe remaining USD LIBOR tenors (currently scheduled for June 30, 2023). When LIBOR ceases to exist, the level of interest payments on the portion of our indebtedness that bears interest at variable rates wouldmight be affected which may materially impact the amount of our interest payments under such debt. Further, if we, the agent, and/or the lenders holding a majority of the outstanding loans or commitments under such indebtedness determine that a LIBOR rate is no longer available, that a specific date has been announced after which a LIBOR rate will no longer be made available, or that syndicated loans are being executed or amended to adopt a replacement rate, then the terms of such indebtedness will allow us and the applicable agentfail to amend such indebtedness to implement a replacement rate, subject to the negative consent of the lenders holding a majority of the outstanding loans or commitments. Suchrate. Regardless, such replacement rate will give due consideration to any evolving or then-existing conventions for similar credit facilities, which may result in different than expected interest payments.
Macroeconomic, Business, Market and Operational Risks
Adverse worldwide economic or other conditions could reduce the demand for cruises and passenger spending, adversely impacting our operating results, cash flows and financial condition including impairing the value of our goodwill, ships, trademarks and other assets and potentially affecting other critical accounting estimates where the change may be material to our operating results.
In addition to health and safety concerns, demand for cruises is affected by international, national, and local economic conditions. Weak or uncertain economic conditions may impact consumer confidence and pose a risk as vacationers postpone or reduce discretionary spending. This, in turn, may result in cruise booking slowdowns, decreased cruise prices and lower onboard revenues, even after the COVID-19 pandemic has ended and/or related health and safety concerns are reduced. Given the global nature of our business, we are exposed to many different economies and our business could be hurt by challenging conditions in any of our markets. Any significant deterioration of international, national, or local economic conditions, including those resulting from geopolitical events and/or international disputes and the current economic and employment impact of the COVID-19 pandemic in countries where many of our customers reside could result in a prolonged period of booking slowdowns, depressed cruise prices and/or reduced onboard revenues, even after the COVID-19 pandemic has ended and/or related health and safety concerns are reduced. Additionally, the continued impact of COVID-19 on the financial markets is complicated and we cannot predict its effect on geopolitical events and/or international trade policies as countries attempt to mitigate the impact of the pandemic and as they re-open their economies or re-implement lockdown measures. Additionally, uncertainties resulting from the United Kingdom’s recent exit from the European Union may impact our business.
Our operating costs could increase due to market forces and economic or geopolitical factors beyond our control.
Our operating costs, including fuel, food, payroll and benefits, airfare, taxes, insurance, and security costs, are all subject to increases due to market forces and economic or geopolitical conditions or other factors beyond our control, including as a

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result of rerouting itineraries due to ports closing or not accepting passengers in connection with the COVID-19 pandemic. Increases in these operating costs could adversely affect our future profitability when an economic recovery begins.
Any further impairment of our goodwill, long-lived assets, equity investments and notes receivable could adversely affect our financial condition and operating results.
We evaluate goodwill for impairment on an annual basis, or more frequently when circumstances indicate that the carrying value of a reporting unit may not be recoverable. A challenging operating environment, such as is currently being experienced under the impact of COVID-19, impacts affecting consumer demand or spending, the deterioration of general macroeconomic conditions, or other factors could result in a change to the future cash flows we expect to derive from our operations. Reductions of cash flows used in the valuation analyses may result in the recording of an impairment charge to a reporting unit’s goodwill. During the twelve months ended December 31, 2020, we recognized a Silversea Cruises’ goodwill impairment loss of $576.2 million. See Note 5. Goodwill to our consolidated financial statements under Item 1. Financial Statements for further information.
Price increases for commercial airline service for our guests or major changes or reduction in commercial airline service and/or availability could adversely impact the demand for cruises and undermine our ability to provide reasonably priced vacation packages to our guests.
Many of our guests depend on scheduled commercial airline services to transport them to or from the ports where our cruises embark or disembark. Increases in the price of airfare would increase the overall price of the cruise vacation to our guests, which may adversely impact demand for our cruises. In addition, changes in the availability and/or regulations governing commercial airline services, including those resulting from the COVID-19 pandemic, have adversely affected and could continue to adversely affect our guests’ ability to obtain air travel, as well as our ability to transfer our guests to or from our cruise ships, which could adversely affect our results of operations.
Fears of terrorist attacks, war, and other hostilities could have a negative impact on our results of operations.
Events such as terrorist attacks, war (or war-like conditions), conflicts (domestic or cross-border), civil unrest and other hostilities, including an escalation in the frequency or severity of incidents, and the resulting political instability, travel restrictions and advisories, and concerns over safety and security aspects of traveling or the fear of any of the foregoing have had, and could have in the future, a significant adverse impact on demand and pricing in the travel and vacation industry. In view of our global operations, we are susceptible to a wide range of adverse events. These events could also result in additional security measures taken by local authorities which may potentially impact access to ports and/or destinations.
Disease outbreaks and an increase in concern about the risk of illness could adversely impact our business and results from operations.
Disease outbreaks and increased concern related to illness when travelling to, from, and on our ships could cause a drop in demand for cruises, guest cancellations, travel restrictions, an unavailability of ports and/or destinations, cruise cancellations, ship redeployments and an inability to source our crew, provisions or supplies from certain places. Due to the complex and evolving nature of the COVID-19 pandemic we cannot predict the duration of the effect of the current pandemic, and the magnitude is dependent on the development of future events and responses from governments, other authorities, and individual consumers. Our industry, including our passengers and crew, may be subject to enhanced health and safety requirements in the future which may be costly and take a significant amount of time to implement across our fleet and we may be subject to concerns that cruises are susceptible to the spread of infectious diseases such as COVID-19. For example, local governments may establish their own set of rules for self-quarantines and/or require proof of individuals health status prior to or upon visiting. These effects may extend beyond any resolution of the current COVID-19 pandemic through the development of a vaccine or effective therapeutic treatment, and the impact of any of these factors could have a material adverse effect on our business and results of operations. In addition, the new operating protocols we are developing and any other health protocol we may develop or that may be required by law in the future in response to COVID-19 or other infectious diseases may be costly to implement and less effective than we expected in reducing the risk of infection and spread of such disease on our cruise ships, which will negatively impact our operations and expose us to reputational and legal risks.
Incidents on ships, at port facilities, land destinations and/or affecting the cruise vacation industry in general, and the associated negative media coverage and publicity, could affect our reputation and impact our sales and results of operations.
The ownership and/or operation of cruise ships, private destinations, port facilities and shore excursions involves the risk of accidents, illnesses, mechanical failures, environmental incidents and other incidents which may bring into question safety, health, security and vacation satisfaction and can negatively impact our sales, operations and reputation. Incidents involving cruise ships, and, in particular the safety, health and security of guests and crew and the media coverage thereof, including those related to the COVID-19 pandemic, have impacted and could continue to impact demand for our cruises and pricing in the industry. In particular, we cannot predict the impact on our financial performance and our cash flows required for cash refunds of deposits as a result of the pause in our global fleet cruise operations, which may be prolonged, and the public’s concern

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regarding the health and safety of travel, especially by cruise ship, and related decreases in demand for travel and cruising. Moreover, our ability to attract and retain guests and crew depends, in part, upon the perception and reputation of our company and our brands and the public’s concerns regarding the health and safety of travel generally, as well as regarding the cruising industry and our ships specifically. Our reputation and our business could also be damaged by continued or additional negative publicity regarding the cruise industry in general, including publicity regarding the spread of contagious disease such as COVID-19, over-tourism in key ports and destinations and the potentially adverse environmental impacts of cruising. The considerable expansion in the use of social and digital media over recent years has compounded the potential scope and reach of any negative publicity. In addition, incidents involving cruise ships may result in additional costs to our business, increasing government or other regulatory oversight and, in certain cases, potential litigation.
Significant weather, climate events and/or natural disasters could adversely impact our business and results from operations.
Natural disasters (e.g. earthquakes, volcanos, wild fires), weather and/or climate events (including hurricanes and typhoons) could impact our source markets and operations resulting in travel restrictions, guest cancellations, an inability to source our crew or our provisions and supplies from certain places. We are often forced to alter itineraries and occasionally cancel a cruise or a series of cruises or to redeploy our ships due to these types of events, which could have an adverse effect on our sales, operating costs and profitability in the current and future periods. Increases in the frequency, severity or duration of these types of events could exacerbate their impact and cause further disruption to our operations or make certain destinations less desirable or unavailable impacting our revenues and profitability further. Any of the foregoing could have an adverse impact on our results of operations and on industry performance.
Our reliance on shipyards, their subcontractors and our suppliers to implement our newbuild and ship upgrade programs and to repair and maintain our ships exposes us to risks which, if realized, could adversely impact our business.
We rely on shipyards, their subcontractors and our suppliers to effectively construct our new ships and to repair, maintain, and upgrade our existing ships on a timely basis and in a cost effective manner; and there are a limited number of shipyards with the capability and capacity to build, repair, maintain and/or upgrade our ships. As such, any disruptions effecting the newbuild or fleet modernization supply chain will adversely impact our business as there are limited substitutes.
The COVID-19 pandemic has led to suspensions and/or slowdowns of work at certain shipyards, which impacts our ability to construct new ships when and as planned, our ability to timely and cost-effectively procure new capacity, and our ability to execute scheduled drydocks and/or fleet modernizations. The effects of the COVID-19 pandemic on the shipyards, their subcontractors, and our suppliers have resulted in delays in our previously scheduled ship deliveries, which are currently under discussion with the shipyards. Variations from our plan could have a significant negative impact on our business operations and financial condition.
Building, repairing, maintaining and/or upgrading a ship is sophisticated work that involves significant risks. In addition, the prices of labor and/or various commodities that are used in the construction of ships can be subject to volatile price changes, including the impact of fluctuations in foreign exchange rates. Shipyards, their subcontractors, and/or our suppliers may encounter financial, technical or design problems when doing these jobs. If materialized, these problems could impact the timely delivery or costs of new ships or the ability of shipyards to repair and upgrade our fleet in accordance with our needs or expectations. In addition, delays, mechanical faults and/or unforeseen incidents may result in cancellation of cruises, or, in more severe situations, delays of new ship orders, or necessitate unscheduled drydocks. Such events could result in lost revenue, increased operating expenses, or both, and thus adversely affect our results of operations.
An increase in capacity worldwide or excess capacity in a particular market could adversely impact our cruise sales and/or pricing.
Although our ships can be redeployed, cruise sales and/or pricing may be impacted by the introduction of new ships into the marketplace, reductions in cruise capacity, overall market growth and deployment decisions of ourselves and our competitors. As of December 31, 2020, a total of 105 new ships with approximately 217,600 berths were on order for delivery through 2027 in the cruise industry, including 15 ships currently scheduled to be delivered to us. The further net growth in capacity from these new ships and future orders, without an increase in the cruise industry’s demand and/or share of the vacation market, could depress cruise prices and impede our ability to achieve yield improvement. Additionally, due to our global suspension of operations and the suspension of operations by other cruise operators, cruise prices and yield improvement are further at risk depending on how, when, and where global operations resume.
In addition, to the extent that we or our competitors deploy ships to a particular itinerary/region and the resulting capacity in that region exceeds the demand, we may lower pricing and profitability may be lower than anticipated. This risk exists in emerging cruise markets, where capacity has grown rapidly over the past few years and in mature markets where excess capacity is typically redeployed. Any of the foregoing could have an adverse impact on our results of operations, cash flows and financial condition, including potentially impairing the value of our ships and other assets.

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Unavailability of ports of call may adversely affect our results of operations.
We believe that port destinations are a major reason why guests choose to go on a particular cruise or on a cruise vacation. The availability of ports and destinations is affected by a number of factors, including industry demand and competition for key ports and destinations, existing capacity constraints, constraints related to the size of certain ships, security, financial limitations on port development, exclusivity arrangements that ports may have with our competitors, geopolitical developments and local governmental regulations; and in light of the COVID-19 pandemic, port availability could also be subject to immediate change depending on local and/or onboard disease outbreaks or other government restrictions as well as limited availability when sailing resumes. In addition, higher fuel costs may adversely impact the destinations we choose to call upon on certain of our itineraries as they become too costly to include.
Increased demand and competition for key ports of call or destinations, limitations on the availability or feasibility of use of specific ports of call and/or constraints on the availability of shore excursions and other service providers at such ports or destinations could adversely affect our results of operations.
We may lose business to competitors throughout the vacation market.
We operate in the vacation market and cruising is one of many alternatives for people choosing a vacation. We therefore risk losing business not only to other cruise lines, but also to other vacation operators, which provide other leisure options, including hotels, resorts, internet-based alternative lodging sites and package holidays and tours.
We face significant competition from other cruise lines on the basis of cruise pricing, travel agent preference and also in terms of the nature of ships, services and destinations that we offer to guests. Our principal competitors within the cruise vacation industry include Carnival Corporation & plc, which owns, among others, Aida Cruises, Carnival Cruise Line, Costa Cruises, Cunard Line, Holland America Line, P&O Cruises, Princess Cruises and Seabourn; Disney Cruise Line; MSC Cruises; and Norwegian Cruise Line Holdings Ltd, which owns Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises. Our revenues are sensitive to the actions of other cruise lines in many areas including pricing, scheduling, capacity and promotions, which can have a substantial adverse impact not only on our revenues, but on overall industry revenues.
In the event that we do not effectively market or differentiate our cruise brands from our competitors or otherwise compete effectively with other vacation alternatives and new or existing cruise companies, our results of operations and financial position could be adversely affected.
If we are unable to appropriately balance our cost management and capital allocation strategies with our goal of satisfying guest expectations, it may adversely impact our business success.
Our goals call for us to provide high quality products and deliver high quality services. There can be no assurance that we can successfully balance these goals with our cost management and capital allocation strategies. Our business also requires us to make capital allocation decisions across a broad scope of investment options with varying return profiles and time horizons for value realization. These include significant capital investment decisions such as ordering new ships, upgrading our existing fleet, enhancing our technology and/or data capabilities, and expanding our portfolio of land-based assets, based on expected market preferences, competition and projected demand. There can be no assurance that our strategies will be successful, which could adversely impact our business, financial condition and results of operations. For example, our ownership and operation of older tonnage, in particular during the business disruption caused by COVID-19, has resulted in impaired asset values due to expected returns that we will not be able to recover.
Our attempts to expand our business into new markets and new ventures may not be successful.
We opportunistically seek to grow our business through, among other things, expansion into new destinations or source markets and establishment of new ventures complementary to our current offerings. These attempts to expand our business increase the complexity of our business, require significant levels of investment and can strain our management, personnel, operations and systems. In addition, we have been unable to execute our attempts to expand our business as a result of the impacts of the COVID-19 pandemic, as described elsewhere herein. There can be no assurance that these business expansion efforts will develop as anticipated or that we will succeed, and if we do not, we may be unable to recover our investment, which could adversely impact our business, financial condition and results of operations.
Risks associated with our development and operation of key land-based destination projects may adversely impact our business or results of operations.
We have invested, either directly or indirectly through joint ventures and partnerships, in a growing portfolio of key land-based projects including port and terminal facilities, private destinations and multi-brand destination projects. These investments can increase our exposure to certain key risks depending on the scope, location, and the ownership and management structure of these projects. These risks include susceptibility to weather events, exposure to local political/regulatory developments and policies, logistical challenges and human resource and labor risks; in addition to location-specific

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safety, environmental, and health risks, including challenges posed by the COVID-19 pandemic and its effects locally where we have these projects and relationships.
Our reliance on travel agencies to sell and market our cruises exposes us to certain risks which, if realized, could adversely impact our business.
We rely on travel agencies to generate the majority of bookings for our ships. Accordingly, we must ensure that our commission rates and incentive structures remain competitive. If we fail to offer competitive compensation packages or fail to maintain our relationships, these agencies may be incentivized to sell cruises offered by our competitors to our detriment, which could adversely impact our operating results. Our reliance on third-party sellers is particularly pronounced in certain markets. In addition, the travel agent industry is sensitive to economic conditions that impact discretionary income of consumers. Significant disruptions, such as those caused by the COVID-19 pandemic, or contractions in the industry could reduce the number of travel agencies available for us to market and sell our cruises, which could have an adverse impact on our financial condition and results of operations. Additionally, the strength of our recovery from suspended operations could be delayed if we are not aligned and partnered with key travel agencies.
Business activities that involve our co-investments with third parties may subject us to additional risks.
Partnerships, joint ventures and other business structures involving our co-investments with third parties generally include some form of shared control over the operations of the business and create additional risks, including the event that other investors in such ventures become bankrupt or otherwise lack the financial resources to meet their obligations, or could have or develop business interests, policies or objectives that are inconsistent with ours. In addition to financial risks, our co-investment activities have also presented managerial and operational risks and expose us to reputational or legal concerns. These or other issues related to our co-investments with third parties could adversely impact our operations or liquidity. Due to the COVID-19 pandemic, Pullmantur S.A. filed for reorganization under the terms of the Spanish insolvency laws. In addition, with the exception of limited sailings outside of the U.S. starting in July 2020, TUI Cruises and Hapag-Lloyd Cruises have, for the most part, suspended sailings and their operations, results of operations and liquidity have been and will continue to be adversely materially impacted. The Company may be required to continue to provide funding for these affiliated entities and it is unclear when and to what extent these entities will fully resume operations and our ability to provide such funding will be limited by the level and terms of our outstanding indebtedness. Further, due to the arrangements we have in place with our partners in these ventures, we are limited in our ability to control the strategy of these ventures if and when they resume operations, or their use of capital and other key factors to their results of operation which could adversely affect our investments and impact our results of operations.
Past or pending business acquisitions or potential acquisitions that we may decide to pursue in the future carry inherent risks which could adversely impact our financial performance and condition.
The Company, from time to time, has engaged in acquisitions (e.g., our Silversea Cruises acquisition) and may pursue acquisitions in the future, which are subject to, among other factors, the Company’s ability to identify attractive business opportunities and to negotiate favorable terms for such opportunities. Accordingly, the Company cannot make any assurances that potential acquisitions will be completed timely or at all, or that if completed, we would realize the anticipated benefits of such acquisition. Acquisitions also carry inherent risks such as, among others: (1) the potential delay or failure of our efforts to successfully integrate business processes and realizing expected synergies; (2) difficulty in aligning procedures, controls and/or policies; and (3) future unknown liabilities and costs that may be associated with an acquisition. In addition, acquisitions may also adversely impact our liquidity and/or debt levels, and the recognized value of goodwill and other intangible assets can be negatively affected by unforeseen events and/or circumstances, which may result in an impairment charge. Any of the foregoing events could adversely impact our financial condition and results of operations.
We rely on supply chain vendors and third-party service providers who are integral to the operations of our businesses. These vendors and service providers are also affected by COVID-19 and may be unable or unwilling to deliver on their commitments or may act in ways that could harm our business.
We rely on supply chain vendors to deliver key products to the operations of our businesses around the world. Any event impacting a vendor’s ability to deliver goods of the expected quality at the location and time needed could negatively impact our ability to deliver our cruise experience. Events impacting our supply chain could be caused by factors beyond the control of our suppliers or us, including inclement weather, natural disasters, increased demand, problems in production or distribution and/or disruptions in third-party logistics or transportation systems, including those caused by the COVID-19 pandemic. Any such interruptions to our supply chain could increase our costs and could limit the availability of products critical to our operations.
In order to achieve cost and operational efficiencies, we outsource to third-party vendors certain services that are integral to the operations of our global businesses, such as our onboard concessionaires, certain of our call center operations and operation of a large part of our information technology systems, which are also affected by the COVID-19 pandemic. We are

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subject to the risk that certain decisions are subject to the control of our third-party service providers and that these decisions may adversely affect our activities. A failure to adequately monitor a third-party service provider’s compliance with a service level agreement or regulatory or legal requirements could result in significant economic and reputational harm to us. There is also a risk the confidentiality, privacy and/or security of data held by third parties or communicated over third-party networks or platforms could become compromised.
The potential unavailability of insurance coverage, an inability to obtain insurance coverage at commercially reasonable rates or our failure to have coverage in sufficient amounts to cover our incurred losses may adversely affect our financial condition or results of operations.
We seek to maintain appropriate insurance coverage at commercially reasonable rates. We normally insure based on the cost of an asset rather than replacement value and we also elect to self-insure, co-insure, or use deductibles in certain circumstances for certain risks such as loss of use of a ship or other business interruption. The limits of insurance coverage we purchase are based on the availability of the coverage, evaluation of our risk profile and cost of coverage. We do not carry business interruption insurance and accordingly we have no insurance coverage for loss of revenues or earnings from our ships or other operations. Accordingly, we are not protected against all risks and we cannot be certain that our coverage will be adequate for liabilities actually incurred which could result in an unexpected decrease in our revenue and results of operations in the event of an incident.
We are members of four Protection and Indemnity (“P&I”) clubs, which are part of a worldwide group of 13 P&I clubs, known as the International Group of P&I Clubs (the “IG”). P&I coverage provided by the clubs is on a mutual basis and we are subject to additional premium calls in the event of a catastrophic loss incurred by any member of the 13 P&I clubs, whereby the reinsurance limits purchased by the IG are exhausted. We are also subject to additional premium calls based on investment and underwriting shortfalls experienced by our own individual insurers. Certain liabilities, costs, and expenses associated with COVID-19 cases identified on or traced to our vessels are eligible for insurance coverage under our participation in these P&I clubs.
We cannot be certain that insurance and reinsurance coverage will be available to us and at commercially reasonable rates in the future or at all or, if available, that it will be sufficient to cover potential claims. Additionally, if we or other insureds sustain significant losses, the result may be higher insurance premiums, cancellation of coverage, or the inability to obtain coverage. The COVID-19 pandemic, for example, depending on its on-going scope, and duration and the associated insurance claims volumes driven by the pandemic, may potentially impact the insurance markets we rely on for coverage and could adversely impact both the coverage options available to us in the future as well as the premium costs we are required to pay for those coverages. Such events could adversely affect our financial condition or results of operations.
Disruptions in our shoreside or shipboard operations or our information systems may adversely affect our results of operations.
Our principal executive office and principal shoreside operations are located in Florida, and we have shoreside offices throughout the world. Actual or threatened natural disasters (e.g., hurricanes/typhoons, earthquakes, tornadoes, fires or floods), municipal lockdowns, curfews, quarantines, or similar events in these locations may have a material impact on our business continuity, reputation and results of operations. For instance, all Company shoreside operations are working remotely due to the COVID-19 pandemic, which has posed increased technological risks. In addition, substantial or repeated information system failures, computer viruses or cyber attacks impacting our shoreside or shipboard operations could adversely impact our business. We do not generally carry business interruption insurance for our shoreside or shipboard operations or our information systems. As such, any losses or damages incurred by us could have an adverse impact on our results of operations.
Provisions of our Articles of Incorporation, By-Laws and Liberian law could inhibit others from acquiring us, prevent a change of control, and may prevent efforts by our shareholders to change our management.
Certain provisions of our Articles of Incorporation and By-Laws and Liberian law may inhibit third parties from effectuating a change of control of the Company without approval from our board of directors which could result in the entrenchment of current management. These include provisions in our Articles of Incorporation that prevent third parties, other than A. Wilhelmsen AS and Cruise Associates and their permitted transferees, from acquiring beneficial ownership of more than 4.9% of our outstanding shares without the consent of our board of directors.
Compliance and Regulatory Risks
Changes in U.S. or other countries’ foreign travel policy have affected, and may continue to affect our results of operations.
Changes in U.S. and other countries' foreign policy have in the past and could in the future result in the imposition of travel restrictions or travel bans on U.S. persons to certain countries or result in the imposition of U.S. travel advisories, warnings, rules, regulations or legislation that could exposeexposing us to penalties or claims of monetary damages. In addition, some countries have adopted restrictions against U.S. travelers, and we currently cannot predict when those restrictions will be eased. The timing and scope of these changes areand regulations can be unpredictable, and they could cause us to cancel scheduled sailings, possibly on short notice, or could result in possible litigation against us. This, in turn, could decrease

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our revenue, increase our operating costs and otherwise impair our profitability. For instance, in June 2019, the U.S. government announced that cruise ships would no longer be allowed to travel between the U.S.
Factors associated with climate change, including an increasing global regulatory focus, could adversely affect our business.
There is increasing global regulatory focus on climate change, greenhouse gas and Cuba. This required us to change our high yielding Cuba sailings on short notice, which impacted our earnings. Moreover, in May 2019, the U.S. government activated Title III of the Cuban Libertyother emissions. These regulatory efforts,both internationally and Solidarity (Libertad) Act of 1996, popularly known as the Helms-Burton Act. This allowed certain individuals whose property was confiscated by the Cuban government to sue in U.S. courts anyone who “traffics” in the property in question. The activationU.S., are still developing, including the international alignment of Title III has resulted in litigation against ussuch efforts, and otherswe cannot yet determine what the final regulatory programs or their impact will be on our business. However, such climate change-related regulatory activity in the tourism industry.
Additionally, in the first quarter of 2020, the U.S. Department of State, along with other governments, including Canada, issued travel advisories warning against cruise travel as a result of the COVID-19 pandemic and subsequently imposed restrictions on those entering the U.S. and many nations imposed strict temporary restrictions on international travel. This, combined with other factors, ultimately lead to the company voluntarily suspending the sailings offuture may adversely affect our fleet globally and may limit or slow our ability to resume operations in the near term. In addition to the loss of revenues, our financial condition is affected by refund requests, future cruise credit issuances, and other costs associated with returning passengers and crew home safely. Furthermore, many countries have adopted restrictions against U.S. travelers and we currently cannot predict when those restrictions will be eased.
Growing anti-tourism sentiments and environmental concerns related to cruising could adversely impact our operations.
Certain ports and destinations are facing a surge of both cruise and non-cruise tourism which, in certain cases, has fueled anti-tourism sentiments and related countermeasures to limit the volume of tourists allowed in these destinations. In certain destinations, countermeasures to limit the volume of tourists are being contemplated and/or put into effect, including proposed limits on cruise ships and cruise passengers. Potential restrictions in ports and destinations such as Venice, Barcelona or Key West, could limit the itinerary and destination options we can offer our passengers going forward. Some environmental groups have also generated negative publicity about the environmental impact of the cruise vacation industry and are advocating for more stringent regulation of ship emissions at berth and at sea. These anti-tourism sentiments and growing environmental scrutiny of the cruise industry and any related countermeasures could adversely impact our operationsbusiness and financial results and subjectby requiring us to reduce our emissions, pay for our emissions, modify our itineraries and may increase our exposure, if any, to climate change-related litigation. Such activity may also impact us by increasing complianceour operating costs, including fuel costs.
Environmental, labor, health and safety, financial responsibility and For example, the European Union has proposed a series of significant carbon reforms under its Fit for 55 package designed to meet its 2030 emission goals, which would require us, among other maritime regulations could affect operations andthings, to increase operating costs.
the use of low carbon fuel onboard our vessels as well as connectivity to shore power. The proposed legislation also includes updates to the European Union Emission Trading System which would impose requirements to purchase carbon emission allowances beginning in 2024. In addition, the U.S. and various state and foreign government or regulatory agencies have enacted, or may enact, environmental regulations or policies, such as requiring the use of low sulfur fuels (e.g., IMO 2020),Sulfur Limit) or the incoming carbon intensity indicator regulation, that have or could increase our direct cost to operate in certain markets, increase our cost forof fuel, limit the supply of compliant fuel, cause us to incur significant expenses to purchase and/or develop new equipment and adversely impact the cruise vacation industry. While we have taken and expect to continue to take a number of actions to mitigate the potential impact of certain ofIf enacted, these regulations there can be no assurances that these efforts will be successful over the long term.
There is increasing global regulatory focusmay individually or collectively have a material adverse effect on climate change, greenhouse gas and other emissions. These regulatory efforts, both internationally and in the U.S. are still developing, and we cannot yet determine what the final regulatory programs or their impact will be in any jurisdiction where we do business. However, such climate change-related regulatory activity in the future may adversely affect our business and results of operations due to increased costs associated with compliance and modified itineraries in the affected regions.
There has also been growing environmental scrutiny of the environmental impact of the cruise vacation industry, and some environmental groups are advocating for more stringent regulation of ship emissions at berth and at sea. This negative publicity of the cruise industry and any related measures may lead to changes in consumer preferences, such as methods or frequency of travel, which could adversely impact our operations and financial results by requiringand subject us to reduce our emissions, purchase allowances or otherwise pay for our emissions. Such activity may also impact us by increasing ourreputational impacts and costs.
Labor, health and safety, financial responsibility and other maritime regulations and measures could affect operations and increase operating costs, including fuel costs.
In addition, weWe are subject to various international, national, state and local laws, regulations and treaties that govern, among other things, discharge from our ships, safety standards applicable to our ships, treatment of disabled persons, health and sanitary standards applicable to our guests, security standards on board our ships and at the ship/port interface areas, and financial responsibilities to our guests. These issues are, and we believe will continue to be, an area of focus by the relevant authorities throughout the world. This could result in the enactment of more stringent regulation of cruise ships that could subject us to increasing compliance costs in the future.future and may increase our exposure, if any, to environmental-related litigation.
A change in our tax status under the U.S. Internal Revenue Code, or other jurisdictions, may have adverse effects on our income.results of operations.
WeRoyal Caribbean Cruises Ltd. and a number of our subsidiaries are foreign corporations that derive income from a U.S. trade or business and/or from sources within the U.S. In connection with the year end audit, each year, Faegre Drinker Biddle & Reath LLP, our U.S. tax counsel, delivers to us an opinion, based on certain representations and assumptions set forth in it, to the effect that this income, to the extent derived from or incidental to the international operation of a ship or ships, is excluded from gross income for U.S. federal income tax purposes pursuant to Section 883 of the Internal Revenue Code. We believe that most of our income (including that of our subsidiaries) is derived from or incidental to the international operation of ships.
Our ability to rely on Section 883 could be challenged or could change in the future. Provisions of the Internal Revenue Code, including Section 883, are subject to legislative change at any time. Moreover, changes could occur in the future with

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respect to the identity, residence or holdings of our direct or indirect shareholders, trading volume or trading frequency of our shares, or relevant foreign tax laws of Liberia or the Bahamas, such that they no longer qualify as equivalent exemption jurisdictions, that could affect our eligibility for the Section 883 exemption. Accordingly, there can be no assurance that we will continue to be exempt from U.S. income tax on U.S. source shipping income in the future. If we were not entitled to the benefit of Section 883, we and our subsidiaries would be subject to U.S. taxation on a portion of the income derived from or incidental to the international operation of our ships, which would reduce our net income.
Additionally, portions of our business are operated by companies that are within the United Kingdom tonnage tax regime. Further, some of our operations are conducted in jurisdictions where we rely on tax treaties to provide exemption from taxation. To the extent the United Kingdom tonnage tax laws change or we do not continue to meet the applicable qualification requirements or if tax treaties are changed or revoked, we may be required to pay higher income tax in these jurisdictions, adversely impacting our results of operations.
AsNumerous countries are considering implementation of the OECD’s 15% global minimum tax, which may materially impact us. In addition, as budgetary constraints continue tomay adversely impact fiscal policy in the jurisdictions in which we operate, increaseswe may be subject to changes in incomeour existing tax regulations, tax auditstreatment or other tax reform, affecting our operations may be imposed.as well as increased tax audits.
We are not a U.S. corporation and, as a result, our shareholders may be subject to the uncertainties of a foreign legal system in protecting their interests.
Our corporate affairs are governed by our Articles of Incorporation and By-Laws and by the Business Corporation Act of Liberia. The provisions of the Business Corporation Act of Liberia resemble provisions of the corporation laws of a number of states in the U.S. However, there are very few judicial cases in Liberia interpreting the Business Corporation Act of Liberia. While the Business Corporation Act of Liberia provides that it is to be applied and construed to make the laws of Liberia, with respect of the subject matter of the Business Corporation Act of Liberia, uniform with the laws of the State of Delaware and other states with substantially similar legislative provisions (and adopts their case law to the extent it is non-conflicting), there have been few Liberian court cases interpreting the Business Corporation Act of Liberia, and we cannot predict whether Liberian courts would reach the same conclusions as United States courts. We understand that legislation has been proposed but not yet adopted by the Liberian legislature which amends the provisions regarding the adoption of non-Liberian law to, among other things, provide for the adoption of the statutory and case law of Delaware and not also states with substantially similar legislative provisions, and potentially provide the courts of Liberia discretion in application of non-statutory corporation law of Delaware in cases when the laws of Liberia are silent. The right of shareholders to bring a derivative action in Liberian courts may be more limited than in U.S. jurisdictions. There may also be practical difficulties for shareholders attempting to bring suit in Liberia, and Liberian courts may or may not recognize and enforce foreign judgments. Thus, our public shareholders may have more difficulty in protecting their interests with respect tochallenging actions taken by management, directors or controlling shareholders than would shareholders of a corporation incorporated in a U.S. jurisdiction.
General Risk Factors
Conducting business globally may resultresults in increased costs and other risks.
We operate our business globally, which exposes us to a number of risks, including increased exposure to a wider range of regional and local economic conditions, volatile local political conditions, potential changes in duties and taxes, including changing and/or uncertain interpretations of existing tax laws and regulations, required compliance with additional laws and policies affecting cruising, vacation or maritime businesses or governing the operations of foreign-based companies, currency fluctuations, interest rate movements, difficulties in operating under local business environments, port quality and availability in certain regions, U.S. and global anti-bribery laws orand regulations, imposition of trade barriers and restrictions on repatriation of earnings.
Our future growth strategies increasingly depend on the growth and sustained profitability of international markets. Factors that will be critical to our success in these markets include our ability to continue to raise awareness of our products and our ability to adapt our offerings to best suit rapidly evolving consumer demands. This risk is further heightened by the COVID-19 pandemic, as authorities in many of these markets have implemented numerous measures to contain the spread and impact of COVID-19, such as travel bans and restrictions, shelter-in-place/stay-at-home orders, and other limitations on business activity, including business closures. In addition, these measures could change unpredictably and/or could be scaled up or down in response to evolving intensity or resurgence of COVID-19 in or around these markets. The execution of our planned growth strategies is dependent on meeting the governmental and regulatory measures and policies in each of these markets. Our ability to realize our future growth strategy is highly dependent on our ability to satisfy country-specific policies and requirements in order to return to service, as well as meetingmeet the needs of region specificregion-specific consumer preferences as services come back online. These factors may cause us to reevaluate some of our international business strategies.
Operating globally also exposes us to numerous and sometimes conflicting legal, regulatory and tax requirements. In many parts of the world, including countries in which we operate, practices in the local business communities might not conform to international business standards. These legal and regulatory requirements and standards may change in response to the COVID-19 pandemic, and there may be greater uncertainty as to the interpretation and enforcement of applicable laws and regulations, including those introduced in response to the COVID-19 pandemic. We cannot guarantee consistent interpretation, application, and enforcement of newly issued rules and regulations, put in place in response to the COVID-19 pandemic, which could place limits on our operations or increase our costs, as well as negatively impact our future growth strategies in our key growth

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markets. We must adhere to policies designed to promote legal and regulatory compliance as well as applicable laws and regulations. However, we might not be successful in ensuring that our employees, agents, representatives and other third parties with whom we associate throughout the world properly adhere to them.applicable laws and regulations. In addition, we may be exposed to the risk of penalties and other liabilities if we fail to comply with all applicable legal and regulatory requirements introduced in response to the COVID-19 pandemic, which may be subject to frequent and rapid change.requirements. Failure by us, our employees or any of these third parties to adhere to our policies or applicable laws or regulations could result in penalties, sanctions, damage to our reputation and related costs, which in turn could negatively affect our results of operations and cash flows.
As a global operator, our business also may be impacted by changes in U.S. policy or priorities in areas such as trade, immigration (including any continuation of any of the immigration policies put in place by the U.S. government in response to the COVID-19 pandemic) and/or environmental or labor regulations, among others. Depending on the nature and scope of any such changes, they could impact our domestic and international business operations. Any such changes, and any international response to them, could potentially introduce new barriers to passenger or crew travel and/or cross border transactions, impact our guest experience and/or increase our operating costs.
If we are unable to address these risks adequately, our financial position and results of operations could be adversely affected, including impairing the value of our ships and other assets.
The terms of our existing debt financing gives, and any future preferred equity or debt financing may give, holders of any preferred securities or debt securities rights that are senior to rights of our common shareholders.
The holders of our existing debt have rights, preferences and privileges senior to those of holders of our common stock in the event of liquidation. If we incur additional debt or raise equity through the issuance of preferred stock or convertible securities, the terms of the debt or the preferred stock issued may give the holders rights, preferences and privileges senior to those of holders of our common stock, particularly in the event of liquidation. If we raise funds through the issuance of additional equity, the ownership percentage of our existing shareholders would be diluted.
Fluctuations in foreign currency exchange rates, fuel prices and interest rates could affect our financial results.
We are exposed to market risk attributable to changes in foreign currency exchange rates, fuel prices and interest rates. Significant changes in any of the foregoing could have a material impact on our financial results, net of the impact of our hedging activities and natural offsets. Our operating results have been and will continue to be impacted, often significantly, by changes in each of these factors. Thefactors
A portion of our indebtedness bears interest at variable rates that are linked to changing market interest rates. As a result, an increase in market interest rates would increase our interest expense and our debt service obligations. As of December 31, 2022, we had approximately $6.0 billion of indebtedness that bears interest at variable rates, which is net of our interest rate swap agreements. This amount represented approximately 25.0% of our total indebtedness. As of December 31, 2022, a hypothetical 1% increase in prevailing interest rates would increase our forecasted 2023 interest expense by approximately $34.8 million. Additionally, the value of our earnings in foreign currencies is adversely impacted by a strong U.S. dollar. In addition, any significant increase in fuel prices
Any further impairment of our goodwill, long-lived assets, equity investments and notes receivable could materially and adversely affect our business as fuel pricesfinancial condition and operating results.
We evaluate goodwill for impairment on an annual basis, or more frequently when circumstances indicate that the carrying value of a reporting unit may not only impact our fuel costs, but also somebe recoverable. A challenging operating environment, conditions affecting consumer demand or spending, the deterioration of ourgeneral macroeconomic conditions, expected ship deliveries, or other expenses, such as crew travel, freight, and commodity prices. Mandatory fuel restrictions, may also create uncertainty relatedfactors could result in a change to the pricefuture cash flows we expect to derive from our operations. Reductions of cash flows used in the valuation analyses may result in the recording of impairments, which could adversely affect our financial condition and availability of certain fuel types potentially impacting operating costs and the value of our related hedging instruments. Also, a significant increase in interest rates could materially impact the cost of our floating rate debt.results.
The loss of key personnel, our inability to recruit or retain qualified personnel, or disruptions among our shipboard personnel due to strained employee relations could adversely affect our results of operations.
Our success depends, in large part, on the skills and contributions of key executives and other employees and on our ability to recruit, develop and retain high quality personnel as well as having adequate succession plans and back-up operating plans for when critical executives are unable to serve. As demand for qualified personnel in the industry grows, we must continue to effectively recruit, train, motivate and retain our employees, both shoreside and on our ships, in order to effectively compete in our industry, maintain our current business and support our projected global growth. In addition, we
We have in the past and may in the future experience difficulties indifficulty recruiting and retaining qualified personnel primarily due to competitive labor markets. A prolonged shortage of qualified personnel and/or increased turnover may inhibit our ability to operate our business in an optimal manner, and may result in increased costs if we reduce the levelsneed to hire temporary personnel, and/or increased wages and/or benefits in order to attract and retain employees, all of fixed or variable compensation that we offer (including equity compensation impacted by the trading pricewhich may negatively impact our results of our equity), whether in response to the impacts of the COVID-19 pandemic or otherwise.operations.
As of December 31, 2020,2022, approximately 89%88% of our shipboard employees were covered by collective bargaining agreements. A dispute under our collective bargaining agreements could result in a work stoppage of those employees covered by the agreements. We may not be able to satisfactorily renegotiate these collective bargaining agreements when they expire. In addition, existing collective bargaining agreements may not prevent a strike or work stoppage on our ships. We may also be subject to or affected by work stoppages unrelated to our business or collective bargaining agreements. Any such work stoppages or potential work stoppages could have a material adverse effect on our financial results, as could a loss of key employees, our inability to recruit or retain qualified personnel or disruptions among our personnel.
If we are unable to keep pace with developments, design, and implementation in technology or technological obsolescence, including technology in response to the COVID-19 pandemic,, our operations or competitive position could become impaired.
Our business continues to demand the use of sophisticated technology and systems. These technologies and systems require significant investment and must be proven, refined, updated, upgraded and/or replaced with more advanced systems in order to continue to meet our customers’ demands and expectations.expectations as well as to process our information effectively. If we are unable to do so in a timely manner or within reasonable cost parameters, if there are any disruptions, delays or deficiencies in design or if we are unable to appropriately and timely train our employees to operate any of these new systems, our business could suffer. We also may not achieve the benefits that we anticipate from any new technology or system, which could result in higher than anticipated costs or impair our operating results.
In response to the COVID-19 pandemic, there has been a search for technology to accurately detect, either directly or indirectly, whether an individual is or has been infected with the virus or has been exposed to someone who is or might be infected. While this technology is in the early stages, as this technology continues to develop we may be faced with decisions regarding what technology to adopt for testing our passengers and employees, and what safety procedures to adopt for future

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sailings. We may be unable to obtainprocure appropriate technology in a timely manner or at all or we may incur significant costs in doing so. A failure to adopt the appropriate technology, or a failure or obsolescence in the technology that we do adopt, or a failure in our safety procedureshave adopted, could adversely affect our results of operations.
We are exposed to cyber security attacks and data breaches includingand the risks and costs associated with protecting our systems and maintaining data integrity and security of our business information, as well as personal data of our guests, employees and business partners.security.
We are subject to cyber security attacks. These cyber attacks can vary in scope and intent from attacks with the objective of compromising our systems, networks, and communications for economic gain to attacksor with the objective of disrupting, disabling or otherwise compromising our maritime and/or shoreside operations. The attacks can encompass a wide range of methods and intent, including phishing attacks, illegitimate requests for payment, theft of intellectual property, theft of confidential or non-public information, installation of malware, installation of ransomware and theft of personal or business information. The breadthfrequency and scopesophistication of, these attacks, as well as the techniques and sophisticationmethods used to conduct, these attacks, have grownincreased over time.
A successful cyber security attack may target us directly, or it may be the result of a third party’s inadequate care.care, or resulting from vulnerabilities in licensed software. In either scenario, the Company may suffer damage to its systems and data that could interrupt our operations, adversely impact our brand reputation, and brand and expose us to increased risks of governmental investigation, litigation, fines, and other liability, any of which could adversely affect our business. Furthermore, responding to such an attack and mitigating the risk of future attacks could result in additional operating and capital costs in systems technology, personnel, monitoring and other investments.
In addition, weWe are also subject to various risks associated with the collection, handling, storage, and transmission of sensitive information. In the regular course of doing business, we collect large volumes of employee, customer, and other third-party data, including personally identifiable information and individual creditpayment data, for various business purposes. WeAlthough we have policies and procedures in place to safeguard such sensitive information, this information has been and could be subject to cyber security attacks and the aforementioned risks. In addition, we are subject to federal, state, and international laws (including the European Union General Data Protection Regulation), as well as industry standards, relating to the collection, use, retention, security and transfer of personally identifiable information and individual creditpayment data. In many cases,Those laws include, among others, the European Union General Data Protection Regulation and regulations of the New York State Department of Financial Services and similar state agencies that impose additional cyber security requirements as a result of our provision of certain insurance products. Complying with these laws apply not only to third-party transactions, but also to transfers of information between the Company and its subsidiaries, and among the Company, its subsidiaries and other parties with which the Company has commercial relations. Several jurisdictions have passedapplicable laws in this area, and other jurisdictions are considering imposing additional restrictions. These laws continue to develop and may be inconsistent from jurisdiction to jurisdiction. Complying with emerging and changing international requirements has caused, and may cause, us to incur substantial costs or require us to change our business practices. If we failpractices, and our failure to comply with the various applicable data collection and privacy laws, we could be exposeddo so may expose us to substantial fines, penalties, restrictions, litigation, or other expenses and adversely affect our business. Further, any changes to laws or regulations, including new restrictions or requirements applicable to our business, or an increase in enforcement of existing laws and regulations, could be adversely impacted.expose us to additional costs and liability and could limit our use and disclosure of such information.
While we continue to evolve our cyber security practices in line with our business’ reliance on technology and the changing external threat landscape, and we invest time, effort and financial resources to secure our systems, networks and communications, our security measures cannot provide absolute assurance that we will be successful in preventing or responding todefending from all cyber security attacks.attacks impacting our operation. There can be no assurance that any breach or incident will not have a material impact on our operations and financial results.
Any breach, theft, loss, or fraudulent use of guest, employee, third-party or company data, could adversely impact our reputation and brand and our ability to retain or attract new customers, and expose us to risks of data loss, business disruption, governmental investigation, litigation and other liability, any of which could adversely affect our business. Significant capital investments and other expenditures could be required to remedy the problem and prevent future breaches, including costs associated with additional security technologies, personnel, experts and credit monitoring services for those whose data has been breached. Further, if we or our vendors experience significant data security breaches or fail to detect and appropriately respond to significant data security breaches, we could be exposed to government enforcement actions and private litigation.
Litigation, enforcement actions, fines or penalties could adversely impact our financial condition or results of operations and/or damage our reputation.
Our business is subject to various U.S. and international laws and regulations that could lead to enforcement actions, fines, civil or criminal penalties or the assertion of litigation claims and damages. In addition, improper conduct by our employees, agents or joint venture partners could damage our reputation and/or lead to litigation or legal proceedings that could result in civil or criminal penalties, including substantial monetary fines. In certain circumstances it may not be economical to defend against such matters and/or our legal strategy may not ultimately result in us prevailing in a matter. Such events could lead to an adverse impact on our financial condition or results of operations. In addition, we have experienced, and may continue to experience, increases in litigation pertaining to the COVID-19 crisis, including potential claims for non-refundable cash deposits. We cannot predict the quantum or outcome of any such proceedings and the impact that they will have on our financial results, but any such impact may be material. While some of these claims are covered by insurance, we cannot be certain that all of them will be, which could have an adverse impact on our financial condition or results of operations.

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Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
Information about our cruise ships, including their size, may be found within the Operating Strategies - Fleet upgrade and maintenance section and the Operations - Cruise Ships and Itineraries sections in Item 1. Business. Information regarding our cruise ships under construction, estimated expenditures and financing may be found within the Future Capital Commitments and Funding Needs and Sources sections of Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Our principal executive office and principal shoreside operations are located in leased office buildings at the Port of Miami, Florida. We also lease a number of other offices in the U.S. and throughout Europe, Asia, Mexico, South America and Australia to administer our brand operations globally.
We believe that our facilities are adequate for our current needs and that we are capable of obtaining additional facilities as necessary.
We also operate two private destinations which we utilize as ports-of-call on certain itineraries: (i) an island we own in the Bahamas whichthat we call CocoCay; and (ii) Labadee, a secluded peninsula that we lease on the north coast of Haiti.
Item 3. Legal Proceedings
As previously reported, two lawsuits were filed against Royal Caribbean Cruises Ltd.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.government. The complaints further allege that Royal Caribbean Cruises Ltd.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. Royal Caribbean Cruises Ltd. filed its answer to each complaint in October 2019 and on October 15, 2020, and the
The Court dismissed the Port of Santiago Action with prejudice on the basis that the plaintiffsplaintiff acquired his interest in that action lacked standingthe Port of Santiago after the enactment of the Helms-Burton Act. In November 2022, the United States Court of Appeals for the 11th Circuit affirmed the Court's dismissal of the lawsuit.
In the Havana Docks Action, the Court entered final judgment in December 2022 in favor of the plaintiff and awarded damages and attorneys' fees to bring the claim. This decisionplaintiff 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 been appealed bycross-appealed with regards to the plaintiffs.interest calculation used for purposes of determining damages. We believe we have meritorious defensesgrounds for and intend to vigorously pursue our appeal. During the claims allegedfourth quarter of 2022, we recorded a charge of approximately $130.0 million to Other (expense) income within in bothour consolidated statements of comprehensive loss related to the Havana Docks Action, including post-judgment interest and the Port of Santiago Action,related legal defense costs and bonding fees.
In addition, we intend to vigorously defend ourselves against them. We believe that it is unlikely that the outcome of either action will have a material adverse impact to our financial condition, results of operations or cash flows. However, the outcome of litigation is inherently unpredictable and subject to significant uncertainties, and there can be no assurances that the final outcome of this case will not be material.
As previously reported, on October 7, 2020, a shareholder filed a putative class action complaint against us, and three officers, Richard Fain, Jason Liberty and Michael Bayley, in the United States District Court for the Southern District of Florida (the "Court"), alleging misrepresentations relating to COVID-19 in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5, seeking unspecified damages on behalf of a purported class consisting of all persons and entities (subject to specified exceptions) that purchased or otherwise acquired our securities from February 4, 2020 through March 17, 2020. As previously disclosed, on October 27, 2020, a second complaint was filed by another shareholder against us and these same officers in the Court alleging the same misrepresentations relating to COVID-19. As is the case with the first action, the second action seeks unspecified damages on behalf of a purported class consisting of all persons and entities (subject to specified exceptions) that purchased or otherwise acquired our securities from February 4, 2020 through March 17, 2020. On December 23, 2020, these cases were consolidated with a new lead plaintiff, Indiana Public Retirement System. We cannot predict the duration or outcome of this lawsuit at this time, although management believes the claims are without merit. Depending on how this case progresses, it could be costly to defend and could divert the attention of management and other resources from operations. Accordingly, even if ultimately resolved in our favor, this action could have a material adverse effect on our business, financial condition, results of operations and liquidity. On February 25, 2021, the lead plaintiff filed with the Court a voluntary dismissal of the action without prejudice.
We are also routinely involved in other claims regulatory investigations and inquiries, and consumer complaints, including those related to COVID-19, that are typical within the travel and tourismcruise vacation industry. The majority of these claims are covered by insurance. We believe the outcome of such claims, net of expected insurance recoveries, will not have a material adverse impact on our financial condition or results of operations and cash flows.


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Item 4. Mine Safety Disclosures
None.

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PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Our common stock is listed on the New York Stock Exchange ("NYSE") under the symbol "RCL."
Holders
As of February 22, 2021,20, 2023, there were 1,296approximately 1,243 record holders of our common stock. Since certain of our shares are held by brokers and other institutions on behalf of shareholders, the foregoing number is not representative of the number of beneficial owners.
Dividends
Holders of our common stock have an equal right, pro rata based on number of shares held, to share in our profits in the form of dividends when and if declared by our board of directors out of funds legally available, subject to any rights of holders of preferred stock if any. Holders of our common stock have no rights to any sinking fund.
There are no exchange control restrictions on remittances of dividends on our common stock by reason of our incorporation in Liberia because (1) we are and intend to maintain our status as a nonresident Liberian entity under the Liberia Revenue Code of 2000 as amended and the regulations thereunder, and (2) our ship-owning subsidiaries are not now engaged, and are not in the future expected to engage, in any business in Liberia, including voyages exclusively within the territorial waters of the Republic of Liberia. Under current Liberian law, no Liberian taxes or withholding will be imposed on payments to holders of our securities other than to a holder that is a resident Liberian entity or a resident individual or an individual or entity subject to taxation in Liberia as a result of having a permanent establishment within the meaning of the Liberia Revenue Code of 2000 as amended in Liberia.
The declaration of dividends shall at all times be subject to the final determination of our board of directors that a dividend is prudent at that time in consideration of the needs of the business. In connection with securing various financial covenant waivers, we agreed with certain of our lenders not to pay dividends until the end of the third quarter of 2022. In addition, in the event we thereafter declare a dividend, we will need to repay the amounts deferred under our export credit facilities as part of the principal amortization deferrals agreed with them during 2020 and 2021. Accordingly, we didhave not declaredeclared a dividend duringsince the second, third and fourth quartersfirst quarter of 2020. Refer to Note 12.10. Shareholders' Equity to our consolidated financial statements under Item 8. Financial Statements and SupplementalSupplementary Data for further information on dividends declared.
Share Repurchases
There were no repurchases of common stock during the quarteryear ended December 31, 2020. As of December 31, 2020, the 24-month common stock repurchase program authorized by our board of directors on May 9, 2018 had expired.2022.
In connection with our debt covenant waivers, we agreed with certain of our lenders not to engage in stock repurchases until the end of the third quarter of 2022. In addition, in the event we engage in share repurchases,repurchase shares of our common stock, we will need to repay the amounts deferred under our export credit facilities as part of the principal amortization deferrals agreed with themour lenders during 2020 and 2021.


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Performance Graph
The following graph compares the total return, assuming reinvestment of dividends, on an investment in the Company, based on performance of the Company's common stock, with the total return of the Standard & Poor's 500 Composite Stock Index ("S&P 500") and the Dow Jones United States Travel and Leisure Index for a five year period by measuring the changes in common stock prices from December 31, 20152017 to December 31, 2020.2022.

rcl-20201231_g1.jpg
12/1512/1612/1712/1812/1912/20
Royal Caribbean Cruises Ltd
100.0082.91122.90103.06144.2381.65
S&P 500100.00111.96136.40130.42171.49203.04
Dow Jones U.S. Travel & Leisure100.00107.57133.19125.74155.84158.56
rcl-20221231_g1.jpg
12/1712/1812/1912/2012/2112/22
Royal Caribbean Cruises Ltd
100.0083.86117.3666.4368.4043.97
S&P 500100.0095.62125.72148.85191.58156.89
Dow Jones U.S. Travel & Leisure100.0094.41117.01119.05132.73105.83
The stock performance graph assumes for comparison that the value of the Company's common stock and of each index was $100 on December 31, 20152017 and that all dividends were reinvested. Past performance is not necessarily an indicator of future results.

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Item 6. Selected Financial DataReserved.
The selected consolidated financial data presented below for the years ended December 31, 2016 through December 31, 2020 and as of the end of each such year, except for Adjusted Net (Loss) Income amounts, are derived from our audited consolidated financial statements and should be read in conjunction with those financial statements and the related notes as well as in conjunction with Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Year Ended December 31,
20202019
2018 (1)
20172016
(in thousands, except per share data)
Operating Data: (2)
Total revenues$2,208,805 $10,950,661 $9,493,849 $8,777,845 $8,496,401 
Operating (Loss) Income$(4,601,557)$2,082,701 $1,894,801 $1,744,056 $1,477,205 
Net (Loss) Income (3)
$(5,775,130)$1,907,600 $1,815,792 $1,625,133 $1,283,388 
Net (Loss) Income attributable to Royal Caribbean Cruises Ltd.$(5,797,462)$1,878,887 $1,811,042 $1,625,133 $1,283,388 
Adjusted Net (Loss) Income attributable to Royal Caribbean Ltd. (4)
$(3,924,579)$2,002,847 $1,873,363 $1,625,133 $1,314,689 
Per Share Data—Basic: (2)
Net (Loss) Income attributable to Royal Caribbean Cruises Ltd.$(27.05)$8.97 $8.60 $7.57 $5.96 
Adjusted Net (Loss) Income attributable to Royal Caribbean Cruises Ltd.$(18.31)$9.56 $8.90 $7.57 $6.10 
Weighted-average shares214,335 209,405 210,570 214,617 215,393 
Per Share Data—Diluted: (2)
Net (Loss) Income attributable to Royal Caribbean Cruises Ltd.$(27.05)$8.95 $8.56 $7.53 $5.93 
Adjusted Net (loss) Income attributable to Royal Caribbean Cruises Ltd.$(18.31)$9.54 $8.86 $7.53 $6.08 
Weighted-average shares and potentially dilutive shares214,335 209,930 211,554 215,694 216,316 
Dividends declared per common share$0.78 $2.96 $2.16 $1.71 $1.35 
Balance Sheet Data:
Total assets (5) (6)
$32,465,187 $30,320,284 $27,698,270 $22,360,926 $22,310,324 
Total debt, including commercial paper and capital leases$19,329,043 $11,034,876 $10,777,699 $7,539,451 $9,387,436 
Common stock$2,652 $2,365 $2,358 $2,352 $2,346 
Total shareholders' equity$8,760,669 $12,163,846 $11,105,461 $10,702,303 $9,121,412 

(1)On July 31, 2018, we acquired a 66.7% equity stake in Silversea Cruise Holding Ltd ("Silversea Cruises"). Refer to Note 1. General, Note 3. Business Combinations and Note 11. Redeemable Noncontrolling Interest to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for information on the Silversea Cruises acquisition.
(2)Operating Data and Per Share Data amounts in 2020 reflect the impact of our 2020 suspension of operations due to the COVID-19 pandemic, including impairment charges and credit losses of $1.6 billion incurred related to the impairment of goodwill and trademarks and trade names attributable to our Silversea Cruises reporting unit, and long-lived assets as well as credit losses mostly on receivables related to our sale of property and equipment.
(3)Amount for 2017 includes a gain of $30.9 million related to the sale of Legend of the Seas.
(4)For 2020, 2019 and 2018, refer to Financial Presentation and Results of Operations under Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations for the definition of Adjusted Net Income and a reconciliation of Adjusted Net Income to Net income.
(5)We reclassified prepaid commissions of $64.6 million from Customer deposits to Prepaid expenses and other assets in our consolidated balance sheet as of December 31, 2017 in order to conform to the current year presentation.Not applicable.

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(6)Upon adoption of the new Lease accounting guidance effective January 1, 2019, we recognized right-of-use assets relating to operating leases within Operating lease right-of-use assets in our consolidated balance sheet. As of December 31, 2019, we reported Operating lease right-of-use assets of $687.6 million in our consolidated balance sheet. The comparative information presented has not been recast and continues to be reported under the accounting standards in effect for those periods. For further information on leases, refer to Note 10. Leases, to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for further information.

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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Cautionary Note Concerning Forward-Looking Statements
The discussion under this caption "Management's“Management's Discussion and Analysis of Financial Condition and Results of Operations"Operations” and elsewhere in this document,Annual Report on Form 10-K, includes "forward-looking statements"“forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including statements regarding our expectations for the first quarter and full year of 2021,future periods, business and industry prospects or future results of operations or financial position, made in this Annual Report on Form 10-K are forward-looking. Words such as "anticipate," "believe," "could," "estimate," "expect," "goal," "intend," "may," "plan," "project," "seek," "should," "will," "driving"“anticipate,” “believe,” “considering,” “could,” “driving,” “estimate,” “expect,” “goal,” “intend,” “may,” “plan,” “project,” “seek,” “should,” “will”, "would", and similar expressions are intended to further identify any of these forward-looking statements. Forward-looking statements reflect management's current expectations, but they are based on judgments and are inherently uncertain. Furthermore, they are subject to risks, uncertainties and other factors that could cause our actual results, performance or achievements to differ materially from the future results, performance or achievements expressed or implied in those forward-looking statements. Examples of these risks, uncertainties and other factors include, but are not limited to, those discussed in this Annual Report on Form 10-K and, in particular, the risks discussed under the caption "Risk Factors"Factors” in Part I, Item 1A herein.
All forward-looking statements made in this Annual Report on Form 10-K speak only as of the date of this document.filing. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Overview
The discussion and analysis of our financial condition and results of operations is organized to present the following:
a review of our critical accounting policies and estimates and of our financial presentation, including discussion of certain operational and financial metrics we utilize to assist us in managing our business;
a discussion of our results of operations for the year ended December 31, 20202022 compared to the same period in 2019;
a discussion of our business outlook,2021; and
a discussion of our liquidity and capital resources, including our future capital and contractual commitmentsmaterial cash requirements and potential funding sources.
A discussion of our results of operations, and sources and uses of cash for the year ended December 31, 20192021 compared to the year ended December 31, 20182020 is included in Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2019,2021, filed with the SEC on February 25, 2020, as updated by our Current Report on Form 8-K dated May 13, 2020,March 1, 2022 and is incorporated by reference into this Form 10-K.

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Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). (Refer to Note 1. General and Note 2. Summary of Significant Accounting Policies to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data). Certain of our accounting policies are deemed "critical," as they require management's highest degree of judgment, estimates and assumptions. We have discussed these accounting policies and estimates with the audit committee of our board of directors. We believe our most critical accounting policies and estimates are as follows:
LiquidityManagement's Plan and COVID-19Liquidity
The effectsIn the face of the global pandemic impact of COVID-19, have hadwe paused our guest cruise operations in March 2020 and continue to have a material negative impactbegan resuming guest cruise operations in 2021, with our full fleet in service by June 2022.
As part of our liquidity management, we rely on our operations, financial results and liquidity. The full extent of the impact will be determined by the length of time COVID-19 influences our industry and our eventual gradual return to service. Given the ongoing effects of COVID-19 on our operations and global bookings, we have identified the estimationestimates of our future liquidity requirements as a critical accounting policy.
The estimation of our future liquidity requirements includeswhich include numerous assumptions that are subject to various risks and uncertainties. The principal assumptions used to estimate our future liquidity requirements during our out-of-service period consist of:
Expected datetiming of return to operations;cash collections for cruise bookings;
Expected gradual resumption ofsustained increase in revenue per available passenger cruise operations;day;
Expected lower than comparable historicalincrease in occupancy levels, duringreaching historical levels in the resumptionspring of cruise operations;2023; and
Expected incremental expenses forInflationary increases to our operating costs, mostly impacting the resumptionexpected cost of cruise operations, for the maintenance of additional public health protocolsfuel and procedures for additional regulations.food as compared to 2019.
The assumptions used to estimate our liquidity requirements are frequently and continuously evaluated because of the unprecedented non-operational environment we are experiencing due to COVID-19. In addition, the magnitude, duration and speed of the global pandemic continues to be uncertain. As a result, we have made reasonable estimates and judgments of the impact of COVID-19 on our liquidity within our financial statements and there may be changes to those estimates in future periods.
We have taken and will continue to take actionspursue various opportunities to improveraise additional capital to fund obligations associated with future debt maturities and/or to extend the maturity dates associated with our liquidity, including:
Reductionexisting indebtedness or facilities. Actions to raise capital may include issuances of capital expenditures;
Reduction of operating expenses (including furloughing staff and laying up vessels);
Amendingdebt, convertible debt or equity in private or public transactions or entering into new or extended credit agreements to defer payments and covenant requirements, as well as extend maturity dates;
Raising capital through debt and stock issuances; and
Suspending dividend payments.facilities.
Ship Accounting
Ships represent our most significant assets and are stated at cost less accumulated depreciation and amortization. Depreciation of ships is generally computed net of a 10%-15% projected residual value, using the straight-line method over the estimated useful life of the asset, which is generally 30-35 years. The 30-35 year useful life and 10%-15% residual value is the weighted-average of all major components of a ship. Our useful life and residual value estimates take into consideration the impact of anticipated technological changes, long-term cruise and vacation market conditions and historical useful lives of similarly-built ships. In addition, we take into consideration our estimates of the weighted-average useful lives of the ships' major component systems, such as hull, superstructure, main electric, engines and cabins. We employ a cost allocation methodology at the component level, in order to support the estimated weighted-average useful lives and residual values, as well as to determine the net cost basis of assets being replaced. Given the very large and complex nature of our ships, our accounting estimates related to ships and determinations of ship improvement costs to be capitalized require considerable judgment and are inherently uncertain. We do not have cost segregation studies performed to specifically componentize our ship systems. However, we estimate the costs, useful lives and residual values of component systems based principally on general and technical information known about major ship component systems and their lives, as well as our knowledge of the cruise vacation industry. We do not identify and track depreciation by ship component systems, but instead utilize these estimates to determine the net cost basis of assets replaced or refurbished. Improvement costs that we believe add value to our ships are capitalized as additions to the ship and depreciated over the shorter of the improvements' estimated useful lives or that of the associated ship. The estimated cost and accumulated depreciation of replaced or refurbished ship components are written

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off and any resulting losses are recognized within Cruise operating expenses in our Consolidated Statements of Comprehensive Income (Loss).Loss.
We periodically review estimated useful lives and residual values for ongoing reasonableness, considering long term views on our intended use of each class of ships and the planned level of improvements to maintain and enhance vessels within those classes. In the event a factor is identified that may trigger a change in the estimated useful lives and residual values of our ships, a review of the estimate is completed. In the fourth quarter of 2019, we completed a modernization of the Oasis of the Seas under our ship upgrade program. The level of capital investment, as well as planned investment levels in the other ships within the Oasis class, triggered a review of the estimated useful lives and residual values of the Oasis-class ships. Following a review of the estimate, considering the intended use of the vessel and assessment of the estimated lives of component assets forming the Oasis class ships, we concluded a change to the estimated lives and residual values of Oasis class ships was required. Effective fourth quarter of 2019, we revised the estimated useful lives and residual values of the Oasis-class ships from 30 years with a 15% residual value to 35 years with a 10% residual value. The change in the estimated useful lives and residual values was accounted for prospectively as a change in accounting estimate. For further information regarding this change in accounting estimate, refer to Note 2. Summary of Significant Accounting Policies to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data.
We use the deferral method to account for drydocking costs. Under the deferral method, drydocking costs incurred are deferred and charged to expense on a straight-line basis over the period to the next scheduled drydock, which we estimate to be a period of thirty to sixty months based on the vessel's age as required by Class. Deferred drydock costs consist of the costs to drydock the vessel and other costs incurred in connection with the drydock which are necessary to maintain the vessel's Class certification. Class certification is necessary in order for our cruise ships to be flagged in a specific country, obtain liability insurance and legally operate as passenger cruise ships. The activities associated with those drydocking costs cannot be performed while the vessel is in service and, as such, are done during a drydock as a planned major maintenance activity. The

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significant deferred drydock costs consist of hauling and wharfage services provided by the drydock facility, hull inspection and related activities (e.g., scraping, pressure cleaning, bottom painting), maintenance to steering propulsion, thruster equipment and ballast tanks, port services such as tugs, pilotage and line handling, and freight associated with these items. We perform a detailed analysis of the various activities performed for each drydock and only defer those costs that are directly related to planned major maintenance activities necessary to maintain Class. The costs deferred are related to activities not otherwise routinely periodically performed to maintain a vessel's designed and intended operating capability. Repairs and maintenance activities are charged to expense as incurred.
We use judgment when estimating the period between drydocks, which can result in adjustments to the estimated amortization of drydock costs. If the vessel is disposed of before the next drydock, the remaining balance in deferred drydock is written-off to the gain or loss uponon disposal of vessel in the period in which the sale takes place. We also use judgment when identifying costs incurred during a drydock which are necessary to maintain the vessel's Class certification as compared to those costs attributable to repairs and maintenance which are expensed as incurred.
We believe we have made reasonable estimates for ship accounting purposes. However, should certain factors or circumstances cause us to revise our estimates of ship useful lives or projected residual values, depreciation expense could be materially higher or lower. If circumstances cause us to change our assumptions in making determinations as to whether ship improvements should be capitalized, the amounts we expense each year as repairs and maintenance costs could increase, partially offset by a decrease in depreciation expense. If we had reduced our estimated average ship useful life by one year, depreciation expense for 20202022 would have increased by approximately $157.3$85.0 million. If our ships were estimated to have no residual value, depreciation expense for 20202022 would have increased by approximately $345.3$307.6 million. We have evaluated our estimated ship useful lives and projected residual values in light of our current environment and determined that there are no changes to these estimates based on our return to service expectations.
Business Combinations
On July 31, 2018, we acquired a 66.7% equity stake in Silversea Cruises for $1.02 billion in cash and contingent consideration. Refer to Note 3. Business Combination to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for further information on the acquisition.
On July 9, 2020, we acquired the remaining 33.3% interest in Silversea Cruises that we did not already own (the "noncontrolling interest") from Heritage. As a result of the acquisition of the noncontrolling interest, Silversea Cruises is now a wholly owned cruise brand. As consideration for the noncontrolling interest, we issued to Heritage 5.2 million shares of common stock, par value $0.01 per share, of Royal Caribbean Cruises Ltd. Pursuant to the agreement governing the acquisition, among other things, the parties terminated any existing obligation to issue Heritage any contingent consideration, at fair value, in connection with our acquisition of a 66.7% interest in Silversea Cruises on July 31, 2018. The share purchase did not result in a change of control. The purchase was accounted for as an equity transaction and no gain or loss was recognized in earnings. Refer to Note 11. Redeemable Noncontrolling Interest to our consolidated financial statements under Item 8. Financial

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Statements and Supplementary Data for further information regarding our acquisition of Silversea Cruises' noncontrolling interest.
We account for business combinations in accordance with ASC 805, Business Combinations, by applying the acquisition method of accounting. The acquisition method of accounting requires that we record the assets acquired and liabilities assumed, and the noncontrolling interest, if any, at their respective fair values at the acquisition date. Goodwill is recognized as the excess of the purchase price over the fair value of the net assets acquired. Significant estimates and assumptions are made by management to value such assets and liabilities based on third party valuations such as appraisals or internal valuations based on discounted cash flow analyses or other valuation techniques. Although we believe that those estimates and assumptions are reasonable and appropriate, they are inherently uncertain and subject to change. If during the measurement period (not to exceed one year), additional information is obtained about facts and circumstances that existed as of the acquisition date related to the fair value of the assets acquired and liabilities assumed, we may adjust our estimates to account for subsequent adjustments to the provisional amounts recognized at the acquisition date, resulting in an offsetting adjustment to the goodwill associated with the business acquired.
Uncertain tax positions and tax-related valuation allowances are initially established in connection with a business combination as of the acquisition date. Our purchase price measurement period for the Silversea Cruises 2018 acquisition was closed during 2019.
Any contingent consideration is estimated at fair value at the acquisition date. Liability-classified contingent consideration is remeasured each reporting period, with changes in fair value recognized in earnings until the contingent consideration is settled.estimates.
Valuation of Goodwill, Indefinite-Lived Intangible Assets and Long-Lived Assets
We review goodwill and indefinite-lived intangible assets for impairment at the reporting unit level annually or, when events or circumstances dictate, more frequently. The impairment review for goodwill consists of a qualitative assessment of whether it is more-likely than-not that a reporting unit's fair value is less than its carrying value, and if necessary, a goodwill impairment test. Factors to consider when performing the qualitative assessment include general economic conditions, limitations on accessing capital, changes in forecasted operating results, changes in fuel prices and fluctuations in foreign exchange rates.
The goodwill impairment analysis consists of a comparison of the fair value of the reporting unit with its carrying value. We typically estimate the fair value of our reporting units using a probability-weighted discounted cash flow model, which may also include a combination of a market-based valuation approach. The estimation of fair value utilizing discounted expected future cash flows includes numerous uncertainties which require our significant judgment when making assumptions of expected revenues, operating costs, marketing, selling and administrative expenses, interest rates, ship additions and retirements as well as assumptions regarding the cruise vacation industry's competitive environment and general economic and business conditions, among other factors. The principal assumptions used in the discounted cash flow model for our 20202022 impairment assessments were:
The timing of our return to service, changes in market conditions and port or other restrictions;assessment consisted of:
Forecasted net revenues primarily the timing of returning to normalized operations, occupancyper available passenger cruise day;
Occupancy rates from existing and expected ship deliveries, including options, and terminaldeliveries;
Vessel operating expenses;
Terminal growth rate; and
Weighted average cost of capital (i.e., discount rate).
The discounted cash flow model uses the most current projected operating results for the upcoming fiscal year as a base. To that base, we add future years' cash flows based on multiple revenue and expense scenarios reflecting the impact of various return to service management assumptions beyond the base year on the reporting unit. We discount the projected cash flows using rates specific to the reporting unit based on its weighted-average cost of capital.
If the fair value of the reporting unit exceeds its carrying value, no write-down of goodwill is required. As amended by ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment, if the fair value of the reporting unit is less than the carrying value of its net assets, an impairment is recognized based on the amount by which the carrying value of a reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to such reporting unit. Refer to Note 4. Goodwill to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for further information on goodwill.

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The impairment review for indefinite-life intangible assets can be performed using a qualitative or quantitative impairment assessment. The quantitative assessment consists of a comparison of the fair value of the asset with its carrying value. We estimate the fair value of these assets using a discounted cash flow model and various valuation methods depending on the nature of the intangible asset, such as the relief-from-royalty method, for trademarks and trade names. The principal assumptions used in the discounted cash flow model for our 20202022 impairment assessments were:

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assessment consisted of:
Forecasted net revenues primarily the timing of returning to normalized operations, occupancyper available passenger cruise day;
Occupancy rates from existing and expected ship deliveries, including options, and terminaldeliveries;
Terminal growth rate;
Royalty rate; and
Weighted average cost of capital (i.e., discount rate).
If the carrying value exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. If the fair value exceeds its carrying value, the indefinite-life intangible asset is not considered impaired. Other intangible assets assigned finite useful lives are amortized on a straight-line basis over their estimated useful lives. Refer to Note 6.5. Intangible Assets to our consolidated financial statements under Item 8. Financial Statements and SupplementalSupplementary Data for further information on indefinite-life intangible assets.
We review our ships and other long-lived assets, including right-of-use assets for impairment whenever events or changes in circumstances indicate, based on estimated undiscounted futurerecent and projected cash flows,flow performance and remaining useful lives, that the carrying value of these assets may not be fully recoverable. We evaluate asset impairment at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The lowest level for which we maintain identifiable cash flows that are independent of the cash flows of other assets and liabilities is at the ship level for our ships. If estimated undiscounted future cash flows are less than the carrying value of an asset, an impairment charge is recognized to the extent its carrying value exceeds fair value. Refer to Note 76. Property and Equipment to our consolidated financial statements under Item 8. Financial Statements and SupplementalSupplementary Data for further information on determination of fair value for long-lived assets.
We estimate fair value based on quoted market prices in active markets, if available. If active markets are not available, we base fair value on independent appraisals, sales price negotiations and projected future cash flows discounted at a rate estimated by management to be commensurate with the business risk. Quoted market prices are often not available for individual reporting units and for indefinite-life intangible assets. Accordingly, we estimate the fair value of a reporting unit and an indefinite-life intangible asset using an expected present value technique.
The outbreak of COVID-19 has resulted in an unprecedented global response to contain the spread and control the resurgence of the disease. These global efforts have resulted in travel restrictions and created significant uncertainty regarding worldwide port closures and availability of ports and destinations generally. As part of the global containment effort, the Company previously announced a voluntary suspension of its Global Brands' cruise operations through at least April 30, 2021, for most of our cruise operations.
As a result of the developments in 2020, we performed interim impairment evaluations, in addition to our annual impairment reviews, of certain of our goodwill, indefinite-lived intangible assets and long-lived assets in connection with the preparation of our 2020 quarterly and annual financial statements, as further discussed below.
Royal Caribbean International Reporting Unit
WeDuring the fourth quarter of 2022, we performed interim impairment evaluationsa qualitative assessment of the Royal Caribbean International’s goodwill in connection with the preparation of our quarterly financial statements for the periods ended March 31, 2020 and June 30, 2020 due to the significant impact that COVID-19 has hadInternational reporting unit. Based on our projected cash flows and triggering events identified in those quarters. Our extended suspension of our operations andqualitative assessment, we concluded that it was more-likely-than-not that the possibility of further extensions created some uncertainty in forecasting the operating results and future cash flows used in our impairment analyses. As a result of the tests, we determined that theestimated fair value of the Royal Caribbean International reporting unit exceeded its carrying value by approximately 30% and 8% as of March 31, 2020 and June 30, 2020, respectively, resulting in no impairmentthus, we did not proceed to the Royal Caribbean International goodwill in those periods. The fair value of the Royal Caribbean International reporting unit as of March 31, 2020 was determined using a discounted cash flow model and a probability-weighted discounted cash flow model in combination with a market based valuation approach for the June 30, 2020 and November 30, 2020 assessments. We did not perform interim impairment evaluation of Royal Caribbean International's goodwill during the quarter ended September 30, 2020 as no triggering events were identified.
During the fourth quarter of 2020, we performed our annual impairment review of goodwill for Royal Caribbean International's reporting unit. We did not perform a qualitative assessment but instead proceeded directly to thetwo-step goodwill impairment test. As a resultNo indicators of impairment exist primarily because the test, we determined thereporting unit's fair value of the Royal Caribbean International reporting unithas consistently exceeded its carrying value by approximately 14% resulting in no impairmenta significant margin and forecasts of operating results expected to Royal Caribbean International's goodwill.be generated by the reporting unit appear sufficient to support its carrying value. As of December 31, 2020,2022, the carrying valueamount of goodwill attributable to our Royal Caribbean reporting unit was $296.6$296.4 million.
We did not perform interim impairment evaluations of Royal Caribbean International's goodwill during 2022 as no triggering events were identified.
Silversea Cruises Reporting Unit
WeDuring the fourth quarters of 2022 and 2021, we performed interimour annual impairment evaluationsreview of Silversea Cruises’Cruises goodwill. We did not perform qualitative assessments but instead proceeded directly to the goodwill impairment tests. As of November 30, 2022, and trade name in connection with the preparation of our financial statements for the quarter ended March 31, 2020. As a result of these analyses, we determined that the carrying value of the Silversea Cruises reporting unit exceeded its fair value. Similarly, we determined that the carrying value of Silversea Cruises’ trade name exceeded its fair value. Accordingly, upon the completion of the impairment test, we recognized impairment charges of $576.2 million and $30.8 million for goodwill and the trade name, respectively, during the

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quarter ended March 31, 2020. We estimatedNovember 30, 2021, the fair value of the Silversea Cruises reporting unit was determined using a probability-weighted discounted cash flow model in combination with a market basedmarket-based valuation approach. We did not perform interim impairment evaluations of Silversea Cruises' reporting unit or trade names during the quarters ended June 30, 2020 and September 30, 2020 as no triggering events were identified.
During the fourth quarter of 2020, we performed our annual impairment review of Silversea Cruises' goodwill. We did not perform a qualitative assessment but instead proceeded directly to the goodwill impairment test. As a result of the test,tests, we determined the fair value of the Silversea Cruises reporting unit exceeded its carrying value by approximately 12%,26% and 35% as of November 30, 2022 and 2021, respectively, resulting in no impairment to Silversea Cruises' goodwill. As of December 31, 2020, theThe carrying value of goodwill attributable to our Silversea Cruises reporting unit was $508.6 million.million as of December 31, 2022 and 2021.

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During the fourth quarterquarters of 2020,2022 and 2021, we performed our annual impairment reviewreviews of the Silversea Cruises'Cruises trade name. As a result of the quantitative test,tests, we determined that the fair value of the Silversea Cruises' trade name exceeded its carrying value by approximately 3%25% and 19%, as of November 30, 2022 and November 30, 2021, respectively, resulting in no impairment to Silversea Cruises' trade name. We will continue to closely monitor the change in fair value of the Silversea Cruises' trade name. Any further adverse developments due to COVID-19 or other events affecting the projected cash flows for Silversea Cruises may lead to further impairment of the Silversea Cruises' trade name.
As of December 31, 20202022 and 2019,2021, the carrying value of indefinite-life intangible assets was $321.5 million, and $352.3 million, respectively, which primarily relates to the Silversea Cruises trade name.
Long-lived Assets
Events surrounding the COVID-19 pandemic negatively impacted the expected undiscounted cash flows of certain of our long-lived assets. We evaluated these assets during the year ended 2020 pursuant to our long-lived asset impairment test which resulted in an impairment charge of $464.2 million during the year ended December 31, 2020, to write down certain ships operated by our Global Brands to their estimated fair values. The amount also includes impairment charges for ships that our Global Brands disposed of during 2020 as well as the three Azamara ships.
We also recordeddid not perform interim impairment chargesevaluations of $171.3 million during the year ended December 31, 2020 for the three ships that we chartered to Pullmantur Holdings prior to the filing of the Pullmantur reorganization. During the quarter ended September 30, 2020, we sold the ships to third parties for amounts approximating their carrying values and no further impairment was recorded.
During the year ended December 31, 2020, we also determined that certain construction in progress projects would be reduced in scopeSilversea Cruises's goodwill or would no longer be completed as a result of our capital cost containment measures in response to the COVID-19 impact on our liquidity. This led to an impairment charge of $91.5 million of construction in progress assets reported in Property and equipment, net.
In addition, during the year ended December 31, 2020, we identified that the undiscounted cash flows for certain right-of-use assets were less than their carrying values due to the negative impact of COVID-19. We evaluated these assets pursuant to our long-lived asset impairment test, resulting in an impairment charge of $65.9 million to write down these assets to their estimated fair values during the year ended December 31, 2020.
The combined impairment charge of $1.5 billion primarily related to our goodwill, trademarks and trade names vessels, construction in progress,during 2022 and right-of-use assets2021, as no triggering events were recognized in earnings during the year ended December 31, 2020 and is reported within Impairment and credit losses within our consolidated statements of comprehensive income (loss). These impairment assessments and the resulting charges were determined based on management’s current estimates and projections using information through the time of the issuance of these financial statements. The adverse impact that COVID-19 will continue to have on our business, operating results, cash flows and overall financial condition is uncertain and may result in changes to the assumptions used in the impairment tests discussed above, which may result in additional impairments of our goodwill, indefinite-lived intangible assets and long-lived assets in the future. Refer to Risk Factors in Part 1, Item 1A. for further discussion on risks related to the COVID-19 pandemic.identified.
Derivative Instruments
We enter into various forward, swap and option contracts to manage our interest rate exposure and to limit our exposure to fluctuations in foreign currency exchange rates and fuel prices. These instruments are recorded on the balance sheet at their fair value and the vast majority are designated as hedges. We also use non-derivative financial instruments designated as hedges of our net investment in our foreign operations and investments. Although certainsome of our derivative financial instruments do not qualify for hedge accounting or are not accounted for under hedge accounting, we do not hold or issue derivative financial instruments for trading or other speculative purposes. We account for derivative financial instruments in accordance with authoritative guidance. Refer to Note 2. Summary of Significant Accounting Policies and Note 1916.. Commitments Fair Value Measurements and ContingenciesDerivative Instruments to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for more information on related authoritative guidance, the Company's hedging programs and derivative financial instruments.

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On a regular basis, we enter into foreign currency forward contracts, interest rate andswaps, fuel swaps and options with third-party institutions in over-the-counter markets. We estimate the fair value of our foreign currency forward contracts and interest rate swaps using expected future cash flows based on the instruments' contract terms and published forward prices for foreign currency exchange and interest rates. We value floors which are embedded within our interest rate swaps using standard option pricing models with inputs based on the options’ contract terms, such as exercise price and maturity, and readily available market data, such as forward interest rates and interest rate volatility. We apply present value techniques and LIBOR or EURIBOR-based discount rates to convert the expected future cash flows to the current fair value of the instruments.
We estimate the fair value of our fuel swaps using expected future cash flows based on the swaps' contract terms and forward prices. We derive forward prices from published forward fuel curves which in turn are based on actual market transactions and published price quotes for similar assets. We apply present value techniques and LIBOR-based discount rates to convert the expected future cash flows to the current fair value of the instruments. We also corroborate our fair value estimates using valuations provided by our counterparties.
We adjust the valuation of our derivative financial instruments to incorporate credit risk.
We believe it is unlikely that materially different estimates for the fair value of our foreign currency forward contracts, and interest rate andswaps, fuel swaps and options would be derived from other appropriate valuation models using similar assumptions, inputs or conditions suggested by actual historical experience.
The current suspension of our cruise operations due to the COVID-19 pandemic and our 2020 and expected 2021 ship disposals resulted in reductions to our forecasted fuel purchases. As of December 31, 2020, we discontinued cash flow hedge accounting on 0.6 million metric tons of our fuel swap agreements maturing in 2020 and 2021, which resulted in the reclassification of a net $104.4 million loss from Accumulated other comprehensive loss to Other expense during the year ended December 31, 2020. Changes in the fair value of fuel swaps for which cash flow hedge accounting was discontinued are currently recognized in Other expense each reporting period.
Future suspension of our operations or modifications to our itineraries may affect our expected forecasted fuel purchases which could result in further discontinuance of fuel swap cash flow hedge accounting and the reclassification of deferred gains or losses from Accumulated other comprehensive loss into earnings. Refer to Risk Factors in Part 1, Item 1A. for further discussion on risks related to the COVID-19 pandemic.
Contingencies—Litigation
On an ongoing basis, we assess the potential liabilities related to any lawsuits or claims brought against us. While it is typically very difficult to determine the timing and ultimate outcome of such actions, we use our best judgment to determine if it is probable that we will incur an expense related to the settlement or final adjudication of such matters and whether a reasonable estimation of such probable loss, if any, can be made. In assessing probable losses, we take into consideration estimates of the amount of insurance recoveries, if any, which are recorded as assets when recoverability is probable. We accrue a liability when we believe a loss is probable and the amount of loss can be reasonably estimated. Due to the inherent uncertainties related to the eventual outcome of litigation and potential insurance recoveries, it is possible that certain matters may be resolved for amounts materially different from any provisions or disclosures that we have previously made.





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Seasonality
Our revenues are seasonal based on demand for cruises. Demand ishas historically been strongest for cruises during the Northern Hemisphere's summer months and holidays. In order to mitigate the impact of the winter weather in the Northern Hemisphere and to capitalize on the summer season in the Southern Hemisphere, our brands have historically focused on deployment to the Caribbean, Asia and Australia during that period. This seasonal trend was disrupted with the voluntary suspension of our global cruise operations effective March 2020 in response to the COVID-19 outbreak. We resumed our global cruise operations commencing in the second half of 2021, with our full fleet in service by June 2022. Since our full fleet is in service, we expect to return to seasonal trends
Financial Presentation
Description of Certain Line Items
Revenues
Our revenues are comprised of the following:
Passenger ticket revenues, which consist of revenue recognized from the sale of passenger tickets and the sale of air transportation to and from our ships; and
Onboard and other revenues, which consist primarily of revenues from the sale of goods and/or services onboard our ships not included in passenger ticket prices, cancellation fees, sales of vacation protection insurance, pre- and post-cruise tours and fees for operating certain port facilities. Onboard and other revenues also include revenues we receive from independent third party concessionaires that pay us a percentage of their revenues in exchange for the right to provide selected goods and/or services onboard our ships, as well as revenues received for our

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bareboat charter, procurement and management related services we perform on behalf of our unconsolidated affiliates.
Cruise Operating Expenses
Our cruise operating expenses are comprised of the following:
Commissions, transportation and other expenses, which consist of those costs directly associated with passenger ticket revenues, including travel agentadvisor commissions, air and other transportation expenses, port costs that vary with passenger head counts and related credit card fees;
Onboard and other expenses, which consist of the direct costs associated with onboard and other revenues, including the costs of products sold onboard our ships, vacation protection insurance premiums, costs associated with pre- and post-cruise tours and related credit card fees, as well as the minimal costs associated with concession revenues, as the costs are mostly incurred by third-party concessionaires and costs incurred for the procurement and management related services we perform on behalf of our unconsolidated affiliates;
Payroll and related expenses, which consist of costs for shipboard personnel (costs associated with our shoreside personnel are included in Marketing, selling and administrative expenses);
Food expenses, which include food costs for both guests and crew;
Fuel expenses, which include fuel and related delivery, storage and emission consumable costs and the financial impact of fuel swap agreements; and
Other operating expenses, which consist primarily of operating costs such as repairs and maintenance, port costs that do not vary with passenger head counts, vessel related insurance, entertainment and gains and/or losses related to the sale of our ships, if any.
We do not allocate payroll and related expenses, food expenses, fuel expenses or other operating expenses to the expense categories attributable to passenger ticket revenues or onboard and other revenues since they are incurred to provide the total cruise vacation experience.
Selected Operational and Financial Metrics
We utilize a variety of operational and financial metrics which are defined below to evaluate our performance and financial condition. As discussed in more detail herein, certain of these metrics are non-GAAP financial measures. These non-GAAP financial measures are provided along with the related GAAP financial measures as we believe they provide useful information to investors as a supplement to our consolidated financial statements, which are prepared and presented in

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accordance with GAAP. The presentation of non-GAAP financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
Adjusted EBITDA is a non-GAAP measure that represents EBITDA (as defined below) excluding certain items that we believe adjusting for is meaningful when assessing our profitability on a comparative basis. For the periods presented, these items included (i) other expenses, which includes our loss contingency in connection with the ongoing Havana Docks litigation recorded in 2022; (ii) impairment and credit losses; (iii) restructuring charges and other initiative expenses; (iv) equity investment asset impairments; (v) net insurance recoveries or costs related to the collapse of the drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas; (vi) Pullmantur reorganization settlement; (vii) the net gain recognized in 2021 in relation to the sale of the Azamara brand; (viii) the noncontrolling interest adjustment to exclude the impact of the contractual accretion requirements associated with the put option held by Heritage Cruise Holding Ltd. and (ix) transaction costs related to the 2018 Silversea Cruises acquisition. A reconciliation of Net Income (Loss) Earningsattributable to Royal Caribbean Cruises Ltd. to Adjusted EBITDA is provided below under Results of Operations.
Adjusted Loss per Share ("Adjusted EPS") is a non-GAAP measure thatrepresents Adjusted Net (Loss) IncomeLoss attributable to Royal Caribbean Cruises Ltd. (as defined below) divided by weighted average shares outstanding or by diluted weighted average shares outstanding, as applicable. We believe that this non-GAAP measure is meaningful when assessing our performance on a comparative basis.A reconciliation of Loss per Share to Adjusted Loss per share is provided below under Results of Operations.
Adjusted Net (Loss) IncomeLoss attributable to Royal Caribbean Cruises Ltd. is a non-GAAP measure that represents net (loss) incomeloss less net income attributable to noncontrolling interest, excluding certain items that we believe adjusting for is meaningful when assessing our performance on a comparative basis. For the periods presented, these items included (i) asset impairment and credit losses recorded in 2020 as a resultloss on the extinguishment of debt; (ii) the impactamortization of COVID-19; (ii) equity investment impairment charges recorded in the first quarter of 2020 as a result of the impact of COVID-19;non-cash debt discount on our convertible notes; (iii) currency translation losses recognized in connection with the ships that were previously chartered to Pullmantur; (iv) the estimated cash refund expected to be paid to Pullmantur guests and other expenses incurred as part of the Pullmantur S.A. reorganization;reorganization; (iv) impairment and credit losses; (v) equity investment asset impairments; (vi) net insurance recoveries related to the collapse of the drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas; (vii) restructuring charges incurred in relation to the reduction in our U.S. workforce and other initiativesinitiative expenses in 2020 and the reorganization of our international sales and marketing structure primarily in 2019; (vi) the amortization of non-cash debt discount on our convertible notes; (vii) loss on the extinguishment of debt;; (viii) the amortization of the Silversea Cruises intangible assets resulting from the 2018 acquisition; Silversea Cruises acquisition in 2018; for 2020, the change in the fair value in the Silversea Cruises contingent consideration;(ix) the noncontrolling interest adjustment to exclude the impact of the contractual accretion requirements associated with the put option held by Heritage Cruise Holding Ltd. ("Heritage"(previously known as Silversea Cruises Group Ltd.), prior noncontrolling interest in Silversea Cruises, which noncontrolling interest we acquired on July 9, 2020; (x) the net gain recognized in the first quarter of 2021 in relation to the Julysale of the Azamara brand; (xi) currency translation losses recognized during the second quarter of 2020, noncontrolling interest purchase; (x)in connection with the change in fair valueships classified as assets held-for-sale that were previously chartered to Pullmantur; (xii) the net loss recognized in the Silversea Cruises contingent consideration; (xi) net insurance recoveries or costsfourth quarter of 2021 related to the collapseelimination of the drydock structure atthree-month reporting lag for Silversea Cruises; and (xiii) loss contingency recorded in connection with the Grand Bahama Shipyard involving ongoing Havana Docks litigation inclusive of related legal fees and costsOasis. A reconciliation of the Seas;Net Loss (xii) transaction costs relatedattributable to the 2018 SilverseaRoyal Caribbean Cruises acquisition; (xiii) the impairment loss and other costs related Ltd. to the exitAdjusted Net Loss attributable to Royal Caribbean Cruises Ltd. is provided below under Results of our tour operations business; (xiv) the impairment loss related to Skysea Holding; and (xv) the impact of the change in accounting principle related to the recognition of stock-based compensation expense from the graded attribution method to the straight-line attribution method for time-based stock awards.Operations.
Available Passenger Cruise Days ("APCD") is our measurement of capacity and represents double occupancy per cabin multiplied by the number of cruise days for the period, which excludes canceled cruise days and drydock days.cabins not available for sale. We use this

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measure to perform capacity and rate analysis to identify our main non-capacity drivers that cause our cruise revenue and expenses to vary.
EBITDA is a non-GAAP measure that represents of Net Income (Loss) attributable to Royal Caribbean Cruises Ltd. excluding (i) interest income; (ii) interest expense, net of interest capitalized; (iii) depreciation and amortization expenses; and (iv) income tax benefit or expense. We believe that this non-GAAP measure is meaningful when assessing our operating performance on a comparative basis. A reconciliation of Net Income (Loss) attributable to Royal Caribbean Cruises Ltd. to EBITDA is provided below under Results of Operations.
Gross Cruise Costs represent the sum of total cruise operating expenses plus marketing, selling and administrative expenses.
CarbonIntensity is our measurement of carbon dioxide emissions per gross tonne nautical mile (well-to-wake).
Net Cruise Costs and Net Cruise Costs Excluding Fuel are non-GAAP measures that represent Gross Cruise Costs excluding commissions, transportation and other expenses and onboard and other expenses and, in the case of Net Cruise Costs Excluding Fuel, fuel expenses (each of which is described above under the Description of Certain Line Items heading). In measuring our ability to control costs in a manner that positively impacts net income, we believe changes in Net Cruise Costs and Net Cruise Costs Excluding Fuel to be the most relevant indicators of our performance. A reconciliation of Gross Cruise

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Costs to Net Cruise Costs and Net Cruise Costs Excluding Fuel is provided below under Results of Operations. For the 2022 period presented, Net Cruise Costs and Net Cruise Costs Excluding Fuel excludes restructuring and other initiative expenses.
Occupancy ("Load factor"), in accordance with cruise vacation industry practice, is calculated by dividing Passenger Cruise Days (as defined below) by APCD. A percentage in excess of 100% indicates that three or more passengers occupied some cabins.
Passenger Cruise Days represent the number of passengers carried for the period multiplied by the number of days of their respective cruises.
Although discussed in prior periods, we did not disclose or reconcile in this report nor reconcile our Gross Yields Net Revenues,and Net Yields, Gross Cruise Costs, Net Cruise Costs and Net Cruise Costs Excluding Fuel, as defined in our Annual Report on Form 10-K for twelve monthsthe year ended December 31, 2019. Historically, we have utilized these financial metrics to measure relevant rate comparisons to other periods. However, our 20202022 and 2021 reduction in capacity and revenues, and the shift in the nature of our running costs due to the suspension of our operations as a resultimpact of the COVID-19 pandemic ("COVID-19")on our operations, do not allow for a meaningful analysis and comparison to the prior periodof these metrics and as such these metrics have been excluded from this report.
Recent Developments: COVID-19
The disruptions For Gross Cruise Costs, Net Cruise Costs, and Net Cruise Costs excluding Fuel we present amounts in constant currency compared to our operations resulting from COVID-19 have had, and continue to have, a material negative impact on our financial condition and results2019, which is the last year of operations. The outbreak of COVID-19 has resulted in an unprecedented global response to contain the spread of the disease. These global efforts have resulted in travel restrictions and created significant uncertainty regarding worldwide port closures and availability of ports and destinations generally. As part of the global containment effort, we previously announced a voluntary suspension of our Global Brands’ cruise operations beginning March 13, 2020, which has been extended through at least April 30, 2021, for most of our cruisenormalized operations.


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Executive Overview
2022 was a transitional year filled with numerous accomplishments. We continue to work with government returned our entire fleet into operations, took delivery of Celebrity Beyond and health authorities across the globe to address the unique public health challenges posed by COVID-19 and expect to re-start our global cruise operation in a phased manner. Notably, we resumed limited cruise operations outside of the U.S. in July and September with TUI Cruises and Hapag-Lloyd, respectively, for a limited period. Recently, we also received approval from the Singaporean Government to resume sailings out of Singapore. As a result, QuantumWonder of the Seas, a ship fromand acquired Silver Endeavour. Additionally, we achieved positive EBITDA and operating cash flow for the year, controlled costs to minimize the impacts of inflation, and saw record shipboard revenues for the year.
Our 2022 Net Loss was $(2.2) billion, or $(8.45) per diluted share, compared to Net Income attributable to Royal Caribbean InternationalCruises Ltd. of $1.9 billion, or $8.95 per diluted share in 2019, the most recent year of normalized operations. Adjusted Net Loss for 2022 was $(1.9) billion, or $(7.50) per diluted share, compared to Adjusted Net Income attributable to Royal Caribbean Cruises Ltd. of $2.0 billion, or $9.54 per diluted share in 2019. 2022 adjusted EBITDA was $711.6 million, compared to adjusted EBITDA of $3.6 billion in 2019. We started 2022 by operating 51 ships and sailing at 57% load factor in the first quarter of 2022. We successfully completed the return of our entire fleet resumed cruising from Singaporeinto operations during the second quarter and achieved 96% load factors in the third quarter with the Caribbean eclipsing triple digits at close to 105% during the third quarter. We finished the year sailing at almost 100% load factor in December 2020. These initial cruises are and will most likely continue2022, with holiday sailings close to take place with reduced guest occupancy, modified itineraries and enhanced health protocols developed in collaboration with governments and health authorities.110% during the fourth quarter.
CDC FrameworkDespite only partially operating for Conditional Sailing Order
On and effective as of October 30, 2020, the U.S. Centers for Disease Control and Prevention ("CDC") issued a Framework for Conditional Sailing Order (the “Conditional Order”) that will conditionally permit cruise ship passenger operations in U.S. waters under certain conditions and using a phased approach. The Conditional Order replaces the CDC’s No Sail Order that expired on October 31, 2020 and will remain in effect until the earlier of (1) the expirationfirst half of the Secretary of Healthyear, total revenues were $8.8 billion in 2022, compared to $11.0 billion in 2019. Load factors for 2022 were 85%, and Human Services’ declaration that COVID-19 constitutes a public health emergency, (2) the rescission or modification by the CDC Director of the Conditional Order based on specific public health or other considerations, or (3) November 1, 2021. See Part I. Item 1. Business - Regulation for further details on the Conditional Order.
We are working with both the CDC and the Healthy Sail Panel ("HSP"), formed in June 2020 by us and Norwegian Cruise Line Holdings Ltd. and composed of leading experts in relevant fields, including epidemiology, infectious diseases, public policy and regulation, engineering and general health safety, to prepare and develop our plan to meet the framework for the Conditional Order. While the Conditional Order represents an important step in our return to service, many uncertainties remain as to the specifics, timing and costs of administering and implementing the requirements of the Conditional Order, some of which may be significant. Further, the Conditional Order contemplates that the CDC may issue additional requirements through technical instructions or orders as needed and that the phases described above will be further determined based on public health considerations, including the trajectory of the pandemic and the ability of cruise ship operators to successfully employ measures that mitigate the risk of COVID-19. Based on our assessment of these conditions or for other reasons, we may determine it necessary to further extend our voluntary suspension of our Global Brands’ cruise sailings which currently extends through at least April 30, 2021, for most of our cruise operations.
Update on Bookings
Booking activity96% for the second half of 2021 is aligned with our anticipated resumption of cruises. Pricing on these bookings isthe year. Additionally, total revenue per passenger cruise day in 2022 was higher than record 2019 both includinglevels, driven by strong onboard revenue performance.
Cruise operating expenses increased from $6.1 billion in 2019 to $6.6 billion in 2022. Gross Cruise Costs per APCD increased 8.2% as-reported and 8.8% in Constant Currency, compared to 2019. Net Cruise Costs, excluding Fuel, per APCD increased 12.9% as-reported and 13.5% in Constant Currency, compared to 2019. Our cost-conscious mindset has helped to mitigate the dilutive impacteffects of future cruise credits (FCCs). Whileinflation, and we benefited from reduced costs related to health protocols as the brands are stillyear went on. For the year Net Cruise Costs included $5.97 per APCD of transitory costs related to health protocols, and one-time lagging costs related to fleet ramp up. 2022 also included Galveston terminal construction costs and increased costs associated with CocoCay, which were not present in 2019.
In 2023, we expect our capacity to increase by 14% compared to 2019, despite the processreduction in capacity resulting from the divestiture of opening for sale the remainder of their 2022/2023 seasons, first and second quarter 2022 sailings have been open for some time. Cumulative advance bookings for the first half of 2022 are within historical ranges and at higher prices. This was achieved with minimal sales and marketing spend, which we believe highlights a strong long-term demand for cruising.

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Since our last quarterly filing, approximately 75% of bookings made for 2021 are newAzamara and the rest are due to the redemptionsale of FCCsolder ships. Since 2019 we have welcomed 9 new ships across our five brands, and our “Lift & Shift” program. We continue to provide guests who were booked on a suspended sailing with the optionaddition of Celebrity Ascent and Silver Nova in 2023 we expect a total of 11 new vessels operating by year end. These new ships, along with enhanced onboard offerings and continued investment in destinations, are expected to request a refund,help drive increases in both Net Yields and Total revenues as our capacity expands. We also plan to receive an FCC, orcontinue investing in both more efficient newbuilds and retrofitting our existing fleet with technology to “lift and shift” their booking to the following year.
As of December 31, 2020, we had $1.8 billion in customer deposits of which approximately 50% are FCCs and the rest are related to new bookings. Approximately 53% of the guests booked on cancelled sailings sincehelp reach our suspension of operations have requested cash refunds.
Update on Recent Liquidity Actions and Ongoing Uses of Cash
As of December 31, 2020, we had liquidity of approximately $4.4 billion in the form of cash and cash equivalents of $3.7 billion and a $0.7 billion one-year commitment through August 12, 2021, for a 364-day term loan facility. As of December 31, 2020, our revolving credit facilities were fully utilized through a combination of amounts drawn and letters of credit issued under the facilities. Given the current environment, we continue to prioritize and bolster liquidity through significant cost and capital expenditure reductions, cash conservation and additional financing sources, as described below, to ensure that we are well positioned for recovery.
Reduced Operating Expenses
We have taken significant actionslong-term goals to reduce operating expenses during the suspension of our global cruise operations. In particular, we:
significantly reduced ship operating expenses, including crew payroll, food, fuel, insurance and port charges;
further reduced operating expenses as the Company’s ships transitioned during the year into various levels of layup;
eliminated or significantly reduced marketing and selling expenses in 2020;
reduced and furloughed our workforce, with approximately 23% of our US shoreside employee base being impacted; and
suspended travel for shoreside employees and instituted a hiring freeze across the organization.•    
We may seek to further reduce our average monthly expenses under a further prolonged non-revenue scenario and during the restart of operations. This includes consideration of additional vessels heading to cold layup as well as further assessment of our shoreside workforce, including those coming back from furlough.
Reduced Capital Expenditures
Since the start of February 2020,carbon intensity. Lastly, we have identified approximately $4.2 billion of total capital expenditure reductions or deferrals in 2020 and 2021. The reductions or deferrals of capital expenditures are comprised of the following:
$1.4 billion of non-newbuild, discretionary capital expenditures; and
$2.8 billion in reduced spend or deferred installment payments for newbuild related payments which we are currently finalizing.
COVID-19 has impacted shipyard operations which have and will continue to result in delays of our previously contracted ship deliveries. During 2021, the Company expects theanticipate taking delivery of OdysseyIcon of the Seas and Silver Dawn during the first and fourth quarters, respectively. As it relates to 2022, the Company has two ship deliveries scheduled: Wonder of the Seas and Celebrity Beyond. The exact durations of the ship delivery delays are currently under discussion with the impacted shipyards.
Debt Maturities, New Financings and Other Liquidity Actions
Since the start of February 2020, we have taken several additional actions to further improve our liquidity position and manage cash flow. In particular, we:
•    increased the capacity under our unsecured revolving credit facilities by $0.6 billion, and fully drew on both facilities;
•    entered into a $2.35 billion 364-day senior secured loan agreement in March of 2020, which was repaid in May of 2020 with proceeds from the $3.32 billion senior secured notes ("Secured Notes") discussed below;
•    issued $3.32 billion in Secured Notes, of which $1.0 billion is due in 2023 and $2.32 billion is due in 2025. The previously mentioned $2.35 billion, 364-day senior secured loan was repaid in its entirety with a portion of the proceeds of these notes. The Secured Notes are unconditionally guaranteed by Celebrity Cruises Holdings Inc., Celebrity Cruises Inc. and certain of our wholly-owned vessel-owning subsidiaries. $1.66 billion of the obligations under the Secured Notes and the related guarantees are secured by first priority security interests in collateral, which includes certain of our material intellectual property, a pledge of 100% of the equity interests of certain of our vessel-owning subsidiaries and mortgages on the 28 vessels owned by such subsidiaries;

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•    secured deferrals of existing debt amortization under our export-credit backed debt facilities which increased the Company’s liquidity by an additional $1.5 billion;
issued $1.0 billion senior guaranteed notes (“Unsecured Notes”) maturing 2023;
issued $1.725 billion senior convertible notes maturing 2023;
qualified for a government commercial paper program by the Bank of England and issued £300.0 million, or approximately $409.9 million, of unsecured commercial paper thereunder;
secured a commitment for a $700.0 million 364-day term loan facility available for draw any time prior to August 12, 2021;
issued approximately 22.6 million shares of common stock for approximately $1.6 billion; and
•    agreed with certain of our lenders that we will not pay dividends or engage in stock repurchases until at least the end of the third quarter of 2022.
Expected debt maturities for 2021 are $0.4 billion, assuming completion of a remaining $0.4 billionyear, to begin operating revenue sailings in ship principal amortization deferrals. We estimate our cash burn to be, on average, in the range of approximately $250 million to $290 million per month during a prolonged suspension of operations. This range includes all interest expenses, ongoing ship operating expenses, administrative expenses, hedging costs, expected necessary capital expenditures (net of committed financings in the case of newbuilds) and excludes changes in customer deposits, commissions, principal repayments, and fees and collateral postings related to financing and hedging activities.
As we return our fleet into service, we have incurred, as it relates to existing operations, and will incur incremental spend as we bring the ships out of their various levels of layup, return the crew to our vessels, take the necessary steps to ensure compliance with the recommended protocols and gear up our sales and marketing activities.
We continue to identify and evaluate further actions to enhance our liquidity and support our recovery. These include and are not limited to further reductions in capital expenditures, operating expenses and administrative costs and additional financings, and refinancings.
Both our non-export credit agency facilities and our export credit agency (“ECA”) facilities contain covenants that require us, among other things, to maintain a fixed charge coverage ratio of at least 1.25x and limit our net debt-to-capital ratio to no more than 62.5%, and under certain facilities, to maintain minimum shareholders’ equity. During the course of 2020, we amended our export credit facilities, substantially all of our non-export credit facilities totaling an outstanding amount of $11.2 billion as of December 31, 2020, and our credit card processing agreements in order to waive the applicable financial covenants through and including the fourth quarter of 2021. The remainder of our credit facilities with financial covenants (totaling $130 million as of December 31, 2020) benefit from a financial covenant waiver through and including the first quarter of 2021. Certain of these amended agreements impose a monthly-tested liquidity covenant. As of December 31, 2020, the minimum liquidity requirement was $350.0 million. Pursuant to these amendments, we have also agreed that we will not pay cash dividends or effectuate share repurchases during the waiver period unless we are in compliance with the fixed charge coverage covenant as of the end of the most recently completed quarter for the duration of the waiver period.
During the first quarter of 2021, we amended $4.9 billion of our non-export credit facilities and certain of our credit card processing agreements to extend the waiver of the financial covenants through and including the third quarter of 2022 or, if earlier, that date falling after January 1, 2022 on which we elect to comply with the modified covenants. In addition, pursuant to the amendments, we have modified the manner in which such covenants are calculated (temporarily in certain cases and permanently in others) as well as the levels at which our net debt to capitalization covenant will be tested during the period commencing immediately following the end of the waiver period and continuing through the end of 2023. The amendments also increase the monthly-tested minimum liquidity covenant to $500 million for the duration of the waiver period (subject to reduction to $350 million, if we raise at least $500 million of additional capital). Pursuant to these amendments, the restrictions on paying cash dividends and effectuating share repurchases were extended through and including the third quarter of 2022.
As of December 31, 2020, we were in compliance with the applicable minimum liquidity covenant and we estimate that we will be in compliance for at least the next twelve months. Refer to Note 9. 2024.Debt for further information regarding our debt covenants.
During the first quarter of 2021, we also amended $6.2 billion of our export credit facilities to extend the waiver of the financial covenants through and including at least the end of the third quarter of 2022. These amendments also allow for the deferral of up to $1.1 billion of principal payments due between April 2021 and April 2022 subject to the satisfaction of various conditions precedent. As of February 19, 2021, the conditions precedent have been satisfied for 13 of the 15 amended facilities, which will allow us to defer $0.8 billion of amortization payments due during this period. There can be no assurances that the conditions precedent will be met for the remaining two facilities. The deferred amounts will be repayable semi-annually over a

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five-year period starting in April 2022. Pursuant to these amendments, we have agreed to implement the same liquidity covenant that applies in our non-export credit facilities. The amendments also provide for mandatory prepayment of the deferred amounts upon the taking of certain actions. Subject to a number of carve-outs, these include, but are not limited to, issuance of dividends, completion of share repurchases, issuances of debt other than for crisis and recovery purposes, the making of loans and the sale of assets other than at arm’s length.
In addition, in the fourth quarter of 2020 and the first quarter of 2021, we entered into amendments to our drawn and undrawn ECA facilities to provide for the issuance of guarantees in satisfaction of existing obligations under these facilities. Following issuance, which in the case of the undrawn facilities, will occur once the debt is drawn, the guarantees will be released under certain circumstances as other debt is repaid or refinanced on an unsecured and unguaranteed basis. In connection with and following the issuance of the guarantees, the guarantor subsidiaries are restricted from issuing additional guarantees in favor of lenders, other than those lenders who are party to the ECA facilities, and certain of the guarantor subsidiaries are restricted from incurring additional debt. In addition, the ECA facilities will benefit from guarantees to be issued by intermediary parent companies of subsidiaries that take delivery of any new vessels subject to export-credit backed financing.





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Executive Overview
During 2020, the world was heavily impacted by the COVID-19 pandemic. As part of the containment effort resulting from the global pandemic, we implemented a voluntary suspension of our cruise operation beginning March 13, 2020, which has been extended through at least April 30, 2021, for most of our cruise operations. As a result, we cancelled almost 2,000 sailings that were originally scheduled to sail in 2020.
Throughout the COVID-19 pandemic, our focus has been on the safety and well-being of our guests and crew, the care of our fleet, and the strength of our liquidity position. We repatriated 46,998 crew members, moved our whole fleet into various level of lay-up and formed an expert panel with Norwegian Cruise Line Holdings, called the Healthy Sail Panel ("HSP"), to develop a comprehensive set of enhanced health and safety protocols. Based on the detailed scientific recommendations of the HSP we were able to successfully resume operations in Singapore, with Quantum of the Seas, and in Europe with TUI Cruises and Hapag-Lloyd.
Since the suspension of our global cruise operation, we have taken aggressive actions to enhance our liquidity, preserve cash and obtain additional financing. During 2020, we raised approximately $9.3 billion of new capital through a combination of bond issuances, common stock public offerings and other loan facilities. We also reduced our steady-state monthly cruise operating expenses by approximately 80% and reduced the 2020 capital expenditures by $3.0 billion. In addition, in the second quarter of 2020 and the first quarter of 2021, we amended our export credit facilities to allow for the deferral of $1.5 billion of principal amortization through April 2022. We also amended over $11 billion of commercial bank and export credit facilities to provide covenant waivers through at least the third quarter of 2022. Given the current environment, we continue to prioritize and bolster our liquidity, working to ensure we are well positioned for recovery. Our average cash burn rate continues to be within the range of $250 million - $290 million per month during this prolonged suspension of operations, despite increased interest expenses from additional financing.
During the year ended December 31, 2020, we executed several measures to structurally reduce our cost base, realign our capital allocation and improve our scale and margins. Besides working on reducing our G&A expenses and streamlining our procurement efforts, we successfully divested three of our oldest and less efficient ships, Empress of the Seas, Majesty of the Seas and Celebrity Xperience and are assisting in the reorganization in Spanish courts of Pullmantur Cruceros. We also acquired the remaining share of Silversea without impacting our liquidity and expanded our joint-venture with TUI Cruises to include Hapag-Lloyd Cruises. Despite disruptions in shipyard operations, we successfully took delivery of three new ships – Celebrity Apex, Silver Moon and Silver Origin. Moreover, in January 2021, we entered into a definitive agreement to sell our Azamara brand to Sycamore Partners in an all-cash transaction which is expected to close in the first quarter of 2021. The deal includes Azamara’s three-ship fleet and associated intellectual property. By reshaping our fleet’s efficiency and the corporations’ cost structure we are aligning our company to better support our operating leverage and earnings growth during our recovery.
As the pandemic persists, we will continue to search for further opportunities in our operations. As important, we are also focusing on our healthy return-to-service program, as well as returning to financial health.
We continue to work and collaborate with the HSP, epidemiological and policy experts, health authorities and various governments around the globe to ensure a healthy and safe return to cruising for guests, crew and the communities we visit. Regarding the resumption of operations out of the U.S., we continue to prepare and develop our plan to meet the Framework for Conditional Sailing Order issued by the U.S. Centers for Disease Control and Prevention (CDC). Overall, and due to the challenges posed by the pandemic, we expect to re-start our global cruise operation in a phased manner with reduced guest occupancy, modified itineraries and enhanced health and safety protocols.




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Results of Operations
In addition to the items discussed above under "Executive Overview," significant items for 20202022 include:
Our Net (Loss) IncomeLoss attributable to Royal Caribbean Cruises Ltd. and Adjusted Net (Loss) IncomeLoss attributable to Royal Caribbean Cruises Ltd. for the year ended December 31, 20202022 was $(5.8)$(2.2) billion and $(3.9)$(1.9) billion, or $(27.05)$(8.45) and $(18.31)$(7.50) per share on a diluted basis, respectively, asreflecting our return to full operations, compared to Net IncomeLoss attributable to Royal Caribbean Cruises Ltd. and Adjusted Net IncomeLoss attributable to Royal Caribbean Cruises Ltd. of $1.9$(5.3) billion and $2.0$(4.8) billion, or $8.95$(20.89) and $9.54$(19.19) per share on a diluted basis, respectively, for the year ended December 31, 2019.2021.
Total revenues, excluding the effect of changes in foreign currency rates, decreasedincreased by $8.7$7.5 billion for the year ended December 31, 20202022 as compared to the same period in 2019 reflecting2021. The increase reflects our full return to operations by June 2022 compared to 2021 when the volume impactsuspension of our cancelled sailings during 2020 asglobal cruise operations was in effect for a resultsubstantial portion of our fleet.APCDs for the COVID-19 pandemic.year ended December 31, 2022was 41,197,650 compared to 11,767,441, in the same period in 2021.
The effect of changes in foreign currency exchange rates related to our passenger ticket and onboard and other revenue transactions, denominated in currencies other than the United States dollar, resulted in a decrease in total revenues of $22.0$149.0 million for the year ended December 31, 20202022 compared to the same period in 2019.2021.
Total cruise operating expenses, excluding the effect of changes in foreign currency rate, decreasedincreased by $3.3$4.0 billion for the year ended December 31, 20202022 compared to the same period in 2019 due2021, which reflects our return to operations in 2022 compared to 2021 when the suspension of our cancelled sailingsglobal cruise operations was in 2020.effect for the substantial portion of our fleet.
The effect of changes in foreign currency exchange rates related to our cruise operating expenses, denominated in currencies other than the United States dollar, resulted in a decrease in total operating expenses of $11.2$79.5 million for the year ended December 31, 20202022 compared to the same period in 2019.2021.
DuringIn January 2022 and April 2022, we took delivery of Wonder of the year endedSeas and Celebrity Beyond, respectively. To finance the purchases, we borrowed $1.3 billion and €0.7 billion, or approximately $0.7 billion based on the exchange rate at December 31, 2020, as a result of the current and expected ongoing impact of the COVID-19 pandemic on our operations and cash flows, we recorded total impairment and credit losses of $1.6 billion. The impairment charges related to our goodwill, trademarks and trade names, long-lived assets, including right-of-use assets, and credit losses related to our notes receivable.
Our consolidated results of operations include Silversea Cruises’ results of operations on a three-month reporting lag from October 1, 2019 through September 30, 2020 for the twelve months ended December 31, 2020, from October 1, 2018 through September 30, 2019 in our consolidated results of operations for the year ended December 31, 2019 and from the date of acquisition of July 31, 2018 to September 30, 2018 in our consolidated results of operations for the year ended December 31, 2018.2022, respectively, under previously committed unsecured term loans. Refer to Note 1. General to our consolidated financial statements under Item 1. Financial Statements for further information on this three-month reporting lag.
During the year ended December 31, 2020, we executed and amended various financing arrangements, as summarized below. Refer to Note 98. Debtand Note 12. Shareholders' Equity, to our consolidated financial statements under Item 8. Financial Statements and SupplementalSupplementary Data for further information. Wonder of the Seas and Celebrity Beyond entered service in the first and second quarters of 2022, respectively.
In July 2022, we purchased the Silver Endeavour for our Silversea Cruises brand. To finance the purchase, we assumed $277 million of debt. Silver Endeavour entered service in the fourth quarter of 2022. Refer to Note 8. Debt to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for further information.
During the year ended December 31, 2022, we executed and amended various financing arrangements, we refinanced $6.9 billion of 2022 and 2023 maturities, which resulted in a total loss on extinguishment of debt of $93.8 million. Refer to Note 8. Debt to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for further information on the following underlyingour 2022 financing transactions:activity.
a $0.6 billion increase inDuring the capacity available under our revolving credit facilities;
additional liquidity of $6.8 billion through the issuance of new debt, including convertible debt, net of repayments, and the securing of a one-year $700 million commitment for a 364-day term loan facility;
£300.0 million, or $409.9 million, based on exchange rates as ofyear ended December 31, 2020,2022, we recorded a loss contingency of available$130.0 million inclusive of related legal fees and issued liquidity under an unsecured government commercial paper programcosts in connection with the Bank of England;
ongoing Havana Docks litigation. Refer to Note 17.the deferral of $0.9 million of existing debt amortization Commitments and Contingencies to our consolidated financial statements under our export-credit backed ship debt facilities through April 2021, which will be paid over a period of four years after the deferral period;Item 8. Financial Statements and
Supplementary Data 22.6 million shares of common stock for approximately $1.6 billion.further information.


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We reported Net IncomeLoss attributable to Royal Caribbean Cruises Ltd,Ltd., Adjusted Net Income, earningsLoss attributable to Royal Caribbean Cruises Ltd., Loss per shareShare and Adjusted EarningsLoss per Share as shown in the following table (in thousands, except per share data):
Year Ended December 31,
202020192018
Net (Loss) Income attributable to Royal Caribbean Cruises Ltd.$(5,797,462)$1,878,887 $1,811,042 
Adjusted Net (Loss) Income attributable to Royal Caribbean Cruises Ltd.(3,924,579)2,002,847 1,873,363 
Net Adjustments to Net (Loss) Income attributable to Royal Caribbean Cruises Ltd. - Increase$1,872,883 $123,960 $62,321 
Adjustments to Net (Loss) Income attributable to Royal Caribbean Cruises Ltd.:
Impairment and credit losses (1)$1,566,380 $— $— 
Equity investment impairment (2)39,735 — — 
Recognition of deferred currency translation adjustment loss on sale of assets (3)69,044 — — 
Convertible debt amortization of debt discount (4)46,546 — — 
Pullmantur reorganization settlement (5)21,637 — — 
Oasis of the Seas incident, Grand Bahama's drydock write-off and other incidental expenses (6)
(1,938)35,239 — 
Loss on extinguishment of debt (7)41,109 6,326 — 
Change in the fair value of contingent consideration and amortization of Silversea Cruises intangible assets related to Silversea Cruises acquisition (8)(33,814)30,675 2,046 
Restructuring charges and other initiatives expense (9)51,853 13,707 — 
Transaction and integration costs related to the Silversea Cruises acquisition (8)— 2,048 31,759 
Noncontrolling interest adjustment (10)72,331 35,965 3,156 
Impairment loss related to Skysea Holding (11)— — 23,343 
Impairment and other costs related to exit of tour operations business (12)— — 11,255 
Impact of change in accounting principle (13)— — (9,238)
Net Adjustments to Net (Loss) Income attributable to Royal Caribbean Cruises Ltd. - Increase$1,872,883 $123,960 $62,321 
Basic:
   (Loss) Earnings per Share$(27.05)$8.97 $8.60 
   Adjusted (Loss) Earnings per Share$(18.31)$9.56 $8.90 
Diluted:
   (Loss) Earnings per Share$(27.05)$8.95 $8.56 
   Adjusted (Loss) Earnings per Share$(18.31)$9.54 $8.86 
Weighted-Average Shares Outstanding:
Basic214,335 209,405 210,570 
Diluted214,335 209,930 211,554 
Year Ended December 31,
202220212020
Net Loss attributable to Royal Caribbean Cruises Ltd.$(2,155,962)$(5,260,499)$(5,797,462)
Loss on extinguishment of debt (1)$93,810 $138,759 $41,109 
Convertible debt amortization of debt discount (2)— 104,291 46,546 
Pullmantur reorganization settlement (3)— 10,242 21,637 
Impairment and credit losses (4)562 82,001 1,566,380 
Equity investment impairment (5)— 31,344 39,735 
Oasis of the Seas incident (6)— (6,584)(1,938)
Restructuring charges and other initiatives expense (7)11,625 1,831 51,853 
Amortization of Silversea Cruises intangible assets and change in the fair value of contingent consideration related to Silversea Cruises acquisition (8)6,493 6,493 (33,814)
Noncontrolling interest adjustment (9)— — 72,331 
Net gain related to the sale of Azamara brand (10)— (3,371)— 
Currency translation adjustment losses (11)— — 69,044 
Net loss related to the elimination of the Silversea Cruises reporting lag (12)— 62,604 — 
Litigation loss contingency (13)130,033 — — 
Adjusted Net Loss attributable to Royal Caribbean Cruises Ltd.$(1,913,439)$(4,832,889)$(3,924,579)
Basic:
   Loss per Share$(8.45)$(20.89)$(27.05)
   Adjusted Loss per Share$(7.50)$(19.19)$(18.31)
Diluted:
   Loss per Share$(8.45)$(20.89)$(27.05)
   Adjusted Loss per Share$(7.50)$(19.19)$(18.31)
Weighted-Average Shares Outstanding:
Basic255,011 251,812 214,335 
Diluted255,011 251,812 214,335 

(1)
Represents net losses related to the early repayment of debt. For further information regarding the repayment transactions, refer to Note 8. Debt to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data.
(1)(2)    Represents the amortization of non-cash debt discount on our convertible notes. For further information regarding the adoption of ASU 2020-06 as of January 1, 2022, which impacts the accounting of the non-cash debt discount on convertible notes, refer to Note 2. Summary of Significant Accounting Policies to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data.
(3)    Represents estimated cash refunds expected to be paid to Pullmantur guests and other expenses incurred as part of the Pullmantur S.A. reorganization.
(4)    Represents asset impairment and credit losses recordedas a result of the impact of COVID-19, with 2022 and 2021 amounts net of the recovery of credit losses previously recognized.
(5)    Represents equity investment asset impairment, primarily for our investments in TUI Cruises GmbH in 2021 and Grand Bahama Shipyard in 2020, as a result of the impact of COVID-19. These amounts are included in Equity investment income (loss) within our consolidated statements of comprehensive income (loss).
(2)    Represents equity investment asset impairment, primarily for our investment in

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(6)    In 2021 and 2020, amounts include net insurance recoveries related to the collapse of the drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas.
(7)    Represents primarily restructuring charges incurred in relation to the reduction in our U.S. workforce and other initiatives expenses.
(8)    In 2022 and 2021, represents the amortization of the Silversea Cruises intangible assets resulting from the 2018 Silversea Cruises acquisition. In 2020, represents the change in the fair value in the Silversea Cruises contingent consideration recorded within Other (expense) income, offset by the amortization of the Silversea Cruises intangible assets.
(9)    Adjustment made to exclude the impact of the contractual accretion requirements associated with the put option held by Heritage Cruise Holding Ltd.'s (previously known as Silversea Cruises Group Ltd.) noncontrolling interest, which noncontrolling interest we acquired on July 9, 2020.
(10)    Represents the net gain recognized in the first quarter of 2020 as a result2021 in relation to the sale of the impact of COVID-19.Azamara brand.
(3)(11)    Represents currency translation losses recognized in connection with the ships sold in 2020 that were previously chartered to Pullmantur. Refer to Note 8.7. Other Assets to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for further information.
(12) Represents the net loss related to the elimination of the Silversea Cruises reporting lag.
(13)     Represents our loss contingency recorded in connection with the ongoing Havana Docks litigation inclusive of related legal fees and costs.















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The following table presents operating results as a percentage of total revenues for the last three years:
Year Ended December 31,
202220212020
Passenger ticket revenues65.5 %61.4 %68.1 %
Onboard and other revenues34.5 %38.6 %31.9 %
Total revenues100.0 %100.0 %100.0 %
Cruise operating expenses:
Commissions, transportation and other15.3 %13.5 %15.6 %
Onboard and other6.7 %7.6 %7.1 %
Payroll and related14.6 %54.7 %35.7 %
Food7.4 %10.7 %7.3 %
Fuel12.1 %25.1 %16.8 %
Other operating18.6 %61.7 %42.7 %
Total cruise operating expenses74.8 %173.5 %125.2 %
Marketing, selling and administrative expenses17.9 %89.4 %54.3 %
Depreciation and amortization expenses15.9 %84.4 %57.9 %
Impairment and credit losses— %5.4 %70.9 %
Operating Loss(8.6)%(252.6)%(208.3)%
Other income (expense):
Interest income0.4 %1.1 %1.0 %
Interest expense, net of interest capitalized(15.4)%(84.3)%(38.2)%
Equity investment income (loss)0.6 %(8.8)%(9.7)%
Other (expense) income(1.4)%1.3 %(6.2)%
(15.7)%(90.7)%(53.1)%
Net Loss(24.4)%(343.3)%(261.5)%
Less: Net Income attributable to noncontrolling interest— %— %1.0 %
Net Loss attributable to Royal Caribbean Cruises Ltd.(24.4)%(343.3)%(262.5)%
Selected statistical information is shown in the following table:
Year Ended December 31,
20222021(1)(3)2020(2)
Passengers Carried5,536,335 1,030,403 1,295,144 
Passenger Cruise Days35,051,935 5,802,582 8,697,893 
APCD41,197,650 11,767,441 8,539,903 
Occupancy85.1 %49.3 %101.9 %

(1)Due to the elimination of the Silversea Cruises three-month reporting lag in October of 2021, we include Silversea Cruises' metrics from October 1, 2020 through June 30, 2021 and October 1 through December 31, 2021 in the year ended December 31, 2021. The year ended December 31, 2021 does not include July, August, and September 2021 statistics as Silversea Cruises' results of operations for those months are included within Other (expense) income in our consolidated statements of comprehensive loss for the year ended December 31, 2021. Refer to Note 1. General to our consolidated financial statements under Item 1. 8. Financial Statements and Supplementary Data for more information on the three-month reporting lag.
(2) Due to the three-month reporting lag effective through September 30, 2021, we include Silversea Cruises' metrics from October 1, 2019 through September 30, 2020 in the year ended December 31, 2020.
(3)    For the year ended December, 31, 2021, we include Azamara Cruises' metrics through March 19, 2021, the effective sale date of the brand. Refer to Note 1. General for further information.
(4)    Represents the amortization of non-cash debt discount onto our convertible notes.consolidated financial statements under Item 8. Financial Statements and Supplementary

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(5)    Represents estimated cash refunds expected to be paid to Pullmantur guests and other expenses incurred as partData for more information on the sale of the Pullmantur S.A. reorganization.Azamara Cruises brand. For the year ended December 31, 2020, we include Azamara Cruises' metrics for the full year.
EBITDA and Adjusted EBITDA were calculated as follows (in thousands):
Year Ended December 31,
202220212020
Net Loss attributable to Royal Caribbean Cruises Ltd.$(2,155,962)$(5,260,499)$(5,797,462)
Interest income(35,857)(16,773)(21,036)
Interest expense, net of interest capitalized1,364,162 1,291,753 844,238 
Depreciation and amortization expenses1,406,689 1,292,878 1,279,254 
Income tax (benefit) expense (1)4,153 (47,167)(14,990)
EBITDA583,185 (2,739,808)(3,709,996)
Other expense (2)116,223 26,883 152,075 
Impairment and credit losses562 82,001 1,566,380 
Restructuring charges and other initiatives expense11,625 1,831 51,853 
Equity investment impairment (3)— 31,344 39,735 
Oasis of the Seas incident (4)— (6,584)(1,938)
Pullmantur reorganization settlement (5)— 5,242 1,637 
Net gain related to the sale of the Azamara brand— (3,371)— 
Noncontrolling interest adjustment (6)— — 72,331 
Adjusted EBITDA$711,595 $(2,602,462)$(1,827,923)
(6)    In
(1) Included within Other (expense) income in our consolidated statements of comprehensive loss.
(2) Represents net non-operating income or expense. For 2022, primarily relates to our loss contingency recorded of approximately $130 million in connection with the ongoing Havana Docks litigation inclusive of related legal fees and costs, as well as amounts related to changes in fair value of fuel swaps for which cash flow hedge accounting was discounted. For 2021 and 2020, amount includesprimarily relates to changes in the fair value of fuel swaps for which cash flow hedge accounting was discontinued. The amounts excludes income tax (benefit) expense, included in the EBITDA calculation above.
(3) Represents equity investment asset impairment, primarily for our investments in TUI Cruises GmbH in 2021 and Grand Bahama Shipyard in 2020, as a result of the impact of COVID-19. These amounts are included in Equity investment income (loss) within our consolidated statements of comprehensive income (loss).
(4) Represents net insurance recoveries related to the collapse of the drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas.
(5) Represents expenses other than estimated cash refunds incurred as part of the Pullmantur S.A. reorganization.
(6) Adjustment made to exclude the impact of the contractual accretion requirements associated with the put option held by Heritage Cruise Holding Ltd.'s (previously known as Silversea Cruises Group Ltd.) noncontrolling interest, which noncontrolling interest we acquired on July 9, 2020.









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EBITDA and Adjusted EBITDA for 2019 were calculated as follows (in thousands, except APCD and per APCD data):
Year Ended December 31,
2019
Net Income attributable to Royal Caribbean Cruises Ltd.$1,878,887 
Interest income(26,945)
Interest expense, net of interest capitalized408,513 
Depreciation and amortization expenses1,245,942 
Income tax expense (1)32,602 
EBITDA3,538,999 
Other income (2)(8,089)
Restructuring charges and other initiatives expense13,707 
Oasis of the Seas incident, Grand Bahama's drydock write-off and other incidental expenses (3)35,239 
Transaction and integration costs related to the 2018 Silversea acquisition2,048 
Non-controlling interest adjustment (4)35,965 
Adjusted EBITDA$3,617,869 
(1) Included within In 2019,Other income (expense) in our consolidated statements of comprehensive income (loss).
(2) Excludes income tax expense, included in the EBITDA calculation above.
amount(3) Amount includes incidental costs, net of insurance recoveries of $14.5 million related to the collapse of the drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas, which were reported primarily within Other operating expenses in our consolidated statements of comprehensive income (loss) for the year ended December 31, 2019;2019; and $20.7 million regarding the Grand Bahama incident involving one of its drydocks, included in Equityour equity investment income within our consolidated statements of comprehensive income (loss) for the year ended December 31, 2019. Refer to Note 8. Other Assets to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for information.
(7)    In 2020, represents the loss on the extinguishment of the $2.35 billion 364-day senior secured term loan. In 2019, represents the loss on the extinguishment of the $700 million 364-day loan related to the 2018 Silversea Cruises acquisition and the remaining balance of the unsecured term loan originally incurred in 2010 to purchase Allure of the Seas.
(8)    Related to the 2018 Silversea Cruises acquisition. Refer to Note 1. General and Note 11. Redeemable Noncontrolling Interest to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for information on the Silversea Cruises acquisition.
(9)    Represents restructuring charges incurred in relation to the reduction in our U.S. workforce and other initiatives expenses in 2020 and the reorganization of our international sales and marketing structure primarily in 2019. Refer to Note 20. Restructuring Charges to our consolidated financial statements under item 8. Financial Statements and Supplementary Data for further information on the restructuring activities.
(10)(4) Adjustment made to exclude the impact of the contractual accretion requirements associated with the put option held by Heritage Cruise Holding Ltd.'s (previously known as Silversea Cruises Group Ltd.'s) noncontrolling interest. Refer to Note 11. Redeemable Noncontrolling Interest to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for further informationinterest, which noncontrolling interest we acquired on noncontrolling interest.July 9, 2020.

(11)    Represents an impairment loss related to Skysea Holding recorded in 2018.
(12)    In 2014, we created a tour operations business that focused on developing, marketing and selling land based tours around the world through an e-commerce platform. During the second quarter of 2018, we decided to cease operations and exit this business. As a result, we incurred exit costs, primarily consisting of fixed asset impairment charges and severance expense.
(13)    In January 2018, we elected to change our accounting policy from the graded attribution method to the straight-line attribution method for time-based stock awards. Refer to Note 2
. Summary of Significant Accounting Policies
to our consolidated financial statements under Item 8.
Financial Statements and Supplementary Data
for further information on our accounting policy.











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The following table presents operating results as a percentage of total revenues for the last three years:
Year Ended December 31,
202020192018
Passenger ticket revenues68.1 %71.7 %71.5 %
Onboard and other revenues31.9 %28.3 %28.5 %
Total revenues100.0 %100.0 %100.0 %
Cruise operating expenses:
Commissions, transportation and other15.6 %15.1 %15.1 %
Onboard and other7.1 %5.8 %5.7 %
Payroll and related35.7 %9.9 %9.7 %
Food7.3 %5.3 %5.5 %
Fuel16.8 %6.4 %7.5 %
Other operating42.7 %12.8 %12.0 %
Total cruise operating expenses125.2 %55.4 %55.4 %
Marketing, selling and administrative expenses54.3 %14.2 %13.7 %
Depreciation and amortization expenses57.9 %11.4 %10.9 %
Impairment and credit losses70.9 %— %— %
Operating (loss) income(208.3)%19.0 %20.0 %
Other income (expense):
Interest income1.0 %0.2 %0.3 %
Interest expense, net of interest capitalized(38.2)%(3.7)%(3.5)%
Equity investment (loss) income(9.7)%2.1 %2.2 %
Other (expense) income(6.2)%(0.2)%0.1 %
(53.1)%(1.6)%(0.8)%
Net (Loss) Income(261.5)%17.4 %19.1 %
Less: Net Income attributable to noncontrolling interest1.0 %0.3 %0.1 %
Net (Loss) Income attributable to Royal Caribbean Cruises Ltd.(262.5)%17.2 %19.1 %

Selected statistical information is shown in the following table:Gross Cruise Costs, Net Cruise Costs and Net Cruise Costs excluding Fuel were calculated as follows (in thousands, except APCD and costs per APCD):
Year Ended December 31,
2020(1)2019 (1)2018 (1)
Passengers Carried1,295,144 6,553,865 6,084,201 
Passenger Cruise Days8,697,893 44,803,953 41,853,052 
APCD8,539,903 41,432,451 38,425,304 
Occupancy101.9 %108.1 %108.9 %

Year Ended December 31,
202220212020
Total cruise operating expenses$6,614,336 $2,657,512 2,765,108 
Marketing, selling and administrative expenses1,582,929 1,370,076 1,199,620 
Gross Cruise Costs8,197,265 4,027,588 3,964,728 
Less:
Commissions, transportation and other1,357,008 207,562 344,625 
Onboard and other596,554 116,946 157,213 
Net Cruise Costs including other costs6,243,703 3,703,080 3,462,890 
Less:
Restructuring charges and other initiatives expense (1)11,625 1,831 51,853 
Net Cruise Costs6,232,078 3,701,249 3,411,037 
Less:
Fuel1,072,567 385,322 371,015 
Net Cruise Costs excluding Fuel$5,159,511 $3,315,927 $3,040,022 
APCD41,197,650 11,767,441 8,539,903 
Gross Cruise Costs per APCD$198.97 $342.27 $464.26 
Net Cruise Costs per APCD$151.27 $314.53 $399.42 
Net Cruise Costs excluding Fuel per APCD$125.24 $281.79 $355.98 
(1) Included within Marketing, selling and administrative expenses We acquired Silversea Cruises on July 31, 2018 and report their results on a three-month reporting lag. As a result, 2020 figures include October 2019 through September 2020 Silversea Cruises amounts, 2019 figures include October 2018 through September 2019 Silversea Cruises amounts and 2018 figures include August and September 2018 Silversea Cruises amounts. Refer to Note 1. General and Note 3. Business Combination toin our consolidated financial statements under Item 8. of comprehensive loss.
Financial Statements and Supplementary Data
for further information on the three-month reporting lag.

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Outlook
Gross Cruise Costs, Net Cruise Costs and Net Cruise Costs excluding Fuel were calculated as follows (in thousands, except APCD and costs per APCD), on a Constant Currency basis:
On March 10, 2020, we withdrew
Year Ended December 31,
20222022 On a Constant Currency Basis2019
Total cruise operating expenses6,614,336 $— $6,062,765 
Marketing, selling and administrative expenses1,582,929 — 1,559,253 
Gross Cruise Costs8,197,265 8,247,096 7,622,018 
Less:
Commissions, transportation and other1,357,008 — 1,656,297 
Onboard and other596,554 — 639,782 
Net Cruise Costs including other costs6,243,703 — 5,325,939 
Less:
Restructuring charges and other initiatives expense (1)11,625 — 13,707 
Integration costs related to Silversea Cruises acquisition (1)— — 862 
Transaction costs related to Silversea Cruises acquisition (1)— — 1,186 
Costs, net of insurance recoveries, related to the Oasis of the Seas incident (2)— — 14,530 
Net Cruise Costs6,232,078 6,262,111 5,295,654 
Less:
Fuel1,072,567 — 697,962 
Net Cruise Costs excluding Fuel$5,159,511 $5,189,542 $4,597,692 
APCD41,197,650 41,197,650 41,432,451 
Gross Cruise Costs per APCD$198.97 $200.18 $183.96 
Net Cruise Costs per APCD$151.27 $152.00 $127.81 
Net Cruise Costs excluding Fuel per APCD$125.24 $125.97 $110.97 
(1) Included within Marketing, selling and administrative expenses in our full-year 2020 guidance due to the heightened impact and uncertaintyconsolidated statements of changes comprehensive loss.
(2) Included within Total cruise operating expenses in the magnitude, duration and geographic reachour consolidated statements of COVID-19. The magnitude, duration and speed of COVID-19 and related disruptions remain uncertain. As a consequence, the Company cannot reasonably estimate the impact of COVID-19 on its business, financial condition or near or longer-term financial or operational results. The adverse impact of the COVID-19 pandemic on our revenues, consolidated results of operations, cash flows and financial condition has been and will continue to be material in 2021. We expect to incur a net loss on both a US GAAP and adjusted basis for our first quarter of 2021, the extent of which will depend on many factors including the timing and extent of our return to service. See Recent Developments: COVID-19 – Update on Bookings for further indication of the booking environment for 2021 and 2022.comprehensive loss.






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Year Ended December 31, 20202022 Compared to Year Ended December 31, 20192021
In this section, references to 20202022 refer to the year ended December 31, 20202022 and references to 20192021 refer to the year ended December 31, 2019.2021.
Revenues
Total revenues for 2020 decreased $8.7increased $7.3 billion, or 79.8%477.0%, to $2.2 billion from $11.0$8.8 billion in 2019.2022 from $1.5 billion in 2021.
Passenger ticket revenues comprised 68.1%65.5% of our 20202022 total revenues. Passenger ticket revenues decreasedincreased by $6.4$4.9 billion, or 80.9%515.6% to $5.8 billion in 2022 from 2019. The decrease$0.9 billion in 2021and was primarily due to a 79.4% decrease in capacity drivenpartially offset by our cancelled sailings resulting from the suspension of our global fleet operations since mid-March 2020 in response to the COVID-19 pandemic.
Passenger ticket revenues also decreased by $15.7 million due to the unfavorable effect of changesmovements in foreign currency exchange rates related to our revenuesrevenue transactions denominated in currencies other than the United States dollar.dollar of $129.8 million.
The remaining 31.9%34.5% of 2020 total revenues was comprised of Onboard and other revenues, which decreased $2.4increased $2.5 billion, or 77.2%. The decrease415.6% to $3.0 billion in 2022 from $591.0 million in 2021 Onboard and other revenueswas primarily due to the 79.4% decrease in capacity noted above.
Additionally, Onboard and other revenues includes, to a much lesser extent, thepartially offset by unfavorable effect of changesmovements in foreign currency exchange rates related to our onboard and other revenues denominated in currencies other than the United States dollar of $6.4 million.
Onboard and other revenues included concession revenues of $76.0 million in 2020 and $363.8 million in 2019.
Cruise Operating Expenses
Total cruise operating expenses for 2020 decreased $3.3 billion, or 54.4%, to $2.8 billion in 2020 from $6.1 billion in 2019. The majority of the decrease was due to the 79.4% decrease in capacity noted above as a result of our cancelled sailings, including:
a $1.3 billion decrease in Commissions, transportation and other primarily due to lower commission and variable passenger tax expenses;
a $482.6 million decrease in Onboard and other expenses mostly due to lower shore excursion costs and beverage costs;
a $463.5 million decrease in Other operating expenses mostly due to lower port fees and a decrease in ship maintenance and consumable costs;
a $422.2 million decrease in Food expenses;
a $326.9 million decrease in Fuel expenses;
a $290.8 million decrease in Payroll and related expenses resulting from reduced onboard staffing levels; and
the favorable effect of changes in foreign currency exchange rates related to our expenserevenue transactions denominated in currencies other than the United States dollar of $11.2 million.$19.2 million.
The increase in total revenues was due to our return of operations, with our full fleet in service by June 2022, compared to 2021 when we began resuming guest cruise operations. Occupancy in 2022 was 85.1% compared to 49.3% in 2021.
Onboard and other revenues included concession revenues of $331.9 million in 2022 and $72.0 million in 2021.
Cruise Operating Expenses
Total Cruise operating expenses increased by $4.0 billion, or 148.9%, to $6.6 billion in 2022 from $2.7 billion in 2021. 
The increase in Cruise operating expenses was driven by the return to operations in 2022, with the majority of our fleet in service compared to 2021, when the suspension of our global cruise operations was in effect. The 2022 operating expenses include the overhead costs associated with bringing our ships back to service and our crew back on board our ships. Additionally, inflationary pressures have impacted our operating costs, especially in fuel and food expense. Our cost of fuel (net of the financial impact of fuel swap agreements) for 2022 increased 43% per metric ton compared to 2021 mainly due to the increase in fuel price.
Marketing, Selling and Administrative Expenses
Marketing, selling and administrative expenses for 2020 decreased $359.6 million,increased $0.2 billion, or 23.1%15.5% to $1.2 billion from $1.6 billion in 2019.2022 from $1.4 billion in 2021. The decreaseincrease was primarily due to the reduction and deferralramp up of our global sales and marketing activities dueefforts starting in the second half of 2021 as we commenced our resumption of operations. Additionally, having our full fleet in service as of June 30, 2022 increased overall expenses compared to the suspension of our operations.2021.


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Depreciation and Amortization Expenses
Depreciation and amortization expenses for 2020 increased $33.3 million,$0.1 billion, or 2.7%8.8%, to $1.4 billion in 2022 compared to $1.3 billion. The increase was primarily due to the additionsaddition of Celebrity ApexWonder of the Seas and Silver OriginCelebrity Beyond to our fleet in the firstJanuary 2022 and second quarters of 2020,April 2022, respectively, and a full year of depreciation in 2020 for SpectrumOdyssey of the Seas.Seas Additionally, the increase is also attributable to new shipboard additionsand Silver Dawn, which were delivered in 2019 associated with our ship modernization projectsMarch 2021 and additions related to our shoreside projects.November 2021, respectively.
.Impairment and Credit Losses
For the year ended December 31, 2020,Impairment and credit losses for 2022 was $0.6 million compared to $82.0 million in 2021. The decrease in impairment loss was primarily due to 2021 impairment charges of certain construction in progress projects that were reduced in scope or terminated as a result of the current and expected ongoing impact of the COVID-19, pandemic on our operations and cash flows, we recorded total impairment and credit losses of $1.6 billion, most of which was recorded during the three months ended March 31, 2020, related to the impairment of goodwill, intangibles, long-lived assets and credit losses related to the sale of our property and equipment.did not recur in 2022.
Other Income (Expense)
Interest expense, net of interest capitalized, increased $435.7$72.4 million, or 106.7%5.6%, to $844.2 million$1.4 billion in 20202022 from $408.5 million$1.3 billion in 2019.2021. The increase was primarily due to additional indebtedness associated with new debt issuances in 2020, a higher average balance on our revolver balances and a loss on extinguishment of the $2.35 billion senior secured term loan of $41.1 million.ship deliveries.

Equity investment (loss) incomefor 2022 was $56.7 million compared to Equity investment Loss of $135.5 million in 2021. The increase in income was primarily due to income from TUI Cruises, one of our equity investments, in 2022 compared to losses in 2021.

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Other (expense) income decreased $444.3$140.7 million, or 192.3%693.5%,to other expense of $120.4 million in 2022 from other income of $20.3 million in 2021. The decrease was primarily due to a loss contingency of $213.3$130.0 million recorded in 2020 from income of $231.0 million in 2019 mainly due to losses reported by our equity investments as a result ofconnection with the adverse impact of COVID-19 on their operations and earnings and a $39.7 million impairment charge of equity investments, recorded during the three months ended March 31, 2020, primarily for our investment in Grand Bahama Shipyard.
Other expense was $137.1 million in 2020 compared to $24.5 million in 2019. The increase in expense of $112.6 million includes recognition of a deferred currency translation adjustment loss of $69.0 million in the quarter ended June 30, 2020 related to the 2016 sale of our majority interest in the Pullmantur brand. We recognized the deferred currency translation loss in 2020 as we no longer have significant involvement in Pullmantur's operations. We also recognized $21.6 million of expense during the second quarter of 2020, approximating the estimated total cash refund expected to be paid to Pullmantur guests and other expenses incurred as part of a settlement agreement with our joint venture partner as part of the brand's reorganization Refer to Note 8. Other Assets to our consolidated financial statements under Item 8. Financial Statements and Supplemental Data for further information on our investment in Pullmantur. In addition, we recorded a net $92.0 million loss related to the change in fair value of mostly fuel swap derivative instruments with no hedge accounting. These expenses were partially offset by income of $45.1 million for the change in contingent consideration payable in 2020 to Heritage, the former minority shareholder of Silversea Cruises, and a decrease of $47.6 million in net tax expense mostly attributable to the suspension in our operations.ongoing Havana Docks litigation.
Other Comprehensive Income (Loss)
Other comprehensive income in 20202022 was $58.4$67.7 million compared to Other comprehensive loss of $170.0$28.5 million in 2019.2021. The change of $228.4 million in 2020 was primarily due to a Gain on cash flow derivative hedgesChanges in defined benefits plan in 20202022 of $38.0$48.9 million compared to a Loss on cash flow derivative hedges of $151.3$8.7 million in 2019. The decrease was primarily due to an increase in the fair value of our foreign currency forward contracts in 2020 compared to a decrease in fair value of our foreign currency contracts in 2019.2021.

Year Ended December 31, 2019 Compared to Year Ended December 31, 2018
A discussion of our results of operations for the year ended December 31, 2019 compared to the year ended December 31, 2018 is included in Part II. Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on February 25, 2020, as updated by our Current Report on Form 8-K dated May 13, 2020, and is incorporated by reference into this Form 10-K.


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Future Application of Accounting Standards
Refer to Note 2.Note. 2 Summary of Significant Accounting Policies to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for further information on Recent Accounting Pronouncements.
Liquidity and Capital Resources
Sources and Uses of Cash
As a resultNet cash provided by (used in) operating activities increased by $2.4 billion to cash provided of $0.5 billion for the COVID-19 impact on our business, includingyear ended December 31, 2022, compared to cash used of $1.9 billion for the suspensionsame period in 2021. Our full resumption of global sailings, we have experienced a decreaseoperations in bookings and2022 generated an increase in customer deposit refunds since the first quarter of 2020, which has significantly affected our liquidityguest ticket and cash flow.
Net cash (used in) provided by operating activities decreased $7.4 billion to cash used of $(3.7) billiononboard collections for the twelve months ended December 31, 2020,2022, compared to cash provided a partial resumption of $3.7 billionoperations in 2019. The current disruptions to our business led to a decrease in collections from our guests as well as an increase of refunds to guests for cancelled sailings during the twelve months ended December 31, 2020 compared to the same period in 2019.
Net cash provided by operating activities increased $237.2 million to $3.7 billion in 2019 compared to $3.5 billion in 2018. The increase in cash provided by operating activities was primarily attributable to an increase in proceeds from customer deposits, an increase in cash receipts from onboard spending and a decrease in fuel costs in 2019 compared to 2018. Additionally, dividends received from unconsolidated affiliates decreased by $92.9 million.2021.
Net cash used in investing activities decreased $0.9increased by$843.0 million to cash used of $3.0 billion to $2.2 billion in 2020for the year ended December 31, 2022, compared to $3.1cash used of $2.1 billion for the same period in 2019.2021. The decreaseincrease in cash used in investing activities was primarily attributable to a decreasean increase in capital expenditures of $1.1 billion.$480.4 million due to the increased cost associated with taking delivery of
Net cash usedWonder of the Seas and Celebrity Beyond in investing activities decreased $1.4 billion to $3.1 billion in 20192022 compared to $4.5 billiontaking delivery of Odyssey of the Seas and Silver Dawn in 2018. The decrease was primarily attributable to the $916.1 million of2021, and an increase in cash paid for the acquisitionon settlement of Silversea Cruises, netderivative financial instruments of cash acquired,$281.7 million in 2018, which did not recur in 2019 and a decrease in capital expenditures of $635.4 million due mostly to the delivery of two more ships in 20182022 compared to 2019, partially offset by higher fleet modernization costs in 2019 compared to 2018.2021.
Net cash provided by financing activities was $9.3$1.7 billion in 20202022 compared to Net cash used in financing activities provided of $0.7$3.0 billion in 2019.2021. The changedecrease of $1.3 billion was primarily attributable to an increase in debt proceeds of $10.0 billion in 2020 compared to the same period in 2019, and $1.4 million in proceeds from common stock issuances on 2020. These proceeds were partially offset by net repayments of commercial paper of $1.1$1.6 billion during the twelve months ended December 31, 20202021, compared to net borrowings of commercial paper of $0.6 billionnone during the same period in 2019.2022, and offset by repayments of commercial paper notes of $414.6 million during the twelve months ended December 31, 2021, compared to none during the same period in 2022.
Net cash used by financing activities was $0.7 billion in 2019 compared to Net cash provided in financing activities of$1.2 billion in 2018. The change was primarily attributable to a decrease in debt proceeds of $5.1 billion in 2019 compared to 2018 primarily due to a decrease in borrowings on our revolving credit facilities and less unsecured term loan borrowings resulting from less ship deliveries in 2019 and the financing of the acquisition of Silversea Cruises in 2018. This decrease in proceeds was partially offset by a decrease in repayments of debt of $2.9 billion and a decrease in stock repurchases of $475.5 million in 2019 compared to 2018.
Future Capital Commitments
Capital Expenditures
Our future capital commitments consist primarily of new ship orders. As of December 31, 2020,2022, we have twoone Oasis-class ships, one Quantum-class ship, and three ships of a new generation, known as our Icon-class, on order for our Royal Caribbean International brand with an aggregate capacity of approximately 32,40022,500 berths. As of December 31, 2020,2022, we have twoone Edge-class shipsship on order for our Celebrity Cruises brand, with an aggregatea capacity of approximately 6,5003,250 berths. Additionally, as of December 31, 2020,2022, we have threetwo ships on order for our Silversea Cruises brand with an aggregate capacity of approximately 1,7501,460 berths. Refer to Item 1. Business-Operations for further information on our ships on order. For the 15 ships on order weWe have committed financing arrangements in place covering 80% of the cost of the ship almostfor the seven ships on order for our Global Brands, all of which include sovereign financing guarantees. Additionally, we have an agreement in place with Chantiers de l’Atlantique to build an additional Edge-class ship for delivery in 2025, which is contingent upon completion of conditions precedent and financing.
As of December 31, 2020,2022, the aggregate cost of our ships on order, not includingexcluding any ships on order by our Partner Brands, and the Silversea Cruises ships that remain contingent upon final documentation and financing, was approximately $14.2$9.8 billion, of which we had deposited $684.8 million as of such date.$832 million. Approximately 66.3%52.3% of the aggregate cost was exposed to fluctuations in the Euro exchange rate at December 31, 2020.2022. Refer to Note 1816.. Fair Value Measurements and Derivative Instruments and Note 1917.. Commitments and Contingencies to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data.

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Decreased demand for cruising as a result of concerns regarding the COVID-19 pandemic has had,We have been, and is expected tomay continue to have, a material impactbe, negatively impacted on our cash flows, liquidity and financial position.position by the COVID-19 pandemic. In order to preserve liquidity, throughout the COVID-19 pandemic, we deferred a significant portion of our planned 2020, 2021 and 20212022 capital expenditures. As of December 31, 2020,2022, we anticipate overall full year capital expenditures, based on our existing ships on order, will be approximately $2.1$4.1 billion for 2021. These amounts do2023. This amount does not include any ships on order by our Partner Brands.

Contractual Obligations46



Material Cash Requirements
As of December 31, 2020,2022, our contractual obligationsmaterial cash requirements were as follows (in thousands):
 Payments due by period
  Less than1-33-5More than
 Total1 yearyearsyears5 years
Operating Activities:     
Operating lease obligations(1)
$873,415 $124,108 $226,823 $153,818 $368,666 
Interest on long-term debt(2)
3,690,617 908,230 1,521,157 746,103 515,127 
Other(3)
567,193 202,618 327,671 14,185 22,719 
Investing Activities:
Ship purchase obligations(4)
11,602,504 1,321,218 5,585,545 3,384,256 1,311,485 
Financing Activities:
Commercial paper(5)
409,319 409,319 — — — 
Debt obligations(6)
18,706,358 909,912 8,546,804 6,341,360 2,908,282 
Capital lease obligations(7)
213,365 51,855 21,335 11,092 129,083 
Other(8)
20,177 8,889 10,261 1,027 — 
Total$36,082,948 $3,936,149 $16,239,596 $10,651,841 $5,255,362 
 Payments due by period
  
 20232024202520262027ThereafterTotal
Operating Activities:     
Interest on debt(1)
$1,345,729 $1,187,749 $1,036,011 $780,404 $648,639 $1,106,447 $6,104,979 
Investing Activities:
Ship purchase obligations(2)
2,705,127 1,846,333 1,287,368 1,218,073 — — 7,056,901 
Total$4,050,856 $3,034,082 $2,323,379 $1,998,477 $648,639 $1,106,447 $13,161,880 

.
(1)    We are obligated under noncancelable operating leases primarily for preferred berthing arrangements, real estate and shipboard equipment. Amounts represent contractual obligations with initial terms in excess of one year.
(2)     DebtLong-term debt obligations mature at various dates through fiscal year 20322037 and bear interest at fixed and variable rates. Interest on variable-rate debt is calculated based on forecasted debt balances, including the impact of interest rate swap agreements, using the applicable rate at December 31, 2020.2022. Debt denominated in other currencies is calculated based on the applicable exchange rate at December 31, 2020.2022.
(3)    Amounts primarily represent future commitments with remaining terms in excess of one year to pay for our usage of certain port facilities, marine consumables, services and maintenance contracts. Included in the 1-3 year figure is estimated cash collateral of $181.1 million that we are required to deliver on or before July 18, 2021 in connection with our Port of Miami terminal operating lease. See Note 10. Leases to our consolidated financial statements under Item 1. Financial Statements for further information on the collateral requirement
(4)(2)     Amounts are based on contractual installment and delivery dates for our ships on order. Included in these figures are $9.4$5.7 billion in final contractual installments, which have committed financing. COVID-19 has impacted shipyard operations which have and will result in delaysfinancing covering 80% of the cost of the ships on order for our previously contracted ship deliveries. The exact durationGlobal Brands, almost all of the ship delivery delays are currently under discussion with the impacted shipyards.which include sovereign financing guarantees. Amounts do not include potential obligations which remain subject to cancellation at our sole discretion or any agreements entered for ships on order that remain contingent upon completion of conditions precedent. Additionally, amounts do not include activity related to Silversea Cruises, including ships placed on order, if any, during the three-month reporting lag period.
(5)   In June 2020, RCL Cruises Ltd., we established a commercial paper facility under the Joint HM Treasury and Bank of England’s COVID Corporate Financing Facility commercial paper program in an aggregate principal amount up to £300.0 million. Refer to Note 98. Debt to our consolidated financial statements under Item 8. Financial Statements and SupplementalSupplementary Datafor maturities related to debt.
Refer to Note 9. Leases to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for further information.maturities related to lease liabilities.
(6) Debt denominated in other currencies is calculated based on the applicable exchange rate at December 31, 2020. In addition, debt obligations presented above are net of debt issuance costs of $314.8 million as of December 31, 2020.
(7)      Amounts represent capital lease obligations with initial terms in excess of one year.
(8)     Amounts represent fees payable to sovereign guarantors in connection with certain of our export credit debt facilities and facility fees on our revolving credit facilities.
Please referRefer to Funding Needs and Sources below for discussion on the planned funding of the above material contractual obligations.

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As a normal part of our business, depending on market conditions, pricing and our overall growth strategy, we continuously consider opportunities to enter into contracts for the building of additional ships. We may also consider the sale of ships or the purchase of existing ships. We continuously consider potential acquisitions and strategic alliances. If any of these were to occur, they would be financed through the incurrence of additional indebtedness, the issuance of additional shares of equity securities or through cash flows from operations.
Off-Balance Sheet Arrangements.
Refer to Note 7. Other Assets to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for ownership restrictions related to TUI Cruises has entered into various ship constructionCruises.
Refer to Note 8. Debt to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for export credit agreements that include certain restrictions on each ofagency guarantees.
Refer to Note 17. Commitments and Contingencies to our consolidated financial statements under Item 8. Financial Statements and TUI AG's ability to reduce our current ownership interest in TUI Cruises below 37.55% through May 2033.
Some of the contracts that we enter into include indemnification provisions that obligate us to make payments to the counterparty if certain events occur. These contingencies generally relate to changes in taxes, increased lender capital costs andSupplementary Data for other similar costs. The indemnification clauses are often standard contractual terms and are entered into in the normal course of business. There are no stated or notional amounts included in the indemnification clauses and we are not able to estimate the maximum potential amount of future payments, if any, under these indemnification clauses. We have not been required to make any payments under such indemnification clauses in the past and, under current circumstances, we do not believe an indemnification obligation is probable.
We have a residual value guarantee associated with our operating lease of a terminal at Port of Miami in Miami, Florida that approximates a percentage of cost of the asset as of the inception of the lease. We consider the possibility of incurring costs associated with the residual value guarantee to be remote. Also in connection with the Port of Miami terminal operating lease, we are required to deliver on or before July 18, 2021, cash collateral in an amount equal to the lesser of our residual value guarantee or the aggregate balance of the lessors' terminal construction debt, estimated at $181.1 million as of December 31, 2020. The collateral is to be issued to an escrow agent and pledged to the benefit of the terminal construction debt lenders until all amounts due by us under the lease have been paid in full.
Since the COVID-19 pandemic began, our senior unsecured ratings from Moody’s and S&P have been downgraded and are currently B2 and B, respectively. These downgrades reduce our ability to incur secured indebtedness by reducing the amount of indebtedness that we are permitted to secure, and may negatively impact our access to, and cost of, debt financing. Additionally, as a result of Moody’s downgrade of the Silversea Notes from Baa3 to Ba2 on August 31, 2020 and S&P’s downgrade of Silversea Cruises' Notes from BBB- to BB on August 31, 2020, certain covenants of the indenture governing the Silversea Notes have been reinstated. On February 25, 2021, S&P Global further downgraded the Silversea Cruises Notes from BB to BB-, which had no further impact with respect to the Silversea Cruises’ Notes.
The Company also has agreements with its credit card processors relating to customer deposits received by the Company for future voyages. These agreements allow the credit card processors to require, under certain circumstances, including breach
of the financial covenants, the existence of other material adverse changes, excessive chargebacks, and other triggering events, the Company to maintain a reserve that can be satisfied by posting collateral.
Executed amendments are in place for the majority of these providers, waiving reserve requirements tied to breach of our financial covenants through at least March 31, 2022 or September 30, 2022 depending on the agreement, 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 $75.0 million held in reserve with a processor where the agreement was amended in the first quarter of 2021, such that future proceeds will be withheld in reserve, of which the maximum projected exposure is approximately $200.0 million. The amount and timing are dependent on future factors that are uncertain, such as the date we return to operations, volume and value of future deposits and whether we transfer our business to other processors. 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.
Certain of our surety agreements with third party providers for the benefit of certain agencies and associations that provide travel related bonds allow the surety to request collateral in the form of cash or letters of credit. As of December 31, 2020, we have posted collateral in the amount of approximately $91 million.agreements.
As of December 31, 2020,2022, other than the items described above, we are not party to any other off-balance sheet arrangements, including guarantee contracts, retained or contingent interest, certain derivative instruments and variable interest entities, that either have, or are reasonably likely to have, a current or future material effect on our financial position.

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Funding Needs and Sources
Historically, we relied on a combination of cash flows provided by operations, draw-downs under our available credit facilities, the incurrence of additional debt and/or the refinancing of our existing debt and the issuance of additional shares of equity securities to fund our obligations. The impact of COVID-19 resulted in our previously announced voluntary suspension

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of Global Brands'global cruise operations from March 13, 2020 which has been extended through at least April 30, 2021, for mostup to our full fleet returning to service during the second quarter of our cruise operations. This2022. The suspension of operations has strained our sources of cash flow and liquidity, causing us to take actions resulting in reductions in our operating expenses, reductions in our capital expenses and new financings and other liquidity actions.
The Company continues to identifycontinually identifies and evaluate furtherevaluates actions to improve itsmaintain adequate liquidity. These include, and are not limited to,to: further reductions in capital expenditures, operating expenses and administrative costs and additional financings. See further discussion on these liquidity actions at Recent Developments : COVID-19.Additionally, we will continue to pursue various opportunities to raise additional capital to fund obligations associated with future debt maturities and/or to extend the maturity dates associated with our existing indebtedness or facilities. Actions to raise capital may include issuances of debt, convertible debt or equity in private or public transactions or entering into new or extended credit facilities.
We have significant contractual obligations of which our debt service obligations and the capital expenditures associated with our ship purchases represent our largest funding needs. As of December 31, 2020,2022, we had $11.6approximately $7.6 billion of committed financing for our ships on order.
As of December 31, 2020, we had $3.9 billion in contractual2022, our obligations due through December 31, 2021,2023 primarily consisted of which approximately $1.3$2.1 billion relatesrelated to debt maturities, $0.9$1.3 billion relatesrelated to interest on debt and $1.3$2.7 billion relatesrelated to progress payments on our ship orders and, based on expected delivery date, the final installments payable due upon the delivery of OdysseySilver Nova, Icon of the Seas,and Celebrity Ascent.
As of December 31, 2020,2022, we had liquidity of $4.4$2.9 billion, consisting ofincluding cash and cash equivalents of $3.7$1.9 billion, $0.3 billion of undrawn revolving credit facility capacity, and a $0.7 billion one-year commitment for a 364-day term loan facility. As which was terminated in February 2023 in connection with our completion of December 31, 2020, ourthe $700 million 7.25% Priority Guaranteed Notes offering. Our revolving credit facilities were fullypartially utilized through a combination of amounts drawn and letters of credit issued under the facilities. In connection withfacilities as of December 31, 2022, which were subsequently amended in January 2023, as described in Note 8. Debt to our debt covenant waiver extensions, weconsolidated financial statements. We have agreed with certain of our lenders not to pay dividends or engage in stock repurchases.repurchases unless we repay the remaining principal payments that were deferred under our export credit facilities in 2020 and 2021. Refer to Note 12.10. Shareholders' Equity to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for further information.
Based on our assumptions and estimates and our financial condition, we believe that the liquidity resulting from the actions mentioned above will be sufficient to fund our liquidity requirements over at least the next twelve months from the issuance of these financial statements. However, there is no assurance that our assumptions and estimates are accurate due to possible unknown variables related to this unprecedented suspension of our operations and, as such, there is inherent uncertainty in our ability to predict future liquidity requirements. Refer to Note 1. General, Management’s Plan and Liquidity, to our consolidated financial statements under Item 1. Financial Statements for further information.
Under certain of our agreements, the contractual interest rate, facility fee and/or export credit agency fee vary with our debt rating. On August 24, 2020, Moody’s downgraded our senior unsecured rating from Ba2 to B2, and on August 31, 2020, S&P Global downgraded our senior unsecured rating from BB to B+, thereby increasing the contractual interest rate, facility fee and export credit agency fee across various facilities. On February 25, 2021, S&P Global further downgraded our senior unsecured rating from B+ to B, which had no further financial impact.
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 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.
Based on our assumptions and estimates and our financial condition, we believe that we have sufficient financial resources to fund our obligations for at least the next twelve months from the issuance of these financial statements. However, there is no assurance that our assumptions and estimates are accurate as there is inherent uncertainty in our ability to predict future liquidity requirements. Refer to Note 1. General, Management’s Plan and Liquidity, to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for further information.
Debt Covenants
Both ourOur export credit facilities, and our non-export credit facilities, and certain of our credit card processing agreements contain covenants that require us, among other things, to maintain a fixed charge coverage ratio, of at least 1.25x and limit our net debt-to-capital ratio, to no more than 62.5%,and maintain minimum liquidity, and under certain facilities, to maintain a minimum level of shareholders'stockholders' equity. The fixed charge coverage ratio is calculated by dividing net cash from operations for the past four quarters by the sum of dividend payments plus scheduled principal debt payments in excess of any new financings for the past four quarters. Our minimum net worthstockholders' equity and maximum net debt-to-capital calculations exclude the impact of Accumulated other comprehensive loss on Total shareholders’stockholders' equity.
In 2021 and 2022, the financial covenant levels were modified for 2023 and 2024. As of December 31, 2020, financial covenant testing on our export-credit and non-export credit facilities totaling $11.2 billion of, and our credit card processing agreements was waived through the fourth quarter of 2021 following amendments to the agreements during 2020.
During the first quarter of 2021, we further amended $4.9 billion of our non-export credit facilities and $6.2 billion of our export credit facilities, and certain credit card processing agreements, to extend the waiver of our financial covenants through and including at least the third quarter of 2022.
In addition, pursuant to the amendments for the non-export credit facilities, we have modified the manner in which such covenants are calculated, temporarily in certain cases and permanently in others, as well as the levels at which our net debt to

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capitalization covenant will be tested during the period commencing immediately following the end of the waiver period and continuing through the end of 2023.
The amendments impose a monthly-tested minimum liquidity covenant of $500.0 million for the duration of the waiver period, subject to reduction to $350.0 million if we raise at least $500.0 million of additional capital, which can be satisfied through previously undrawn facilities. In addition, the amendments to the non-export credit facilities place restrictions on paying cash dividends and effectuating share repurchases through the end of the third quarter of 2022, while the export credit facility amendments require us to prepay any deferred amounts if we elect to issue dividends or complete share repurchases. As of December 31, 2020, we were in compliance with the applicable minimum liquidity covenantour financial covenants and we estimate that we will be in compliance for at least the next twelve months.
In addition to the above, during 2020, we amended our Port of Miami Terminal "A" operating lease agreement to increase the lien basket in line with our debt facilities. In the first quarter of 2021, we also amended this lease to obtain a financial covenant waiver through the end of the third quarter of 2022, on the same terms as apply to the non-export credit facilities. As of December 31, 2020, we were in compliance with the amended covenants under the lease agreement.

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Any further covenant waivers may lead to increased costs, increased interest rates, additional restrictive covenants and other available lender protections as may be agreed with our lenders. There can be no assurance that we would be able to obtain additional waivers in a timely manner, or on acceptable terms. If we require additional waivers and are not able to obtain them or repay the debt facilities, this would lead to an event of default and potential acceleration of amounts due under all of our outstanding debt and derivative contracts. Refer to Note 8. Debt to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for further information regarding debt covenants.
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.
Dividends
DuringThe declaration of dividends shall at all times be subject to the first quarter of 2020 we declared a cash dividend on our common stock of $0.78 per share which was paid in the second quarter of 2020.
During the second quarter of 2020, we agreed with certainfinal determination of our lenders not to pay dividends or engageboard of directors that a dividend is prudent at that time in common stock repurchases for so long as our debt covenant waivers are in effect.consideration of the needs of the business. 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 as part of the principal amortization deferral provided in 2020 andfacilities. Accordingly, we have not declared a dividend since the first quarter of 2021. Accordingly, we did not declare any additional dividends during 2020.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Financial Instruments and Other
General
We are exposed to market risk attributable to changes in interest rates, foreign currency exchange rates and fuel prices. We try to mitigate these risks through a combination of our normal operating and financing activities and through the use of derivative financial instruments pursuant to our hedging practices and policies. The financial impact of these hedging instruments is primarily offset by corresponding changes in the underlying exposures being hedged. We achieve this by closely matching the amount, term and conditions of the derivative instrument with the underlying risk being hedged. Although certain of our derivative financial instruments do not qualify or are not accounted for under hedge accounting, our objective is not to hold or issue derivative financial instruments for trading or other speculative purposes. Refer to Note 1816.. Fair Value Measurements and Derivative Instruments to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data.
Interest Rate Risk
Our exposure to market risk for changes in interest rates relates to our long-term debt obligations including future interest payments. At December 31, 2020,2022, approximately 64.5%75.0% of our long-term debt was effectively fixed as compared to 62.1%65.7% as of December 31, 2019.2021. We use interest rate swap agreements to modify our exposure to interest rate movements and to manage our interest expense.
Market risk associated with our long-term fixed ratefixed-rate debt is the potential increase in fair value resulting from a decrease in interest rates. 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, 2020,During the quarter ended September 30, 2022, we maintainedredeemed 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 the following fixed-rate debt instruments:
Debt InstrumentSwap Notional as of December 31, 2020 (In thousands)MaturityDebt Fixed RateSwap Floating Rate: LIBOR plusAll-in Swap Floating Rate as of December 31, 2020
Oasis of the Seas term loan
$35,000 October 20215.41%3.87%4.12%
Unsecured senior notes650,000 November 20225.25%3.63%3.85%
$685,000 
Thesethese notes. At December 31, 2022, there were no interest rate swap agreements are accounted for as fair value hedges.fixed-rate debt instruments.
The estimated fair value of our long-term fixed-rate debt at December 31, 20202022 was $12.9$14.8 billion, using quoted market prices, where available, or using the present value of expected future cash flows which incorporates risk profile. The fair value of our fixed to floating interest rate swap agreements was estimated to be an asset of $18.8$7.7 million as of December 31, 2020,2021, based on the present value of expected future cash flows. A hypothetical one percentage point decrease in interest rates at December 31, 20202022 would increasedecrease the fair value of our hedged and unhedged long-term fixed-rate debt by approximately $67.2 million and would increase the fair value of our fixed to floating interest rate swap agreements by approximately $11.8$369.4 million.
Market risk associated with our long-term floating-rate debt is the potential increase in interest expense from an increase in interest rates. We use interest rate swap agreements that effectively convert a portion of our floating-rate debt to a fixed-rate basis to manage this risk. A hypothetical one percentage point increase in interest rates would increase our forecasted 20212023 interest expense by approximately $59.4$34.8 million, assuming no change in foreign currency exchange rates.

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At December 31, 2020,2022, we maintained interest rate swap agreements on the following floating-rate debt instruments:
Debt InstrumentDebt InstrumentSwap Notional as of December 31, 2020 (In thousands)MaturityDebt Floating RateAll-in Swap Fixed RateDebt InstrumentSwap Notional as of December 31, 2022 (In thousands)MaturityDebt Floating RateAll-in Swap Fixed Rate
Celebrity Reflection term loan
Celebrity Reflection term loan
$218,167 October 2024LIBOR plus0.40%2.85%
Celebrity Reflection term loan
$109,083 October 2024LIBOR plus0.40%2.85%
Quantum of the Seas term loan
Quantum of the Seas term loan
367,500 October 2026LIBOR plus1.30%3.74%
Quantum of the Seas term loan
245,000 October 2026LIBOR plus1.30%3.74%
Anthem of the Seas term loan
Anthem of the Seas term loan
392,708 April 2027LIBOR plus1.30%3.86%
Anthem of the Seas term loan
271,875 April 2027LIBOR plus1.30%3.86%
Ovation of the Seas term loan
Ovation of the Seas term loan
518,750 April 2028LIBOR plus1.00%3.16%
Ovation of the Seas term loan
380,417 April 2028LIBOR plus1.00%3.16%
Harmony of the Seas term loan (1)
Harmony of the Seas term loan (1)
530,191 May 2028EURIBOR plus1.15%2.26%
Harmony of the Seas term loan (1)
338,990 May 2028EURIBOR plus1.15%2.26%
Odyssey of the Seas term loan(2)
Odyssey of the Seas term loan(2)
460,000 October 2032LIBOR plus0.95%3.20%
Odyssey of the Seas term loan(2)
383,333 October 2032LIBOR plus0.96%3.21%
Odyssey of the Seas term loan (2)
Odyssey of the Seas term loan (2)
191,667 October 2032LIBOR plus0.95%2.83%
Odyssey of the Seas term loan (2)
191,667 October 2032LIBOR plus0.96%2.84%
$2,678,983 $1,920,365 


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(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 December 31, 2020.2022.
(2)    Interest rate swap agreements hedging the term loan of Odyssey of the Seas include LIBOR zero-floors matching the debt LIBOR zero-floor. The effective dates of the $460.0$383.3 million and $191.7 million interest rate swap agreements are October 2020 and October 2022, respectively. The anticipated unsecured term loan for the financing ofOdyssey of the Seaswas initially expected to be drawn in October 2020. However, due to the impact of COVID-19 to shipyard operations, there is a delay in the ship delivery.on March 2021.
These interest rate swap agreements are accounted for as cash flow hedges.
The fair value of our floating to fixed interest rate swap agreements was estimated to be a liabilityan asset of $154.5$123.3 million as of December 31, 20202022 based on the present value of expected future cash flows. These interest rate swap agreements are accounted for as cash flow hedges.
Foreign Currency Exchange Rate Risk
Our primary exposure to foreign currency exchange rate risk relates to our ship construction contracts denominated in Euros, our foreign currency denominated debt and our international business operations. 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 manage portions of the exposure to movements in foreign currency exchange rates.
The estimated fair value, as of December 31, 2020,2022, of our Euro-denominated forward contracts associated with our ship construction contracts was a liability of $70.9$40.7 million, based on the present value of expected future cash flows. As of December 31, 2020,2022, the aggregate cost of our ships on order, not including ships on order by our Partner Brands, and the Silversea Cruises ships that remain contingent upon final documentation and financing, was approximately $14.2$9.8 billion, of which we had deposited $684.8 million$0.8 billion as of such date. Approximately 66.3% and 65.9%52.3% of the aggregate cost of the ships under construction was exposed to fluctuations in the Euro exchange rate at December 31, 20202022 and 2019,2021, respectively. A hypothetical 10% strengthening of the Euro as of December 31, 2020,2022, assuming no changes in comparative interest rates, would result in a $941.2$511.7 million increase in the United States dollar cost of the foreign currency denominated ship construction contracts 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.
Our international business operations subject us to foreign currency exchange risk. We transact business in many different foreign currencies and maintain investments in foreign operations which may expose us to financial market risk resulting from fluctuations in foreign currency exchange rates. Movements in foreign currency exchange rates may affect the value of our earnings in foreign currencies and cash flows. We manage most of this exposure on a consolidated basis, which allows us to take advantage of any natural offsets. Therefore, weakness in one particular currency might be offset by strengths in other currencies over time. The extent to which one currency is effective as a natural offset of another currency fluctuates over time. In addition, some foreign currency exposures have little to no mitigating natural offsets available.
We consider our investments in our foreign operations to be denominated in relatively stable currencies and of a long-term nature. As of December 31, 2020, we maintained foreign currency forward contracts and designated them as hedges of a portion of our net investment in TUI Cruises of €245.0 million, or approximately $299.7 million based on the exchange rate at December 31, 2020. These forward currency contracts mature in October 2021.

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We also address the exposure of our investments in foreign operations by denominating a portion of our debt in our subsidiaries' and investments' functional currencies and designating it as a hedge of these subsidiaries and investments. We had designated debt as a hedge of our net investments primarily in TUI Cruises of approximately €215.0€433.0 million, or approximately $263.0$461.9 million, through December 31, 2020.2022. As of December 31, 2019,2021, we had designated debt as a hedge of our net investments primarily in TUI Cruises of approximately €319.0€97.0 million, or approximately $358.1$110.3 million.
We have included net gains of approximately $22.1$63.5 million and $96.8$47.7 million of foreign-currency transaction remeasurement and changes in the fair value of derivatives in the foreign currency translation adjustment component of Accumulated other comprehensive loss at December 31, 20202022 and 2019,2021, respectively.
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 2020,2022, we maintained an average of approximately $364.0 million$1.1 billion of these foreign currency forward contracts. These instruments are not designated as hedging instruments. For the years ended December 31, 2020, 20192022, 2021 and 20182020 changes in the fair value of the foreign currency forward contracts resulted in gains (losses)losses of approximately $(19.0)$(101.8) million, $1.4$(30.9) million and $(62.4)$(19.0) million, respectively, which offset gains (losses) arising from the remeasurement of monetary assets and liabilities denominated in foreign currencies in those same years of $(1.5)$93.0 million, $0.4$24.3 million and $57.6$(1.5) million, respectively. These changes were recognized in earnings within Other income (expense) in our consolidated statements of comprehensive income (loss).

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Fuel Price Risk
Our exposure to market risk for changes in fuel prices relates primarily to the consumption of fuel on our ships. Fuel cost, net of the financial impact of fuel swap agreements, as a percentage of our total revenues, was approximately 12.1% in 2022, 25.1% in 2021 and 16.8% in 2020, 6.4% in 2019 and 7.5% in 2018.2020. We use fuel swap agreements to mitigate the financial impact of fluctuations in fuel prices.
As of December 31, 2020,2022, we had fuel swap agreements to pay fixed prices for fuel with an aggregate notional amount of approximately $535.0$498.1 million, maturing through 2024.2023. These fuel swap agreements are generally accounted for as cash flow hedges. The fuel swap agreements designated as hedges of projected fuel purchases represented 40% of our projected 2021 fuel requirements, 23% of our projected 2022 fuel requirements and 5%50% of our projected 2023 fuel requirements. The current suspension of the cruise operations due to the COVID-19 pandemic and our 2020 and expected 2021 ship disposals resulted in reductions to our forecasted fuel consumption. As of December 31, 2020, the Company had outstanding fuel swaps of 229,850 and 14,650 metric tons maturing in 2021 and 2022, respectively, that no longer hedge forecasted fuel consumption. The estimated fair value of our fuel swap agreements at December 31, 20202022 was estimated to be a liability of $88.0$6.1 million. We estimate that a hypothetical 10% increase in our weighted-average fuel price from that experienced during the year ended December 31, 20202022 would increase our forecasted 20212023 fuel cost by approximately $15.0$61.0 million, net of the impact of fuel swap agreements.

Item 8. Financial Statements and Supplementary Data
Our Consolidated Financial Statements and Quarterly Selected Financial Data are included beginning on page F-1 of this report.
Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
None.

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Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our ChairmanPresident and Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures, as such term is defined in Exchange Act Rule 13a-15(e), as of the end of the period covered by this report.Annual Report on Form 10-K. Based upon such evaluation, our ChairmanPresident and Chief Executive Officer and Chief Financial Officer concluded that those controls and procedures are effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our ChairmanPresident and Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure and are effective to provide reasonable assurance that such information is recorded, processed, summarized and reported within the time periods specified by the rules and forms of the Securities and Exchange Commission's (the "SEC") rules and forms..
Management's Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our management, with the participation of our ChairmanPresident and Chief Executive Officer and our Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting based on the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2020.2022.
The effectiveness of our internal control over financial reporting as of December 31, 20202022 has been audited by PricewaterhouseCoopers LLP, the independent registered public accounting firm that audited our consolidated financial statements included in this Annual Report on Form 10-K, as stated in its report, which is included herein on page F-2.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Exchange Act Rule 13a-15(d) during the quarter ended December 31, 20202022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there is only reasonable assurance that our controls will succeed in achieving their goals under all potential future conditions.
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.

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PART III
Items 10, 11, 12, 13 and 14. Directors, Executive Officers and Corporate Governance; Executive Compensation; Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters; Certain Relationships and Related Transactions;Transactions, and Director IndependenceIndependence; and Principal Accountant Fees and Services.
Except for information concerning executive officers (called for by Item 401(b) of Regulation S-K), which is included in Part I of this Annual Report on Form 10-K, the information required by Items 10, 11, 12, 13 and 14 is incorporated herein by reference to certain sections of the Royal Caribbean Cruises Ltd. Definitive Proxy Statement relating to our 20212023 Annual Meeting of Shareholders (the "Proxy Statement") to be filed with the Securities and Exchange Commission no later than 120 days after the close of the fiscal year. Please refer to the following sections in the Proxy Statement for more information: "Corporate Governance"; "Proposal 1—Election of Directors"; "Certain Relationships and Related Person Transactions"; "Delinquent Section 16(a) Beneficial Ownership Reporting Compliance"Reports"; "Executive Compensation"; "Security Ownership of Certain Beneficial Owners and Management"; and "Proposal 3—Ratification of Principal Independent Registered Public Accounting Firm." Copies of the Proxy Statement will become available when filed through our Investor Relations website at www.rclcorporate.com (please see "Financial Reports" under "Financial Information"); by contacting our Investor Relations department at 1050 Caribbean Way, Miami, Florida 33132—telephone (305) 982-2625; or by visiting the SEC's website at www.sec.gov.
We have adopted a Code of Business Conduct and Ethics that applies to all of our employees, including our executive officers, and our directors. A copy of the Code of Business Conduct and Ethics is posted in the corporate governance section of our website at www.rclcorporate.com and is available in print, without charge, to shareholders upon written request to our Corporate Secretary at Royal Caribbean Cruises, Ltd., 1050 Caribbean Way, Miami, Florida 33132. Any amendments to the code or any waivers from any provisions of the code granted to executive officers or directors will be promptly disclosed to investors by posting on our website at www.rclcorporate.com. None of the websites referenced in this Annual Report on Form 10-K or the information contained therein is incorporated herein by reference.

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PART IV
Item 15. Exhibits and Financial Statement Schedules
(a)(1) Financial Statements
Our Consolidated Financial Statements have been prepared in accordance with Item 8. Financial Statements and Supplementary Data and are included beginning on page F-1 of this report.
(1)Financial Statement Schedules
None.
(1)Exhibits
Exhibits 10.90 through 10.111 represent management compensatory plans or arrangements.
Incorporated By Reference
Exhibit NumberExhibit DescriptionFormExhibitFiling Date/ Period End Date
3.1S-33.13/23/2009
3.28-K3.112/6/2018
4.1Indenture dated as of July 15, 1994, by and between the Company, as issuer, and The Bank of New York Trust Company, N.A., successor to NationsBank of Georgia, National Association, as Trustee20-F2.412/31/1994
4.2Sixth Supplemental Indenture dated as of October 14, 1997, to the Indenture, dated as of July 15, 1994, by and between the Company, as issuer, and The Bank of New York Trust Company, N.A., as Trustee20-F2.1112/31/1997
4.3Eighth Supplemental Indenture dated as of March 16, 1998, to the Indenture, dated as of July 15, 1994, by and between the Company, as issuer, and The Bank of New York Trust Company, N.A., as Trustee20-F2.1312/31/1997
4.4S-34.17/31/2006
4.58-K4.111/7/2012
4.68-K4.111/28/2017
4.710-K4.712/31/2018
4.810-K4.812/31/2018
4.910-K4.912/31/2018
4.10
4.118-K4.15/19/2020
4.128-K4.16/9/2020
4.138-K4.26/9/2020
Incorporated By Reference
Exhibit NumberFormExhibitFiling Date/ Period End Date
3.1S-33.13/23/2009
3.28-K3.12/11/2022
4.1
4.210-K4.112/31/2020
10.1Amended and Restated Registration Rights Agreement dated as of July 30, 1997, by and among the Company, A. Wilhelmsen AS., Cruise Associates, Monument Capital Corporation, Archinav Holdings, Ltd. and Overseas Cruiseship, Inc.20-F2.2012/31/1997
10.210-Q10.13/31/2018
10.38-K10.111/19/2015
10.410-Q10.76/30/2018
10.510-Q10.86/30/2018
10.68-K10.211/19/2015
10.710-Q10.96/30/2018
10.810-Q10.106/30/2018

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Incorporated By Reference
Exhibit NumberExhibit DescriptionFormExhibitFiling Date/ Period End Date
4.148-K4.110/16/2020
10.1Amended and Restated Registration Rights Agreement dated as of July 30, 1997, by and among the Company, A. Wilhelmsen AS., Cruise Associates, Monument Capital Corporation, Archinav Holdings, Ltd. and Overseas Cruiseship, Inc.20-F2.2012/31/1997
10.28-K10.112/7/2017
10.38-K10.14/10/2019
10.410-Q10.37/25/2019
10.58-K10.310/17/2017
10.610-K10.712/31/2015
10.710-Q10.46/30/2018
10.810-K10.812/31/2015
10.910-Q10.56/30/2018
10.1010-Q10.13/31/2016
10.1110-Q10.66/30/2018
10.1210-K10.1012/31/2015
Incorporated By Reference
Exhibit NumberFormExhibitFiling Date/ Period End Date
10.98-K10.26/28/2016
10.1010-K10.2012/31/2018
10.118-K10.17/28/2017
10.128-K10.112/18/2019
10.138-K10.110/17/2017
10.1410-Q10.116/30/2018
10.158-K10.210/17/2017
10.1610-Q10.126/30/2018
10.178-K10.112/20/2019
10.188-K10.13/23/2020

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Incorporated By Reference
Exhibit NumberExhibit DescriptionFormExhibitFiling Date/ Period End Date
10.1310-Q10.110/30/2019
10.1410-Q10.13/31/2018
10.158-K10.111/19/2015
10.1610-Q10.76/30/2018
10.1710-Q10.86/30/2018
10.188-K10.211/19/2015
10.1910-Q10.96/30/2018
10.2010-Q10.106/30/2018
10.2110-K10.1812/31/2018
10.228-K10.26/28/2016
10.2310-K10.2012/31/2018
10.248-K10.17/28/2017
Incorporated By Reference
Exhibit NumberFormExhibitFiling Date/ Period End Date
10.198-K10.24/10/2020
10.208-K10.25/4/2020
10.218-K10.35/4/2020
10.2210-Q10.65/21/2020
10.238-K10.68/3/2020
10.248-K10.78/3/2020
10.2510-Q10.158/10/2020
10.2610-Q10.168/10/2020
10.2710-Q10.1211/4/2020

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Incorporated By Reference
Exhibit NumberExhibit DescriptionFormExhibitFiling Date/ Period End Date
10.258-K10.27/28/2017
10.268-K10.37/28/2017
10.278-K10.112/18/2019
10.288-K10.110/17/2017
10.2910-Q10.116/30/2018
10.308-K10.210/17/2017
10.3110-Q10.126/30/2018
10.328-K10.112/20/2019
10.338-K10.17/5/2018
10.348-K10.24/10/2019
10.358-K10.16/18/2018
Incorporated By Reference
Exhibit NumberFormExhibitFiling Date/ Period End Date
10.2810-Q10.1311/4/2020
10.2910-K10.6912/31/2020
10.3010-K10.7212/31/2020
10.3110-K10.7512/31/2020
10.3210-K10.7612/31/2020
10.3310-K10.8012/31/2020
10.3410-K10.8312/31/2020
10.358-K10.42/18/2021
10.368-K10.52/18/2021

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Incorporated By Reference
Exhibit NumberExhibit DescriptionFormExhibitFiling Date/ Period End Date
10.368-K10.13/23/2020
10.378-K10.14/10/2020
10.388-K10.24/10/2020
10.398-K10.14/24/2020
10.408-K10.15/4/2020
10.418-K10.25/4/2020
10.428-K10.35/4/2020
10.438-K10.15/11/2020
10.448-K10.25/11/2020
10.458-K10.35/11/2020
10.468-K10.45/11/2020
Incorporated By Reference
Exhibit NumberFormExhibitFiling Date/ Period End Date
10.378-K10.62/18/2021
10.388-K10.52/23/2021
10.398-K10.72/23/2021
10.408-K10.122/23/2021
10.418-K10.152/23/2021
10.428-K10.13/16/2021
10.438-K10.13/19/2021
10.448-K10.23/19/2021
10.458-K10.33/19/2021

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Incorporated By Reference
Exhibit NumberExhibit DescriptionFormExhibitFiling Date/ Period End Date
10.478-K10.55/11/2020
10.4810-Q10.45/21/2020
10.4910-Q10.55/21/2020
10.5010-Q10.65/21/2020
10.518-K10.18/3/2020
10.528-K10.28/3/2020
10.538-K10.38/3/2020
10.548-K10.48/3/2020
10.558-K10.58/3/2020
10.568-K10.68/3/2020
10.578-K10.78/3/2020
Incorporated By Reference
Exhibit NumberFormExhibitFiling Date/ Period End Date
10.4610-Q10.19/30/2021
10.4710-Q10.49/30/2021
10.488-K10.112/28/2021
10.498-K10.512/28/2021
10.508-K10.1312/28/2021
10.518-K10.1412/28/2021
10.528-K10.1512/28/2021
10.538-K10.1712/28/2021
10.548-K10.1912/28/2021
10.558-K10.2012/28/2021

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Table of Contents
Incorporated By Reference
Exhibit NumberExhibit DescriptionFormExhibitFiling Date/ Period End Date
10.588-K10.88/3/2020
10.5910.Q10.158/10/2020
10.6010.Q10.168/10/2020
10.6110.Q10.178/10/2020
10.6210.Q10.911/4/2020
10.63


10.Q10.1011/4/2020
10.6410.Q10.1111/4/2020
10.6510.Q10.1211/4/2020
10.6610.Q10.1311/4/2020
10.678-K1.112/4/2020
10.68
Incorporated By Reference
Exhibit NumberFormExhibitFiling Date/ Period End Date
10.568-K10.2112/28/2021
10.5710-K10.14212/31/2021
10.5810-Q10.16/30/2022
10.5910-Q10.26/30/2022
10.6010-Q10.96/30/2022
10.6110-Q10.126/30/2022
10.6210-Q10.136/30/2022
10.6310-Q10.146/30/2022
10.6410-Q10.156/30/2022
10.6510-Q10.166/30/2022

8161

Table of Contents
Incorporated By Reference
Exhibit NumberExhibit DescriptionFormExhibitFiling Date/ Period End Date
10.69
10.70
10.71
10.72
10.73
10.74
10.75
10.76
10.77
10.78
10.79
Incorporated By Reference
Exhibit NumberFormExhibitFiling Date/ Period End Date
10.6610-Q10.176/30/2022
10.6710-Q10.186/30/2022
10.6810-Q10.216/30/2022
10.6910-Q10.276/30/2022
10.7010-Q10.19/30/2022
10.7110-Q10.29/30/2022
10.72
10.73
10.7410-K10.1712/31/2016
10.758-K10.16/3/2022
10.7610-K10.2312/31/2013
10.7710-Q10.79/30/2017
10.7810-K10.3112/31/2010
10.7910-K10.2712/31/2014
10.8010-K10.2612/31/2015
10.8110-Q10.26/30/2013
10.8210-Q10.36/30/2015

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Table of Contents
Incorporated By Reference
Exhibit NumberExhibit DescriptionFormExhibitFiling Date/ Period End Date
10.80
10.81
10.82
10.83
10.84
10.85
10.86
10.87
10.88
10.898-K1.110/15/2020
10.9010-K10.1712/31/2016
10.9110-Q10.39/30/2008
10.9210-Q10.49/30/2008
10.9310-K10.2312/31/2013
10.9410-Q10.79/30/2017
10.9510-K10.3112/31/2010
10.9610-K10.2712/31/2014
10.9710-K10.2612/31/2015
10.9810-K10.2212/31/2012

83

Table of Contents
Incorporated By Reference
Exhibit NumberExhibit DescriptionFormExhibitFiling Date/ Period End Date
10.9910-Q10.26/30/2013
10.10010-Q10.36/30/2015
10.10110-K10.3312/31/2014
10.10210-K10.3112/31/2016
10.10310-K10.262/25/2013
10.10410-K10.3312/31/2014
10.10510-Q10.46/30/2015
10.1068-K10.312/8/2005
10.10710-K10.3112/31/2006
10.10810-K10.3112/31/2007
10.10910-Q10.19/30/2008
10.11010-K10.3812/31/2008
10.11110-K10.3512/31/2013
21.1
23.1
23.2
24.1
31.1
31.2
32.1
Incorporated By Reference
Exhibit NumberFormExhibitFiling Date/ Period End Date
10.8310-K10.3312/31/2014
10.8410-K10.3112/31/2016
10.8510-K10.262/25/2013
10.8610-K10.3312/31/2014
10.8710-Q10.46/30/2015
10.888-K10.312/8/2005
10.8910-K10.3112/31/2006
10.9010-K10.3112/31/2007
10.9110-Q10.19/30/2008
10.9210-K10.3812/31/2008
10.9310-K10.3512/31/2013
21.1
23.1
23.2
24.1
31.1
31.2
32.1
*    Filed herewith
**    Furnished herewith
Interactive Data FileManagement contract or compensatory plan or arrangement.

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Interactive Data File
101The following financial statements from Royal Caribbean Cruises Ltd.'s Annual Report on Form 10-K for the year ended December 31, 20202022 formatted in iXBRL (Inline eXtensible Business Reporting Language) are as follows:
(i)the Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2020, 20192022, 2021 and 2018;2020;
(ii)the Consolidated Balance Sheets at December 31, 20202022, and 2019;2021;
(iii)the Consolidated Statements of Cash Flows for the years ended December 31, 2020, 20192022, 2021 and 2018;2020;
(iv)the Consolidated Statements of Shareholders' Equity for the years ended December 31, 2020, 20192022, 2021 and 2018;2020; and
(v)the Notes to the Consolidated Financial Statements, tagged in summary and detail.
104Cover Page Interactive Data File, formatted in iXBRL and contained in Exhibit 101


Item 16. Form 10-K Summary
None.


64


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ROYAL CARIBBEAN CRUISES LTD.
(Registrant)
By:/s/ JASON T. LIBERTYNAFTALI HOLTZ
Jason T. LibertyNaftali Holtz Executive Vice President,
Chief Financial Officer
(Principal Financial Officer and duly authorized signatory)

February 26, 202123, 2023
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on February 26, 2021.
23, 2023.
/s/ RICHARD D. FAINJASON T. LIBERTY
Richard D. FainJason T. Liberty
 Director Chairman and Chief Executive Officer
(Principal Executive Officer)
/s/ JASON T. LIBERTYNAFTALI HOLTZ
Jason T. LibertyNaftali Holtz
 Executive Vice President, Chief Financial Officer
(Principal Financial Officer)
/s/ HENRY L. PUJOL
Henry L. Pujol
Senior Vice President, Chief Accounting Officer (Principal Accounting Officer)
*
Richard D. Fain
Chairman of the Board
*
John F. Brock
 Director
*
Stephen R. Howe Jr.
 Director
*
William L. Kimsey
 Director
*
Maritza G. Montiel
 Director
*
Ann S. Moore
 Director
*
Eyal M. Ofer
 Director
*
William K. Reilly
Director
*
Vagn O. Sørensen
 Director
*
Donald Thompson
 Director
*
Arne Alexander Wilhelmsen
Director
*
*
Amy C. McPherson
Director
*

Michael O. Leavitt
Director
*By:/s/ JASON T. LIBERTYNAFTALI HOLTZ
Jason T. Liberty,Naftali Holtz, as Attorney-in-Fact


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ROYAL CARIBBEAN CRUISES LTD.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page

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Report of Independent Registered Public Accounting Firm


To the Board of Directors and Shareholders of Royal Caribbean Cruises Ltd.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Royal Caribbean Cruises Ltd.and its subsidiaries (the “Company”) as of December 31, 20202022 and 2019,2021, and the related consolidated statements of comprehensive (loss) income,loss, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2020,2022, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2020,2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 20202022 and 2019,2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 20202022 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020,2022, based on criteria established in Internal Control - Integrated Framework (2013)issued by the COSO.

ChangeChanges in Accounting PrinciplePrinciples

As discussed in NoteNotes 2 and 1 to the consolidated financial statements, effective January 1, 2022, the Company changed the manner in which it accounts for leasesconvertible notes and effective October 1, 2021, the Company changed the manner in 2019.which it accounts for the consolidation of Silversea Cruises.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Emphasis of Matter

As discussed in Note 1 to the consolidated financial statements, the impact to the Company’s global bookings resulting fromeffects of the COVID-19 pandemic will continue to haveare having a material negative impact on the Company’s results of operationsCompany's operating cash flows and liquidity. Further, in April 2022, approximately $1.0 billion of long- term debt will need to be refinanced or extended should the commencement of operations be delayed beyond management’s current estimate. Management’s Management's evaluation of thethese events and conditions and management’s plansmanagement's plan to mitigate these matters are also described in Note 1.


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Table of Contents
Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
F-2


accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Liquidity – Impact of COVID-19

As described in Note 1 to the consolidated financial statements, management believes the resulting effects of the COVID-19 pandemic are having a material negative impact on the Company’s operating cash flows and liquidity. Management has taken measures to manage liquidity, including the issuance of debt and shares of common stock, the amendment of credit agreements to defer payments, and the modification of covenant requirements and waivers. The principal assumptions used in management’s estimate of future liquidity consisted of (i) the expected timing of cash collections for cruise bookings; (ii) the expected sustained increase in revenue per available passenger cruise day; (iii) the expected increase in occupancy levels to reach historical levels; and (iv) the inflationary increases to the Company’s operating costs, mostly impacting the expected cost of fuel and food. Based on management’s actions, as well as the Company’s present financial condition and the assumptions on liquidity, management believes they have sufficient liquidity to fund their obligations for at least the next twelve months from the issuance of the financial statements.

The principal considerations for our determination that performing procedures relating to the impact of COVID 19 on the Company’s liquidity is a critical audit matter are the significant judgment by management when developing the estimate of future liquidity; this in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s estimate of future liquidity and assumptions related to (i) the expected timing of cash collections for cruise bookings; (ii) the expected sustained increase in revenue per available passenger cruise day; (iii) the expected increase in occupancy levels to reach historical levels, and (iv) the inflationary increases to the Company’s operating costs, mostly impacting the expected cost of fuel and food.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s estimate of future liquidity. These procedures also included, among others, (i) testing management’s process for estimating future liquidity for the twelve months after the date the financial statements are issued; (ii) testing the completeness and accuracy of underlying data used in the estimate; (iii) evaluating the reasonableness of the significant assumptions used by management related to the expected timing of cash collections for cruise bookings, the expected sustained increase in revenue per available passenger cruise day, the expected increase in occupancy levels to reach historical levels, and the inflationary increases to the Company’s operating costs, mostly impacting the expected cost of fuel and food; and (iv) evaluating management’s estimate of future liquidity and their disclosure in the consolidated financial statements regarding having sufficient liquidity to satisfy the Company’s obligations for at least the next twelve months from the issuance of the financial statements. Evaluating management’s assumptions related to the expected timing of cash collections for cruise bookings, the expected sustained increase in revenue per available passenger cruise day, the expected increase in occupancy levels to reach historical levels, and the inflationary increases to the Company’s operating costs, mostly impacting the expected cost of fuel and food involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the Company; (ii) the consistency with external market and industry data; and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Impairment Assessments – Royal Caribbean International & Silversea Cruises Reporting UnitsUnit Goodwill and Silversea Cruises Indefinite-lived Intangible Asset Trade Name

As described in Notes 2, 54 and 65 to the consolidated financial statements, as of December 31, 2022 the Company’s consolidated goodwill balance was $809.5$809 million and the indefinite-livedindefinite-life intangible assets balance was $321.5$321 million, as of December 31, 2020. The Royal Caribbean International reporting unitand the goodwill was $296.6 million,and trade name associated with the Silversea Cruises reporting unit goodwill was $508.6 million and the Silversea Cruises’ indefinite-lived intangible asset trade name was $318.7$509 million respectively, as of December 31, 2020.and $319 million,
F-3


respectively. Management reviews goodwill and indefinite-livedindefinite-life intangible assets for impairment at the reporting unit level and asset level, respectively, annually or, when events or circumstances dictate, more frequently. The quantitative impairment analysisassessment consists of a comparison of the fair value of the reporting unit or asset with its carrying value.

The impact of COVID-19 on management’s operating plans and projected cash flows resulted in the completion of (i) an interim impairment assessment for the Royal Caribbean International reporting unit as of March 31, 2020 and June 30, 2020, and the Silversea Cruises reporting unit as of March 31, 2020; and (ii) an interim impairment assessment in respect to the Silversea Cruises trade name as of March 31, 2020. As a result of management’s interim impairment assessments, management recognized a goodwill impairment charge associated with the Silversea Cruises reporting unit of $576.2 million and an impairment charge of $30.8 million charge for the Silversea Cruises trade name for the quarter ended March 31, 2020. As of November 30, 2020, management performed the annual goodwill impairment reviews and determined no incremental impairment losses existed at the date of this annual assessment for the Royal Caribbean International reporting unit or the Silversea Cruises reporting unit and trade name. The fair Fair value of the Silversea Cruises reporting unit was determinedis estimated by management using a probability-weighted discounted cash flow model in combination with a market basedmarket-based valuation approach for all periods assessed. The fair value of the Royal Caribbean International reporting unit as of March 31, 2020 was determined using a discounted cash flow modelunits and a probability-weighted discounted cash flow model in combination with a market based valuation approachrelief-from-royalty method for the June 30, 2020 and November 30, 2020 assessments. Thetrade names.Management’s principal assumptions used in the discounted cash flow analyses that supportfor the Silversea Cruises reporting unit and Royal Caribbean International reporting units’ impairment assessments consisted of the timing of management’s return to service; changes in market conditions; and port or other restrictions;trade name were forecasted net revenues primarily the timing of returning to normalized operations,per available passenger cruise day, occupancy rates from existing and expected ship deliveries, including options, andvessel operating expenses, terminal growth rate;rate, royalty rate, and the weighted average cost of capital (i.e., discount rate). Management estimates the fair value of the intangible assets using a discounted cash flow model and various valuation methods depending on the nature of the intangible asset, such as the relief-from-royalty method for trade names. The principal assumptions used in the discounted cash flow analyses that support the Silversea Cruises trade name impairment
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Table of Contents
assessments consisted of forecasted net revenues, primarily the timing of returning to normalized operations, occupancy rates from existing and expected ship deliveries, including options, and terminal growth rate; the royalty rate; and the weighted average cost of capital (i.e., discount rate).

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessments of the Royal Caribbean International and Silversea Cruises reporting units and the indefinite-lived intangible asset impairment assessments of the Silversea Cruises reporting unit goodwill and trade name is a critical audit matter are (i) the significant judgment by management when determiningdeveloping the fair value estimates; (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions related to forecasted net revenues primarily the timing of returning to normalized operations,per available passenger cruise day, occupancy rates from existing and expected ship deliveries, including options, and terminal growth rate,rates, and the discount raterates for the goodwill and trade name impairment assessments;assessments, vessel operating expenses for the goodwill impairment assessment and the royalty rate assumption for the trade name impairment assessments;assessment; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s goodwill and indefinite-lived intangible assettrade name impairment assessments, including controls over the valuation of the Royal Caribbean International & Silversea Cruises reporting unitsunit and Silversea Cruises trade name. These procedures alsoincluded, among others, (i) testing management’s process for developing the fair value estimates; (ii) evaluating the appropriateness of the discounted future cash flow model market based valuation approach and the relief-from-royalty model;method; (iii) testing the completeness and accuracy of underlying data used in the fair value estimates; and (iv) evaluating the reasonableness of the significant assumptions used by management related to forecasted net revenues primarily the timing of returning to normalized operations,per available passenger cruise day, occupancy rates from existing and expected ship deliveries, including options, and terminal growth rate;rates, and the discount raterates for the goodwill and trade name impairment assessments, vessel operating expenses for the goodwill impairment assessment and the royalty rate for the trade name impairment assessments and the royalty rate assumption for the Silversea Cruises trade name impairment assessments.assessment. Evaluating management’s assumptions related to forecasted net revenues primarily the timing of returning to normalized operations,per available passenger cruise day, occupancy rates from existing and expected ship deliveries, including options,vessel operating expenses and the terminal growth raterates involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the reporting unit and trade name;the Silversea Cruises brand; (ii) the consistency with external market and industry data; and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in the evaluation of (i) the Company’s discounted cash flow model and relief-from-royalty method, and market based valuation approach and(ii) the discount ratesrate and royalty rate assumptions.
Certain Ship Impairment Assessments

As described in Notes 2 and 7 to the consolidated financial statements, the Company’s consolidated ships and ship improvements balance was $32.0 billion as of December 31, 2020. Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate, based on estimated undiscounted future cash flows, that the carrying value of these assets may not be fully recoverable. The impact of COVID-19 on the Company’s expected future operating cash flows and management’s decision to dispose of certain vessels, resulted in management identifying impairment triggers for certain vessels. Management estimated the recoverability of certain vessels using undiscounted cash flow analyses at interim dates throughout 2020 and again at December 31, 2020. A number of vessels were found to have net carrying values in excess of their estimated undiscounted future cash flows, and as such, were subject to fair value assessments. Management determined fair value of the vessels based on intended use of the identified vessels, and as such, management used a combination of discounted cash flows, replacement cost, scrap and residual value techniques to estimate fair value. Consequently, management recognized $635.5 million of impairment losses during the year ended 2020. The suspension of operations and the possibility of further suspensions create uncertainty in forecasting undiscounted cash flows, which are used by management to determine if a vessel is at risk of impairment. Management’s principal assumptions used in the undiscounted cash flows consisted of the timing of management’s return to service; changes in market conditions; and port or other restrictions; forecasted net revenues, primarily the timing of returning to normalized operations, and occupancy rates; and management’s intended use of the vessel for its remaining useful life.

The principal considerations for our determination that performing procedures relating to certain ship impairment assessments is a critical audit matter are (i) the significant judgment by management in developing the undiscounted cash flow analyses for the ships with triggering events; (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions related to forecasted net revenues, primarily the timing of returning to normalized operations, and occupancy rates and management’s intended use of the vessel for its remaining useful life.
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Table of Contents
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s ship impairment assessments, including controls over the analysis of the Company’s ships that were subject to undiscounted cash flow impairment analyses. These procedures also included, among others, (i) testing management’s process for developing the undiscounted cash flow estimates for certain ships with triggering events; (ii) evaluating the appropriateness of the undiscounted cash flow methods; (iii) testing the completeness and accuracy of underlying data used in the analyses; and (iv) evaluating the significant assumptions used by management related to forecasted net revenues, primarily the timing of returning to normalized operations, and occupancy rates, and management’s intended use of the vessel for its remaining useful life. Evaluating management’s assumptions involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the Company, (ii) the consistency with external market and industry data, and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Liquidity - Impact of COVID-19

As described in Note 1 to the consolidated financial statements, the Company voluntarily suspended its global cruise operations effective March 13, 2020, and this suspension remains in effect through at least April 30, 2021 for most of its cruise operations. The suspension of operations and the impact to the Company’s global bookings resulting from the COVID-19 pandemic will continue to have a material negative impact on the Company’s results of operations and liquidity, which may be prolonged beyond containment of the disease. Management has and will continue undertaking several proactive measures to mitigate the financial and operational impacts of COVID-19, including reduction of capital expenditures and operating expenses (reduction and furloughing of workforce and laying up of vessels), issuing of debt and shares of our common stock, amending of credit agreements to defer payments and covenant requirements and suspending of dividend payments. As of December 31, 2020, the Company had liquidity of $4.4 billion, consisting of cash and cash equivalents of $3.7 billion and a $0.7 billion one-year commitment for a 364-day term loan facility. Based on management’s actions described above, and management’s assumptions regarding the impact of COVID-19 and the suspension of operations, as well as the Company’s present financial condition, management believes the available liquidity will be sufficient to fund the Company’s obligations for at least the next twelve months from the issuance of the consolidated financial statements. The principal assumptions used by management’s to estimate future liquidity requirements consist of (i) the expected date of return to operations; (ii) the expected resumption of operations; (iii) the expected occupancy levels; and (iv) the expected incremental expenses for the resumption of guest cruise operations for the maintenance of additional public health protocols and complying with additional regulations.

The principal considerations for our determination that performing procedures relating to the impact of COVID-19 on the Company’s liquidity is a critical audit matter are (i) the significant judgment by management when evaluating the uncertainty related to the effects of COVID-19 on the Company’s financial results and liquidity, which impacts the Company’s forecasted financial results and estimated liquidity requirements to satisfy its obligations; (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s liquidity assessment to satisfy obligations for at least the next twelve months from the issuance of the consolidated financial statements.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of internal controls relating to management’s assessment of the Company’s liquidity. These procedures also included, among others, (i) testing management’s process for forecasting financial results and liquidity within one year from the issuance of the consolidated financial statements, (ii) testing the completeness and accuracy of underlying data used in the forecast; and (iii) evaluation of management’s liquidity assessment and their disclosure in the consolidated financial statements regarding having sufficient liquidity to satisfy its obligations for at least the next twelve months from the issuance of the consolidated financial statements.



/s/ PricewaterhouseCoopers LLP
Miami,Hallandale Beach, Florida
February 26, 202123, 2023

We have served as the Company’s auditor since at least 1989, which includes periods before the Company became subject to SEC reporting requirements. We have not been able to determine the specific year we began serving as auditor of the Company.
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ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOMELOSS
(in thousands, except per share data)
Year Ended December 31,
202220212020
Passenger ticket revenues$5,793,492 $941,175 $1,504,569 
Onboard and other revenues3,047,048 590,958 704,236 
Total revenues8,840,540 1,532,133 2,208,805 
Cruise operating expenses:
Commissions, transportation and other1,357,008 207,562 344,625 
Onboard and other596,554 116,946 157,213 
Payroll and related1,287,801 838,088 788,273 
Food653,139 164,389 161,750 
Fuel1,072,567 385,322 371,015 
Other operating1,647,267 945,205 942,232 
Total cruise operating expenses6,614,336 2,657,512 2,765,108 
Marketing, selling and administrative expenses1,582,929 1,370,076 1,199,620 
Depreciation and amortization expenses1,406,689 1,292,878 1,279,254 
Impairment and credit losses562 82,001 1,566,380 
Operating Loss(763,976)(3,870,334)(4,601,557)
Other income (expense):
Interest income35,857 16,773 21,036 
Interest expense, net of interest capitalized(1,364,162)(1,291,753)(844,238)
Equity investment income (loss)56,695 (135,469)(213,286)
Other (expense) income (1)
(120,376)20,284 (137,085)
(1,391,986)(1,390,165)(1,173,573)
Net Loss(2,155,962)(5,260,499)(5,775,130)
Less: Net Income attributable to noncontrolling interest— — 22,332 
Net Loss attributable to Royal Caribbean Cruises Ltd.$(2,155,962)$(5,260,499)$(5,797,462)
Loss per Share:
Basic$(8.45)$(20.89)$(27.05)
Diluted$(8.45)$(20.89)$(27.05)
Comprehensive Loss
Net Loss$(2,155,962)$(5,260,499)$(5,775,130)
Other comprehensive income (loss):
Foreign currency translation adjustments10,295 15,703 40,346 
Change in defined benefit plans48,914 8,707 (19,984)
Gain on cash flow derivative hedges8,462 4,046 38,010 
Total other comprehensive income67,671 28,456 58,372 
Comprehensive Loss$(2,088,291)$(5,232,043)$(5,716,758)
Less: Comprehensive Income attributable to noncontrolling interest— — 22,332 
Comprehensive Loss attributable to Royal Caribbean Cruises Ltd.$(2,088,291)$(5,232,043)$(5,739,090)
    ____________________________________________________________
(1) Including a $62.6 million net loss related to the 2021 elimination of the Silversea Cruises reporting lag for the year ended December 31, 2021.
The accompanying notes are an integral part of these consolidated financial statements.
F-5


Year Ended December 31,
202020192018
Passenger ticket revenues$1,504,569 $7,857,057 $6,792,716 
Onboard and other revenues704,236 3,093,604 2,701,133 
Total revenues2,208,805 10,950,661 9,493,849 
Cruise operating expenses:
Commissions, transportation and other344,625 1,656,297 1,433,739 
Onboard and other157,213 639,782 537,355 
Payroll and related788,273 1,079,121 924,985 
Food161,750 583,905 520,909 
Fuel371,015 697,962 710,617 
Other operating942,232 1,405,698 1,134,602 
Total cruise operating expenses2,765,108 6,062,765 5,262,207 
Marketing, selling and administrative expenses1,199,620 1,559,253 1,303,144 
Depreciation and amortization expenses1,279,254 1,245,942 1,033,697 
Impairment and credit losses1,566,380 
Operating (Loss) Income(4,601,557)2,082,701 1,894,801 
Other income (expense):
Interest income21,036 26,945 32,800 
Interest expense, net of interest capitalized(844,238)(408,513)(333,672)
Equity investment (loss) income(213,286)230,980 210,756 
Other (expense) income(137,085)(24,513)11,107 
(1,173,573)(175,101)(79,009)
Net (Loss) Income(5,775,130)1,907,600 1,815,792 
Less: Net Income attributable to noncontrolling interest22,332 28,713 4,750 
Net (Loss) Income attributable to Royal Caribbean Cruises Ltd.$(5,797,462)$1,878,887 $1,811,042 
(Loss) Earnings per Share:
Basic$(27.05)$8.97 $8.60 
Diluted$(27.05)$8.95 $8.56 
Comprehensive (Loss) Income
Net (Loss) Income$(5,775,130)$1,907,600 $1,815,792 
Other comprehensive (loss) income:
Foreign currency translation adjustments40,346 869 (14,251)
Change in defined benefit plans(19,984)(19,535)7,643 
Gain (loss) on cash flow derivative hedges38,010 (151,313)(286,861)
Total other comprehensive income (loss)58,372 (169,979)(293,469)
Comprehensive (Loss) Income$(5,716,758)$1,737,621 $1,522,323 
Less: Comprehensive Income attributable to noncontrolling interest22,332 28,713 4,750 
Comprehensive (Loss) Income attributable to Royal Caribbean Cruises Ltd.$(5,739,090)$1,708,908 $1,517,573 
ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED BALANCE SHEETS
As of December 31,
20222021
(in thousands, except share data)
Assets
Current assets
Cash and cash equivalents$1,935,005 $2,701,770 
Trade and other receivables, net of allowances of $11,612 and $13,411 at December 31, 2022 and December 31, 2021, respectively531,066 408,067 
Inventories224,016 150,224 
Prepaid expenses and other assets455,836 286,026 
Derivative financial instruments59,083 54,184 
Total current assets3,205,006 3,600,271 
Property and equipment, net27,546,445 25,907,949 
Operating lease right-of-use assets537,559 542,128 
Goodwill809,277 809,383 
Other assets, net of allowances of $71,614 and $86,781 at December 31, 2022 and December 31, 2021, respectively1,678,074 1,398,624 
Total assets$33,776,361 $32,258,355 
Liabilities and shareholders' equity
Current liabilities
Current portion of long-term debt$2,087,711 $2,243,131 
Current portion of operating lease liabilities79,760 68,922 
Accounts payable646,727 545,978 
Accrued interest388,828 251,974 
Accrued expenses and other liabilities1,071,129 887,575 
Derivative financial instruments131,312 127,236 
Customer deposits4,167,997 3,160,867 
Total current liabilities8,573,464 7,285,683 
Long-term debt21,303,480 18,847,209 
Long-term operating lease liabilities523,006 534,726 
Other long-term liabilities507,599 505,181 
Total liabilities30,907,549 27,172,799 
Commitments and Contingencies (Note 17)
Shareholders' equity
Preferred stock ($0.01 par value; 20,000,000 shares authorized; none outstanding)— — 
Common stock ($0.01 par value; 500,000,000 shares authorized; 283,257,102 and 282,703,246 shares issued, December 31, 2022 and December 31, 2021, respectively)2,832 2,827 
Paid-in capital7,284,852 7,557,297 
(Accumulated deficit) retained earnings(1,707,429)302,276 
Accumulated other comprehensive loss(643,214)(710,885)
Treasury stock (28,018,385 and 27,882,987 common shares at cost, December 31, 2022 and December 31, 2021, respectively)(2,068,229)(2,065,959)
Total shareholders' equity2,868,812 5,085,556 
Total liabilities and shareholders’ equity$33,776,361 $32,258,355 


The accompanying notes are an integral part of these consolidated financial statements.
F-6

Table of Contents
ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED BALANCE SHEETSSTATEMENTS OF CASH FLOWS
As of December 31,
20202019
(in thousands, except share data)
Assets
Current assets
Cash and cash equivalents$3,684,474 $243,738 
Trade and other receivables, net of allowances of $3,867 and $5,635 at December 31, 2020 and December 31, 2019, respectively284,149 305,821 
Inventories118,703 162,107 
Prepaid expenses and other assets154,339 429,211 
Derivative financial instruments70,082 21,751 
Total current assets4,311,747 1,162,628 
Property and equipment, net25,246,595 25,466,808 
Operating lease right-of-use assets599,985 687,555 
Goodwill809,480 1,385,644 
Other assets, net of allowances of $81,580 and $0 at December 31, 2020 and December 31, 2019, respectively1,497,380 1,617,649 
Total assets$32,465,187 $30,320,284 
Liabilities, redeemable noncontrolling interest and shareholders' equity
Current liabilities
Current portion of long-term debt$961,768 $1,186,586 
Commercial paper409,319 1,434,180 
Current portion of operating lease liabilities102,677 96,976 
Accounts payable353,422 563,706 
Accrued interest252,668 70,090 
Accrued expenses and other liabilities615,750 1,078,345 
Derivative financial instruments56,685 94,875 
Customer deposits1,784,832 3,428,138 
Total current liabilities4,537,121 7,952,896 
Long-term debt17,957,956 8,414,110 
Long-term operating lease liabilities563,876 601,641 
Other long-term liabilities645,565 617,810 
Total liabilities23,704,518 17,586,457 
Commitments and contingencies (Note 19)00
Redeemable noncontrolling interest569,981 
Shareholders' equity
Preferred stock ($0.01 par value; 20,000,000 shares authorized; 0ne outstanding)
Common stock ($0.01 par value; 500,000,000 shares authorized; 265,198,371 and 236,547,842 shares issued, December 31, 2020 and December 31, 2019, respectively)2,652 2,365 
Paid-in capital5,998,574 3,493,959 
Retained earnings5,562,775 11,523,326 
Accumulated other comprehensive loss(739,341)(797,713)
Treasury stock (27,799,775 and 27,746,848 common shares at cost, December 31, 2020 and December 31, 2019, respectively)(2,063,991)(2,058,091)
Total shareholders' equity8,760,669 12,163,846 
Total liabilities, redeemable noncontrolling interest and shareholders’ equity$32,465,187 $30,320,284 

Year Ended December 31,
202220212020
(in thousands)
Operating Activities
Net Loss$(2,155,962)$(5,260,499)$(5,775,130)
Adjustments:
Depreciation and amortization1,406,689 1,292,878 1,279,254 
Impairment and credit losses562 82,001 1,566,380 
Net deferred income tax benefit(21,576)(42,979)(8,791)
Loss (gain) on derivative instruments not designated as hedges99,985 (1,492)49,316 
Share-based compensation expense36,116 63,638 39,779 
Equity investment (income) loss(56,695)135,469 213,286 
Amortization of debt issuance costs148,790 125,116 89,442 
Amortization of debt discounts and premiums13,978 123,439 66,776 
Loss on extinguishment of debt93,810 138,759 41,109 
Currency translation adjustment losses— — 69,044 
Change in fair value of contingent consideration— — (45,126)
Changes in operating assets and liabilities:
(Increase) decrease in trade and other receivables, net(234,348)(181,707)121,055 
(Increase) decrease in inventories(73,792)(34,527)27,077 
(Increase) decrease in prepaid expenses and other assets(153,196)(152,071)295,876 
Increase (decrease) in accounts payable74,657 188,518 (133,815)
Increase (decrease) in accrued interest136,855 (694)182,578 
Increase (decrease) in accrued expenses and other liabilities215,981 235,446 (180,479)
Increase (decrease) in customer deposits1,007,129 1,426,647 (1,643,560)
Other, net(57,126)(15,757)14,276 
Net cash provided by (used in) operating activities481,857 (1,877,815)(3,731,653)
Investing Activities
Purchases of property and equipment(2,710,063)(2,229,704)(1,965,131)
Cash received on settlement of derivative financial instruments52,550 44,492 15,874 
Cash paid on settlement of derivative financial instruments(355,909)(74,249)(161,335)
Investments in and loans to unconsolidated affiliates— (70,228)(100,609)
Cash received on loans to unconsolidated affiliates18,650 31,334 21,086 
Proceeds from the sale of property and equipment and other assets421 176,039 27,796 
Other, net6,585 (22,423)(16,247)
Net cash used in investing activities(2,987,766)(2,144,739)(2,178,566)
The accompanying notes are an integral part of these consolidated financial statements.
F-7


ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended December 31,
202020192018
(in thousands)
Operating Activities
Net (Loss) Income$(5,775,130)$1,907,600 $1,815,792 
Adjustments:
Depreciation and amortization1,279,254 1,245,942 1,033,697 
Impairment and credit losses1,566,380 33,651 
Net deferred income tax (benefit) expense(8,791)7,745 (2,679)
Loss (gain) on derivative instruments not designated as hedges49,316 (1,431)61,148 
Share-based compensation expense39,779 75,930 46,061 
Equity investment loss (income)213,286 (230,980)(210,756)
Amortization of debt issuance costs89,442 31,991 41,978 
Amortization of debt discounts and premiums66,776 31,616 11,004 
Loss on extinguishment of secured senior term loan41,109 6,326 
Change in fair value of contingent consideration(45,126)18,400 
Recognition of deferred currency translation adjustment
loss on sale of assets
69,044 
Gain on sale of unconsolidated affiliate(13,680)
Recognition of deferred gain(21,794)
Changes in operating assets and liabilities:
Decrease (increase) in trade and other receivables, net121,055 (9,898)(9,573)
Decrease (increase) in inventories27,077 (8,533)(23,849)
   Decrease (increase) in prepaid expenses and other assets295,876 15,669 (71,770)
(Decrease) increase in accounts payable(133,815)75,281 91,737 
Increase (decrease) in accrued interest182,578 (4,460)18,773 
(Decrease) increase in accrued expenses and other liabilities(180,479)96,490 42,937 
(Decrease) increase in customer deposits(1,643,560)280,139 385,990 
Dividends received from unconsolidated affiliates2,215 150,177 243,101 
Other, net12,061 28,362 7,371 
Net cash (used in) provided by operating activities(3,731,653)3,716,366 3,479,139 
Investing Activities
Purchases of property and equipment(1,965,131)(3,024,663)(3,660,028)
Cash received on settlement of derivative financial instruments15,874 7,621 76,529 
Cash paid on settlement of derivative financial instruments(161,335)(68,836)(98,074)
Investments in and loans to unconsolidated affiliates(100,609)(25,569)(27,172)
Cash received on loans to unconsolidated affiliates21,086 32,870 124,238 
Proceeds from the sale of property and equipment27,796 
Proceeds from the sale of unconsolidated affiliate13,215 
Acquisition of Silversea Cruises, net of cash acquired(916,135)
Other, net(16,247)(12,829)(1,731)
Net cash used in investing activities(2,178,566)(3,091,406)(4,489,158)
The accompanying notes are an integral part of these consolidated financial statements.
F-8


ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
Year Ended December 31,
202020192018Year Ended December 31,
202220212020
(in thousands)(in thousands)
Financing ActivitiesFinancing ActivitiesFinancing Activities
Debt proceedsDebt proceeds13,547,189 3,525,564 8,590,740 Debt proceeds9,787,166 4,467,789 13,547,189 
Debt issuance costsDebt issuance costs(374,715)(50,348)(81,959)Debt issuance costs(251,888)(201,698)(374,715)
Repayments of debtRepayments of debt(3,845,133)(4,060,244)(6,963,511)Repayments of debt(7,728,568)(2,296,990)(3,845,133)
Premium on repayment of debtPremium on repayment of debt(49,367)(135,372)— 
Proceeds from issuance of commercial paper notesProceeds from issuance of commercial paper notes6,765,816 26,240,540 4,730,286 Proceeds from issuance of commercial paper notes— — 6,765,816 
Repayments of commercial paper notesRepayments of commercial paper notes(7,837,635)(25,613,111)(3,965,450)Repayments of commercial paper notes— (414,570)(7,837,635)
Purchase of treasury stock(99,582)(575,039)
Dividends paidDividends paid(326,421)(602,674)(527,494)Dividends paid— — (326,421)
Proceeds from common stock issuancesProceeds from common stock issuances1,431,375 Proceeds from common stock issuances— 1,621,860 1,431,375 
Other, netOther, net(10,688)(10,516)(9,500)Other, net(16,370)(442)(10,688)
Net cash provided by (used in) financing activities9,349,788 (670,371)1,198,073 
Net cash provided by financing activitiesNet cash provided by financing activities1,740,973 3,040,577 9,349,788 
Effect of exchange rate changes on cashEffect of exchange rate changes on cash1,167 1,297 (20,314)Effect of exchange rate changes on cash(1,829)(727)1,167 
Net increase (decrease) in cash and cash equivalents3,440,736 (44,114)167,740 
Net (decrease) increase in cash and cash equivalentsNet (decrease) increase in cash and cash equivalents(766,765)(982,704)3,440,736 
Cash and cash equivalents at beginning of yearCash and cash equivalents at beginning of year243,738 287,852 120,112 Cash and cash equivalents at beginning of year2,701,770 3,684,474 243,738 
Cash and cash equivalents at end of yearCash and cash equivalents at end of year$3,684,474 $243,738 $287,852 Cash and cash equivalents at end of year$1,935,005 $2,701,770 $3,684,474 
Supplemental DisclosuresSupplemental DisclosuresSupplemental Disclosures
Cash paid during the year for:Cash paid during the year for:Cash paid during the year for:
Interest, net of amount capitalizedInterest, net of amount capitalized$418,164 $246,312 $252,466 Interest, net of amount capitalized$959,907 $834,245 $418,164 
Non-Cash Investing ActivitiesNon-Cash Investing ActivitiesNon-Cash Investing Activities
Contingent consideration for the acquisition of Silversea Cruises$$$44,000 
Notes receivable issued upon sale of property and equipment and other assetsNotes receivable issued upon sale of property and equipment and other assets$— $16,000 $53,419 
Purchases of property and equipment included in accounts payable and accrued expenses and other liabilitiesPurchases of property and equipment included in accounts payable and accrued expenses and other liabilities$16,189 $86,155 $Purchases of property and equipment included in accounts payable and accrued expenses and other liabilities$33,853 $14,097 $16,189 
Notes receivable issued upon sale of property and equipment$53,419 $$
Acquisition of property and equipment from assumed debtAcquisition of property and equipment from assumed debt$277,000 $— $— 
Non-Cash Financing ActivitiesNon-Cash Financing ActivitiesNon-Cash Financing Activities
Acquisition of Silversea Cruises non-controlling interest$592,313 $$
Purchase of Silversea Cruises non-controlling interestPurchase of Silversea Cruises non-controlling interest$— $— $592,313 
Termination of Silversea Cruises contingent consideration obligationTermination of Silversea Cruises contingent consideration obligation$16,564 $$Termination of Silversea Cruises contingent consideration obligation$— $— $16,564 
Common stock issuances pending cash settlement and included in trade receivablesCommon stock issuances pending cash settlement and included in trade receivables$121,352 $$Common stock issuances pending cash settlement and included in trade receivables$— $— $121,352 
Debt related to acquisition of property and equipmentDebt related to acquisition of property and equipment$277,000 $— $— 



The accompanying notes are an integral part of these consolidated financial statements.
F-9F-8

Table of Contents
ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Common StockPaid-in CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Treasury StockTotal Shareholders' Equity
(in thousands, except per share data)
Balances at January 1, 2018$2,352 $3,390,117 $9,022,405 $(334,265)$(1,378,306)$10,702,303 
Cumulative effect of accounting changes— — (23,476)— — (23,476)
Activity related to employee stock plans30,783 — — — 30,789 
Common stock dividends, $2.60 per share— — (546,689)— — (546,689)
Changes related to cash flow derivative hedges— — — (286,861)— (286,861)
Change in defined benefit plans— — — 7,643 — 7,643 
Foreign currency translation adjustments— — — (14,251)— (14,251)
Purchases of treasury stock— — — — (575,039)(575,039)
Net Income attributable to Royal Caribbean Cruises Ltd.— — 1,811,042 — — 1,811,042 
Balances at December 31, 20182,358 3,420,900 10,263,282 (627,734)(1,953,345)11,105,461 
Activity related to employee stock plans73,059 — — (5,164)67,902 
Common stock dividends, $2.96 per share— — (618,843)— — (618,843)
Changes related to cash flow derivative hedges— — — (151,313)— (151,313)
Change in defined benefit plans— — — (19,535)— (19,535)
Foreign currency translation adjustments— — — 869 — 869 
Purchases of treasury stock— — — — (99,582)(99,582)
Net Income attributable to Royal Caribbean Cruises Ltd.— — 1,878,887 — — 1,878,887 
Balances at December 31, 20192,365 3,493,959 11,523,326 (797,713)(2,058,091)12,163,846 
Activity related to employee stock plans29,750 — — — 29,759 
Common stock issuance226 1,552,500 — — — 1,552,726 
Equity component of convertible notes, net of issuance costs— 307,640 — — — 307,640 
Acquisition of Silversea non-controlling interest52 608,825 — — — 608,877 
Common stock dividends, $0.78 per share— — (163,089)— — (163,089)
Changes related to cash flow derivative hedges— — — 38,010 — 38,010 
Change in defined benefit plans— — — (19,984)— (19,984)
Foreign currency translation adjustments— — 40,346 — 40,346 
Purchases of treasury stock— 5,900 — — (5,900)
Net Loss attributable to Royal Caribbean Cruises Ltd.— — (5,797,462)— — (5,797,462)
Balances at December 31, 2020$2,652 $5,998,574 $5,562,775 $(739,341)$(2,063,991)$8,760,669 
Common StockPaid-in CapitalRetained Earnings (Accumulated Deficit)Accumulated Other Comprehensive Income (Loss)Treasury StockTotal Shareholders' Equity
(in thousands, except per share data)
Balances at January 1, 2020$2,365 $3,493,959 $11,523,326 $(797,713)$(2,058,091)$12,163,846 
Activity related to employee stock plans29,750 — — — 29,759 
Common stock issuance226 1,552,500 — — — 1,552,726 
Equity component of convertible notes, net of issuance costs— 307,640 — — — 307,640 
Acquisition of Silversea non-controlling interest52 608,825 — — — 608,877 
Common stock dividends, $0.78 per share— — (163,089)— — (163,089)
Changes related to cash flow derivative hedges— — — 38,010 — 38,010 
Change in defined benefit plans— — — (19,984)— (19,984)
Foreign currency translation adjustments— — — 40,346 — 40,346 
Purchases of treasury stock— 5,900 — — (5,900)— 
Net Loss attributable to Royal Caribbean Cruises Ltd.— — (5,797,462)— — (5,797,462)
Balances at December 31, 2020$2,652 $5,998,574 $5,562,775 $(739,341)$(2,063,991)$8,760,669 
Activity related to employee stock plans62,991 — — — 62,996 
Common stock issuance170 1,495,732 — — — 1,495,902 
Changes related to cash flow derivative hedges— — — 4,046 — 4,046 
Change in defined benefit plans— — — 8,707 — 8,707 
Foreign currency translation adjustments— — — 15,703 — 15,703 
Purchases of treasury stock— — — — (1,968)(1,968)
Net Loss attributable to Royal Caribbean Cruises Ltd.— — (5,260,499)— — (5,260,499)
Balances at December 31, 2021$2,827 $7,557,297 $302,276 $(710,885)$(2,065,959)$5,085,556 
Activity related to employee stock plans35,195 37 — — 35,237 
Cumulative effect of adoption of Accounting Standards Update 2020-06— (307,640)146,220 — — (161,420)
Changes related to cash flow derivative hedges— — — 8,462 — 8,462 
Change in defined benefit plans— — — 48,914 — 48,914 
Foreign currency translation adjustments— — — 10,295 — 10,295 
Purchases of treasury stock— — — — (2,270)(2,270)
Net Loss attributable to Royal Caribbean Cruises Ltd.— — (2,155,962)— — (2,155,962)
Balances at December 31, 2022$2,832 $7,284,852 $(1,707,429)$(643,214)$(2,068,229)$2,868,812 

The accompanying notes are an integral part of these consolidated financial statements.
F-10F-9

Table of Contents

ROYAL CARIBBEAN CRUISES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1. General
Description of Business
We are a global cruise company. We own and operate 4three global cruise brands: Royal Caribbean International, Celebrity Cruises Azamara and Silversea Cruises (collectively, our "Global Brands"). We also own a 50% joint venture interest in TUI Cruises GmbH ("TUIC"), thatwhich operates the German brands TUI Cruises and Hapag-Lloyd Cruises (collectively, our "Partner Brands"). On June 30, 2020, TUIC acquired Hapag-Lloyd Cruises, a luxury and expedition brand for German-speaking guests, from TUI AG for approximately €1.2 billion, or $1.3 billion as of the purchase date. See Note 8. Other Assets for further information on the acquisition. We account for our investments in our Partner Brands under the equity method of accounting. Together, our Global Brands and our Partner Brands operateoperated a combined 6164 ships as of December 31, 2020.2022. Our ships offer a selection of worldwide itineraries that call on more than 1,000 destinations in over 120 countries on all 7seven continents.
Management's Plan and Liquidity
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.
As part of our liquidity management, we rely on estimates of our future liquidity which include numerous assumptions that are subject to various risks and uncertainties. The principal assumptions used to estimate our future liquidity consist of:
Expected timing of cash collections for cruise bookings;
In 2020, Pullmantur Holdings S.L. ("Pullmantur Holdings"),Expected sustained increase in which we own a 49% non-controlling interest,revenue per available passenger cruise day;
Expected increase in occupancy levels, reaching historical levels in late spring of 2023; and certain
Inflationary increases to our operating costs, mostly impacting the expected cost of its other subsidiaries filed for reorganization in Spain under the terms of the Spanish insolvency laws (the "Pullmantur reorganization") duefuel and food as compared to the negative impact2019.
The resulting effects of the COVID-19 pandemic are having a material negative impact on our operating cash flows and liquidity. We believe we have made reasonable estimates and judgments of the company. The Pullmantur brand has cancelled allimpact of its scheduled ship operations.these events to our consolidated financial statements; however, there can be no assurance the estimates and assumptions of our future liquidity requirements will be realized, and actual results could vary materially. We suspended equity method accounting for Pullmantur Holdingshave taken proactive measures to manage our liquidity, including issuing debt and shares of our common stock, amending credit agreements to defer payments (see Note 8. Debt ), obtaining relevant modification of covenant requirements and waivers (see Note 8. Debt ), and during the second quarterpause, reducing operating expenses and capital expenditures.
As of 2020.December 31, 2022, we had liquidity of $2.9 billion, including $0.3 billion of undrawn revolving credit facility capacity, $1.9 billion in cash and cash equivalents and a $0.7 billion commitment for a 364-day term loan facility which was terminated in February 2023 upon issuance of our $700 million aggregate principal amount of 7.25% Priority Guaranteed Notes. Our revolving credit facilities were utilized through a combination of amounts drawn and letters of credit issued under the facilities as of December 31, 2022, which were subsequently amended in January 2023, as described in Note 8. Debt to our consolidated financial statements.
Based on our actions, as well as our present financial condition and the aforementioned assumptions on liquidity, we believe that we have sufficient liquidity to fund our obligations for at least the next twelve months from the issuance of the financial statements. As of December 31, 2022, we were in compliance with our financial covenants and we estimate we will be in compliance for the next twelve months. Refer to Note 8. Other AssetsDebt for further information regarding Pullmantur's reorganization filingrefinancing transactions, and its impactthe applicable financial covenants.
We will continue to pursue various opportunities to raise additional capital to fund obligations associated with future debt maturities and/or to extend the Company.
On July 9, 2020, we acquired the remaining 33.3% interest in Silversea Cruises that we did not already own (the "noncontrolling interest") from Heritage Cruise Holding Ltd. ("Heritage"). As a result of the acquisition of the noncontrolling interest, Silversea Cruises is now a wholly owned cruise brand. As consideration for the noncontrolling interest, we issued to Heritage 5.2 million shares of common stock, par value $0.01 per share, of Royal Caribbean Cruises Ltd. Pursuant to the agreement governing the acquisition, among other things, the parties terminated any existing obligation to issue Heritage any contingent consideration, at fair value, in connectionmaturity dates associated with our acquisitionexisting indebtedness or facilities. Actions to raise capital may include issuances of a 66.7% interestdebt, convertible debt or equity in Silversea Cruises on July 31, 2018. The share purchase did not result in a change of control. The purchase was accounted for as an equity transaction and no gainprivate or loss was recognized in earnings. See Note 11. Redeemable Noncontrolling Interest for further information regarding our acquisition of the noncontrolling interest.public transactions or entering into new or extended credit facilities.
On January 19, 2021, we announced that we entered into a definitive agreement to sell the Azamara brand, including its 3-ship fleet and associated intellectual property to Sycamore Partners in an all-cash carve-out transaction for $201.0 million. The transaction is subject to customary conditions and is expected to close in the first quarter of 2021.
Management's Plan and Liquidity
As part of our response to the COVID-19 pandemic, we voluntarily suspended our global cruise operations effective March 13, 2020 and this suspension remains in effect through at least April 30, 2021, for most of our cruise operations.
We are working with both the U.S. Center for Disease Control and Prevention (“CDC”) and the Healthy Sail Panel (“HSP”), formed in June 2020 by us and Norwegian Cruise Line Holdings Ltd. and composed of leading experts in relevant fields, including epidemiology, infectious diseases, public policy and regulation, engineering and general health safety, to prepare and develop a plan to meet the requirements of the CDC’s Framework for the Conditional Sailing Order (the “Conditional Order”). The Conditional Order permits cruise ship passenger operations in U.S. waters under certain conditions and following the establishment of certain protocols and procedures, with the order remaining in effect until the earlier of (1) the expiration of the Secretary of Health and Human Services’ declaration that COVID-19 constitutes a public health emergency; (2) the CDC Director rescinds or modifies the Conditional Order based on specific public health or other considerations, or (3) November 1, 2021.
Many uncertainties remain as to the specifics, timing and costs of administering and implementing the requirements of the Conditional Order, some of which may be significant, as well as the extent of any additional requirements the CDC may issue as it provides further guidance on the requirements of the Conditional Order. We expect to re-start our global cruise operations in a phased manner once we fulfill the requirements of the Conditional Order, with cruises having reduced guest occupancy, modified itineraries and enhanced health and safety protocols. Based on our assessment of these conditions or for other reasons, we may determine it necessary to further extend our voluntary suspension of our Global Brands’ cruise sailings which currently extends through at least April 30, 2021, for most of our cruise operations. As such, we believe the suspension of our operations
The accompanying notes are an integral part of these consolidated financial statements.
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and the impact to our global bookings resulting from the COVID-19 pandemic will continue to have a material negative impact on our results of operations and liquidity, which may be prolonged beyond containment of the disease.
As of December 31, 2020, we had liquidity of $4.4 billion, consisting of cash and cash equivalents of $3.7 billion and a $0.7 billion one-year commitment for a 364-day term loan facility. As of December 31, 2020, our revolving credit facilities were fully utilized through a combination of amounts drawn and letters of credit issued under the facilities.
As of December 31, 2020, financial covenant testing on our amended export-credit and non-export credit facilities, totaling and outstanding principal amount of $11.2 billion, and on our credit card processing agreements, was waived through the fourth quarter of 2021 following amendments to the agreements during 2020.
During the first quarter of 2021, we further amended $4.9 billion of our non-export credit facilities and $6.2 billion of our export credit facilities, and certain credit card processing agreements to extend the waiver of our financial covenants through and including at least the third quarter of 2022. In addition, during the first quarter of 2021, we amended our export credit facilities to defer an additional $0.8 billion of principal payments due under these export facilities between April 2021 and March 2022. Pursuant to the covenant amendments for the non-export facilities and certain of the credit card processingagreements, we have modified the manner in which such covenants are calculated, temporarily in certain cases and permanently in others, as well as the levels at which our net debt to capitalization covenant will be tested during the period commencing immediately following the end of the waiver period and continuing through the end of 2023. The amendments also impose a monthly-tested minimum liquidity covenant of $500.0 million for the duration of the waiver period subject to reduction to $350.0 million if we raise at least $500.0 million of additional capital, which can be satisfied through previously undrawn facilities. In addition, the amendments place restrictions on paying cash dividends and effectuating share repurchases through at least the end of the third quarter of 2022. As of December 31, 2020, we were in compliance with the applicable minimum liquidity covenant and we estimate that we will be in compliance for at least the next twelve months. Refer to Note 9. Debt for further information regarding our debt covenants.
Significant events affecting travel, including COVID-19 and our suspension of operations, typically have an impact on the booking pattern for cruise vacations, with the full extent of the impact generally determined by the length of time the event influences travel decisions. The estimation of our future liquidity requirements includes numerous assumptions that are subject to various risks and uncertainties. The principal assumptions used to estimate our future liquidity requirements consist of:
Expected date of return to operations;
Expected gradual resumption of cruise operations;
Expected lower than comparable historical occupancy levels during the resumption of cruise operations; and
Expected incremental expenses for the resumption of cruise operations, for the maintenance of additional public health protocols and procedures for additional regulations.
There can be no assurance that our assumptions and estimates are accurate due to possible variables, including, but not limited to, the uncertainties associated with the CDC’s interpretation and application of the requirements in the Conditional Order and subsequent changes to those requirements, our ability to meet these requirements , some of which may be significant, and whether efforts by other countries to contain the disease will further restrict our ability to commence operations. We have and will continue undertaking several proactive measures to mitigate the financial and operational impacts of COVID-19, including reduction of capital expenditures and operating expenses (reduction and furloughing of workforce and laying up of vessels), issuing of debt and shares of our common stock, amending of credit agreements to defer payments and covenant requirements and suspending of dividend payments.
Based on these actions and our assumptions regarding the impact of COVID-19 and our suspension of operations, as well as our present financial condition, we believe that our available liquidity as described above will be sufficient to fund our obligations for at least the next twelve months from the issuance of these financial statements. Beyond the next 12 months, in April 2022, approximately $1.0 billion of long- term debt will need to be refinanced or extended should the commencement of operations be delayed beyond the summer of 2021, in order to maintain the Company's liquidity position. We are working on refinancing or negotiating extension of the obligation, which we expect to have completed in advance of the April 2022 due date. There can be no assurances that the Company will be successful in completing the refinancing or extension necessary to meet its obligations beyond twelve months from the issuance of these financial statements on terms acceptable to the Company. If the Company is unable to maintain the required minimum level of liquidity or negotiate its minimum liquidity requirements, it could have a significant adverse effect on the Company’s business, financial condition and operating results.
Any further covenant waivers may lead to increased costs, increased interest rates, additional restrictive covenants and other available lender protections as may be agreed with our lenders. There can be no assurance that we would be able to obtain additional waivers in a timely manner, or on acceptable terms. If we require additional waivers and are not able to obtain them
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or repay the debt facilities, this would lead to an event of default and potential acceleration of amounts due under all of our outstanding debt and derivative contracts.
The Company also has agreements with its credit card processors relating to customer deposits received by the Company for future voyages. These agreements allow the credit card processors to require, under certain circumstances, including breach of the financial covenants, the existence of other material adverse changes, excessive chargebacks, and other triggering events, the Company to maintain a reserve that can be satisfied by posting collateral.
Executed amendments are in place for the majority of these providers, waiving collateral posting and reserve requirements tied to breach of our financial covenants through at least March 31, 2022 or September 30, 2022 depending on the agreement, 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 approximately $75.0 million held in reserve with a processor where the agreement was amended in the first quarter of 2021, such that future proceeds will be withheld in reserve, of which the maximum exposure is approximately $200.0 million. The amount and timing are dependent on future factors that are uncertain, such as the date we return to operations, volume and value of future deposits and whether we transfer our business to other processors. 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.
Basis for Preparation of Consolidated Financial Statements
The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Estimates are required for the preparation of financial statements in accordance with these principles. Actual results could differ from these estimates. Refer to Note 2. Summary of Significant Accounting Policies for a discussion of our significant accounting policies.
All significant intercompany accounts and transactions are eliminated in consolidation. We consolidate entities over which we have control, usually evidenced by a direct ownership interest of greater than 50%, and variable interest entities where we are determined to be the primary beneficiary. Refer to Note 87. Other Assets for further information regarding our variable interest entities. We consolidate the operating results of Silversea Cruises on a three-month reporting lag to allow for more timely preparation of our consolidated financial statements. With the exception of the October 2020 delivery of the Silver Moon which is reported in our consolidated financial statements as of and for the year ended December 31, 2020, no material events or other transactions involving Silversea Cruises have occurred from September 30, 2020 through December 31, 2020. Refer to Note 7. Property and Equipment, and Note 9. Debt for further information on the delivery of Silver Moon.
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.
On July 9, 2020, we acquired the remaining 33.3% interest in Silversea Cruises that we did not already own from Heritage Cruise Holding Ltd. 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 is 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 year ended December 31, 2021. Accordingly, the results of Silversea Cruises from October 1, 2020 to December 31, 2021 are included in our consolidated statement of comprehensive loss for the year ended December 31, 2021. To effect the change, we have reflected the third quarter 2021 operating results for Silversea Cruises, which were a net loss of $62.6 million within Other income (expense) in our consolidated statement of comprehensive loss for the year ended December 31, 2021.

Note 2. Summary of Significant Accounting Policies
Revenues and Expenses
Deposits received on sales of passenger cruises are initially recorded as customer deposit liabilities on our balance sheet. Customer deposits are subsequently recognized as passenger ticket revenues, together with revenues from onboard and other goods and services and all associated cruise operating expenses of a voyage. For further information on revenue recognition, refer to Note 43. RevenuesRevenue.
Cash and Cash Equivalents
Cash and cash equivalents include cash and marketable securities with original maturities of less than 90 days.
Inventories
Inventories consist of provisions, supplies and fuel carried at the lower of cost (weighted-average) or net realizable value.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation and amortization. We capitalize interest as part of the cost of acquiring certain assets. Improvement costs that we believe add value to our ships are capitalized as additions to the ship, the useful lives of the improvements are estimated and
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depreciated over the shorter of the improvements' estimated useful lives or that of the associated ship, and the replaced assets are disposed of on a net cost basis. In addition, we capitalize interest on borrowings during the active construction period of capital projects. Capitalized interest is added to the cost of the assets and depreciated over the estimated useful lives of the assets. The estimated cost and accumulated depreciation of replaced or refurbished ship components are written off and any resulting losses are recognized in
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Cruise operating expenses. Liquidated damages received from shipyards as a result of the late delivery of a new ship are recorded as reductions to the cost basis of the ship.
Depreciation of property and equipment is computed using the straight-line method over the estimated useful life of the asset. The useful lives of our ships are generally 30-35 years, net of a 10%-15% projected residual value. The 30-35-year useful life and 10%-15% residual value are based on the weighted-average of all major components of a ship. Our useful life and residual value estimates take into consideration the impact of anticipated technological changes, long-term cruise and vacation market conditions and historical useful lives of similarly-built ships. In addition, we take into consideration our estimates of the weighted-average useful lives of the ships' major component systems, such as hull, superstructure, main electric, engines and cabins. We employ a cost allocation methodology at the component level, in order to support the estimated weighted-average useful lives and residual values, as well as to determine the net cost basis of assets being replaced. Given the very large and complex nature of our ships, our accounting estimates related to ships and determinations of ship improvement costs to be capitalized require considerable judgment and are inherently uncertain. Depreciation for assets under capitalfinance leases is computed using the shorter of the lease term or related asset life, unless the asset is a finance lease due to title transferring or a purchase option that is reasonably certain of being exercised, in which case the asset is depreciated over the related asset life.
Depreciation of property and equipment is computed utilizing the following useful lives:
Years
Shipsgenerally, 30-35
Ship improvements3-25
Buildings and improvements10-40
Computer hardware and software3-10
Transportation equipment and other3-30
Leasehold improvementsShorter of remaining lease term or useful life 3-30

We periodically review estimated useful lives and residual values for ongoing reasonableness, considering long term views on our intended use of each class of ships and the planned level of improvements to maintain and enhance vessels within those classes. In the event a factor is identified that may trigger a change in the estimated useful lives and residual values of our ships, a review of the estimate is completed. In the fourth quarter of 2019, we completed a modernization of the Oasis of the Seas under our ship upgrade program. We spent $538.0 million under this ship upgrade program for the year ended December 31, 2019, with the Oasis of the Seas representing approximately $170.0 million. As a result of this capital investment and future planned investments in our Oasis-class ships, we performed a review of the estimated useful lives and residual values of Oasis-class ships, concluding in a change to the estimate. Effective fourth quarter of 2019, we revised the estimated useful lives of our Oasis-class ships from 30 years with a 15% residual value to 35 years with a 10% residual value. The change in the estimated useful lives and residual values was accounted for prospectively as a change in accounting estimate. The 35-year useful life with a 10% residual value is based on revised estimates of the weighted-average useful life of all major ship components for the Oasis-class ships. The change in estimate is consistent with our recent investments in and long term future plans to continue to invest in the upgrade of these ships, resulting in the use of certain ship components longer than originally estimated. In determining the change in estimated useful life and residual value, we utilized quantitative and qualitative analysis, including historical and projected usage patterns, industrybenchmarks, planned maintenance programs and projected operational and financial performance of the class. The change allows us to better match depreciation expense with the periods these assets are expected to be in use. For the year ended December 31, 2019, this change increased operating income and net income by approximately $4.6 million and increased earnings per share by $0.02 per share on a basic and diluted basis.
We review long-lived assets, including right-of-use assets for impairment whenever events or changes in circumstances indicate, based on estimated undiscounted future cash flows, that the carrying value of these assets may not be fully recoverable. For purposes of recognition and measurement of an impairment loss, long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The lowest level for which we maintain identifiable cash flows that are independent of the cash flows of other assets and liabilities is at the ship level for our ships. If estimated future cash flows are less than the carrying value of an asset, an impairment charge is recognized to the extent its carrying value exceeds fair value. Refer to Note 7.6. Property and Equipment for further information on determination of fair value for long-lived assets.
We use the deferral method to account for drydocking costs. Under the deferral method, drydocking costs incurred are deferred and charged to expense on a straight-line basis over the period to the next scheduled drydock, which we estimate to be a period of thirty to sixty months based on the vessel's age as required by Class. Deferred drydock costs consist of the costs to drydock the vessel and other costs incurred in connection with the drydock which are necessary to maintain the vessel's Class certification. Class certification is necessary in order for our cruise ships to be flagged in a specific country, obtain liability
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insurance and legally operate as passenger cruise ships. The activities associated with those drydocking costs cannot be performed while the vessel is in service and, as such, are done during a drydock as a planned major maintenance activity. The significant deferred drydock costs consist of hauling and wharfage services provided by the drydock facility, hull inspection and related activities (e.g., scraping, pressure cleaning, bottom painting), maintenance to steering propulsion, thruster equipment and ballast tanks, port services such as tugs, pilotage and line handling, and freight associated with these items. We perform a detailed analysis of the various activities performed for each drydock and only defer those costs that are directly related to planned major maintenance activities necessary to maintain Class. The costs deferred are related to activities not otherwise
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routinely periodically performed to maintain a vessel's designed and intended operating capability. Repairs and maintenance activities are charged to expense as incurred.
Goodwill
Goodwill represents the excess of cost over the fair value of net tangible and identifiable intangible assets acquired. We review goodwill for impairment at the reporting unit level annually or, when events or circumstances dictate, more frequently. The impairment review for goodwill consists ofWe may first perform a qualitative assessment ofto determine whether it is more-likely-than-notmore likely than not that a reporting unit is impaired. When assessing goodwill for impairment, our decision to perform a qualitative assessment for an individual reporting unit is influenced by a number of factors, including the carrying value of the reporting unit's goodwill, the significance of the excess of the reporting unit's estimated fair value is less than itsover carrying value at the last quantitative assessment date, macroeconomic conditions, market conditions and if necessary,our operating performance.
If we do not perform a goodwill impairment test. Factors to consider when performing the qualitative assessment, include general economic conditions, limitations on accessing capital, changes in forecasted operating results, changes in fuel prices and fluctuations in foreign exchange rates. If the qualitative assessment demonstratesor if we determine that it is more-likely-than-notnot more likely than not that the estimated fair value of the reporting unit exceeds its carrying value, it is not necessary to performamount, we calculate the goodwill impairment test. We may elect to bypass the qualitative assessment and proceed directly to step one, for any reporting unit, in any period. On a periodic basis, we elect to bypass the qualitative assessment and proceed to step one to corroborate the results of recent years' qualitative assessments. We can resume the qualitative assessment for any reporting unit in any subsequent period.
The goodwill impairment analysis consists of a comparison of theestimated fair value of the reporting unit with its carrying value. We typically estimate the fair value of our reporting units using a probability-weighted discounted cash flow model,an income approach, which may also include a combination of a market-based valuation approach. The estimation of fair value utilizing discounted expected future cash flows includes numerous uncertainties which require our significant judgment when making assumptions of expected revenues, operating costs, marketing, selling and administrative expenses, interest rates, ship additions and retirements as well as assumptions regarding the cruise vacation industry's competitive environment and general economic and business conditions, among other factors.conditions. The principal assumptions used in the discounted cash flow model for our 20202022 impairment assessments were:assessment consisted of: (i) the timing of our return to service, changes in market conditions and port or other restrictions;forecasted revenues per available passenger cruise day, (ii) forecasted net revenues, primarily the timing of returning to normalized operations, occupancy rates from existing and expected ship deliveries, including options, and(iii) vessel operating expenses, (iv) terminal growth rate;rate, and (iii)(v) weighted average cost of capital (i.e., discount rate). The discounted cash flow model uses the most current projected operating results for the upcoming fiscal year as a base. To that base, we add future years' cash flows based on multiple revenue and expense scenarios reflecting the impact of various return to service management assumptions beyond the base year on the reporting unit. We discount the projected cash flows using rates specific to the reporting unit based on its weighted-average cost of capital. If the fair value of the reporting unit exceeds its carrying value, no write-down of goodwill is required. As amended by ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment, ifIf the fair value of the reporting unit is less than the carrying value of its net assets, an impairment is recognized based on the amount by which the carrying value of a reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to such reporting unit.
Intangible Assets
In connection with our acquisitions, we have acquired certain intangible assets to which value has been assigned based on our estimates. Intangible assets that are deemed to have an indefinite life are not amortized, but are subject to an annual impairment test, or when events or circumstances dictate, more frequently. The impairment review for indefinite-life intangible assets can be performed using a qualitative or quantitative impairment assessment. The quantitative assessment consists of a comparison of the fair value of the asset with its carrying value. We estimate the fair value of these assets using a discounted cash flow model and various valuation methods depending on the nature of the intangible asset, such as the relief-from-royalty method for trademarks and trade names. The principal assumptions used in the discounted cash flows model for our 20202022 impairment assessments were:assessment consisted of: (i) forecasted net revenues primarily the timing of returning to normalized operations,per available passenger cruise day, (ii) occupancy rates from existing and expected ship deliveries, including options, and(iii) terminal growth rate; (ii)(iv) royalty rate; and (iii)(v) weighted average cost of capital (i.e., discount rate). If the carrying value exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. If the fair value exceeds its carrying value, the indefinite-life intangible asset is not considered impaired.
Other intangible assets assigned finite useful lives are amortized on a straight-line basis over their estimated useful lives.
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Contingencies — Litigation
On an ongoing basis, we assess the potential liabilities related to any lawsuits or claims brought against us. While it is typically very difficult to determine the timing and ultimate outcome of such actions, we use our best judgment to determine if it is probable that we will incur an expense related to the settlement or final adjudication of such matters and whether a reasonable estimation of such probable loss, if any, can be made. In assessing probable losses, we take into consideration estimates of the amount of insurance recoveries, if any, which are recorded as assets when recoverability is probable. We accrue a liability, including legal costs, when we believe a loss is probable and the amount of loss can be reasonably estimated. Due to the inherent uncertainties related to the eventual outcome of litigation and potential insurance recoveries, it is possible that certain matters may be resolved for amounts materially different from any provisions or disclosures that we have previously made.
Advertising Costs
Advertising costs are expensed as incurred except those costs which result in tangible assets, such as brochures, which are treated as prepaid expenses and charged to expense as consumed. Advertising costs consist of media and online advertising as well as brochure, production and direct mail costs.
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Media advertising was $138.1$380.2 million, $309.4$303.2 million and $255.7$138.1 million, and brochure, production and direct mail costs were $69.1$129.4 million, $156.0$88.9 million and $133.4$69.1 million for the years ended December 31, 2020, 20192022, 2021 and 2018,2020, respectively.
Derivative Instruments
We enter into various forward, swap and option contracts to manage our interest rate exposure and to limit our exposure to fluctuations in foreign currency exchange rates and fuel prices. These instruments are recorded on the balance sheet at their fair value and the vast majority are designated as hedges. We also use non-derivative financial instruments designated as hedges of our net investment in our foreign operations and investments. Although certain of our derivative financial instruments do not qualify or are not accounted for under hedge accounting, our objective is not to hold or issue derivative financial instruments for trading or other speculative purposes.
At inception of the hedge relationship, a derivative instrument that hedges the exposure to changes in the fair value of a firm commitment or a recognized asset or liability is designated as a fair value hedge. A derivative instrument that hedges a forecasted transaction or the variability of cash flows related to a recognized asset or liability is designated as a cash flow hedge.
Changes in the fair value of derivatives that are designated as fair value hedges are offset against changes in the fair value of the underlying hedged assets, liabilities or firm commitments. Gains and losses on derivatives that are designated as cash flow hedges are recorded as a component of Accumulated other comprehensive loss until the underlying hedged transactions are recognized in earnings. The foreign currency transaction gain or loss of our non-derivative financial instruments and the changes in the fair value of derivatives designated as hedges of our net investment in foreign operations and investments are recognized as a component of Accumulated other comprehensive loss along with the associated foreign currency translation adjustment of the foreign operation or investment. In certain hedges of our net investment in foreign operations and investments, we exclude forward points from the assessment of hedge effectiveness and we amortize the related amounts directly into earnings.
On an ongoing basis, we assess whether derivatives used in hedging transactions are "highly effective" in offsetting changes in the fair value or cash flow of hedged items. For our net investment hedges, we use the dollar offset method to measure effectiveness. For all other hedging programs, we use the long-haul method to assess hedge effectiveness using regression analysis for each hedge relationship. 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. High effectiveness is achieved when a statistically valid relationship reflects a high degree of offset and correlation between the changes in the fair values of the derivative instrument and the hedged item. If it is determined that a derivative is not highly effective as a hedge or hedge accounting is discontinued, any change in fair value of the derivative since the last date at which it was determined to be effective is recognized in earnings.
Cash flows from derivative instruments that are designated as fair value or cash flow hedges are classified in the same category as the cash flows from the underlying hedged items. In the event that hedge accounting is discontinued, cash flows
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subsequent to the date of discontinuance are classified within investing activities. Cash flows from derivative instruments not designated as hedging instruments are classified as investing activities.
We consider the classification of the underlying hedged item’s cash flows in determining the classification for the designated derivative instrument’s cash flows. We classify derivative instrument cash flows from hedges of benchmark interest rate or hedges of fuel expense as operating activities due to the nature of the hedged item. Likewise, we classify derivative instrument cash flows from hedges of foreign currency risk on our newbuild ship payments as investing activities.
Foreign Currency Translations and Transactions
We translate assets and liabilities of our foreign subsidiaries whose functional currency is the local currency, at exchange rates in effect at the balance sheet date. We translate revenues and expenses at weighted-average exchange rates for the period. Equity is translated at historical rates and the resulting foreign currency translation adjustments are included as a component of Accumulated other comprehensive loss, which is reflected as a separate component of Shareholders' equity. Exchange gains or losses arising from the remeasurement of monetary assets and liabilities denominated in a currency other than the functional currency of the entity involved are immediately included in our earnings, except for certain liabilities that have been designated to act as a hedge of a net investment in a foreign operation or investment. Exchange gains (losses) were $(1.5)$93.0 million, $0.4$24.3 million and $57.6$(1.5) million for the years ended December 31, 2020, 20192022, 2021 and 2018,2020, respectively, and were recorded within
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Other income (expense). The majority of our transactions are settled in United States dollars. Gains or losses resulting from transactions denominated in other currencies are recognized in income at each balance sheet date.
Concentrations of Credit Risk
We monitor our credit risk associated with financial and other institutions with which we conduct significant business and, to minimize these risks, we select counterparties with credit risks acceptable to us and we seek to limit our exposure to an individual counterparty. 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 December 31, 2020,2022 and December 31, 2021, we had $26.9 million counterparty credit risk exposure under our derivative instruments of $103.3 million and $1.9 million, respectively, 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 December 31, 2019, we had 0 counterparty credit risk exposure under our derivative instruments. We do not anticipate nonperformance by any of our significant counterparties. In addition, we have established guidelines we follow regarding credit ratings and instrument maturities to maintain safety and liquidity. We do not normally require collateral or other security to support credit relationships; however, in certain circumstances this option is available to us.
(Loss) EarningsLoss Per Share
Basic (loss) earningsloss per share is computed by dividing Net (Loss) IncomeLoss attributable to Royal Caribbean Cruises Ltd. by the weighted-average number of shares of common stock outstanding during each period. Diluted (loss) earningsloss per share incorporates the incremental shares issuable upon the assumed exercise of stock options and conversion of potentially dilutive securities.
Stock-Based Employee Compensation
We measure and recognize compensation expense at the estimated fair value of employee stock awards. Compensation expense for awards and the related tax effects are recognized as they vest. We use the estimated amount of expected forfeitures to calculate compensation costs for all outstanding awards.
Segment Reporting
As of December 31, 2020, we controlled and operated 4 global cruise brands: Royal Caribbean International, Celebrity Cruises, Azamara and Silversea Cruises. We also own a 50% joint venture interest in TUIC, that operates the German brands TUI Cruises and Hapag-Lloyd Cruises. We believe our brands possess the versatility to enter multiple cruise market segments within the cruise vacation industry. Although each of these brands has its own marketing style as well as ships and crews of various sizes, the nature of the products sold and services delivered by these brands share a common base (i.e., the sale and provision of cruise vacations). Our brands also have similar itineraries as well as similar cost and revenue components. In addition, our brands source passengers from similar markets around the world and operate in similar economic environments with a significant degree of commercial overlap. As a result, our brands have been aggregated as a single reportable segment based on the similarity of their economic characteristics, types of consumers, regulatory environment, maintenance requirements, supporting systems and processes as well as products and services provided. Our Chairman and Chief Executive
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Officer has been identified as the chief operating decision-maker and all significant operating decisions including the allocation of resources are based upon the analyses of the Company as 1one segment. Refer to Note 4. Revenues for passenger ticket revenue information by geographic area.
Adoption of Accounting Pronouncements
On January 1, 2019, we adopted the guidance codified in Accounting Standard Codification ("ASC") 842, Leases ("ASC 842") using the modified retrospective approach and elected the optional transition method, which allows entities to initially apply the standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Upon adoption, we applied the guidance to all existing leases.
For leases with a term greater than 12 months, the new guidance requires the lease rights and obligations arising from the leasing arrangements, including operating leases, to be recognized as assets and liabilities on the balance sheet. Upon adoption of the new guidance, the most significant impact was the recognition of right-of-use assets and lease liabilities relating to operating leases in the amounts of $801.8 million and $820.5 million, respectively, reported within Operating lease right-of-use assets and Long-term operating lease liabilities, respectively, with the current portion of the liability reported within Current portion of operating lease liabilities, in our consolidated balance sheet as of January 1, 2019. Accounting for finance leases remained substantially unchanged and continues to be reported within Property and equipment, net and Long-term debt, with the current portion of the debt reported within Current portion of debt, in our consolidated balance sheets. There was no cumulative effect of applying the new standard and accordingly there was no adjustment to our retained earnings upon adoption. The comparative information presented has not been recast and continues to be reported under the accounting standards in effect for those periods. For further information on leases, refer to Note 10. Leases.
This guidance did not have a material impact to our consolidated statements of comprehensive income (loss), consolidated statements of cash flows and our debt-covenants calculations under our current agreements.
In June 2016,March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting StandardStandards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326); Measurement of Credit Losses on Financial Instruments. This ASU, along with subsequent ASUs issued to clarify certain of its provisions, introduces new guidance which makes substantive changes to the accounting model for financial assets subject to credit losses that are measured at amortized cost, as well as certain off-balance sheet credit exposures. The updates include the introduction of a new current expected credit loss (“CECL”) model that is based on expected rather than incurred losses. On January 1, 2020, we adopted these updates using the modified retrospective approach. The adoption did not have a material impact to our consolidated financial statements.
In January 2020, the FASB issued ASU No. 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivative and Hedging (Topic 815), which clarifies the interaction of rules for equity securities, the equity method of accounting, and forward contracts and purchase options on certain types of securities. The guidance clarifies how to account for the transition into and out of the equity method of accounting when considering observable transactions under the measurement alternative. The ASU is effective for annual reporting periods beginning after December 15, 2020, including interim reporting periods within those annual periods, with early adoption permitted. We adopted the guidance during the quarter ended December 31, 2020. The adoption did not have a material impact to our consolidated financial statements.
Recent Accounting Pronouncements
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 mayissuance. In December 2022, the FASB deferred the date for which this guidance can be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or beforefrom December 31, 2022.2022 to December 31, 2024. We are currently evaluating the impact ofadopted the new guidance onduring 2022. The impact to our consolidated financial statements.statements, if any, will be dependent on the timing and terms of any future contract modifications related to a change in reference rate.
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In August 2020, the FASB issued 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 815815") or for convertible debt issued at a substantial premium. The ASU removes certain settlement conditions required for equity contracts to qualify for the derivative scope exception, permitting more contracts to qualify for it.
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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.
Recent Accounting Pronouncements
In September 2022, the FASB issued ASU No. 2022-04, Liabilities-Supplier Finance Programs (Subtopic 405-50) - Disclosure of Supplier Finance Program Obligations. This ASU requires that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude. This ASU is expected to improve financial reporting by requiring new disclosures about the programs, thereby allowing financial statement users to better consider the effect of the programs on an entity’s working capital, liquidity, and cash flows. This ASU is effective for annual reporting periodsfiscal years beginning after December 15, 2021, including interim reporting periods within those annual periods, with early adoption permitted no earlier than2022, except for the amendment on roll forward information which is effective for fiscal yearyears beginning after December 15, 2020. The guidance is expected to have an impact on our consolidated financial statements given the recent issuance of convertible notes, however, we2023. We are stillcurrently evaluating the extent of the impact of the new guidance on our consolidated financial statements.statement disclosures, although we do not expect the impact to be material.
Reclassifications
For the year ended December 31, 2020, we separately presented Amortization of debt discounts and premiums, which includes amortization of commercial paper notes discount, in our consolidated statements of cash flows. As a result, the prior year amortization amounts were reclassified from Other, net within Operating Activities to conform to the current year presentation. Also for the year ended December 31, 2020,2022, we no longer separately presented ProceedsDividends received from exercise of common stock optionsunconsolidated affiliates in our consolidated statements of cash flows. As a result, thecertain immaterial amounts presented in prior year amountsperiods were reclassified to Other, net within FinancingOperating Activities to conform to the current year presentation.
Note 3. Business Combination
On July 31, 2018, we acquired a 66.7% equity stake ("the 2018 acquisition") in Silversea Cruise Holding Ltd. ("Silversea Cruises"), an ultra-luxury and expedition cruise line, from Heritage Cruise Holding Ltd. ("Heritage"), previously known as Silversea Cruises Group Ltd.
The purchase price for the 2018 acquisition consisted of $1.02 billion in cash, net of assumed liabilities, and contingent consideration due to Heritage for which any obligation was terminated upon our acquisition of the noncontrolling interest in 2020. The fair value of the contingent consideration at the time of the 2018 acquisition was $44.0 million. Changes to the fair value of the contingent consideration were recorded in our results of operations, if any, in the period of the change prior to its termination. Refer to Note 183. Fair Value Measurements and Derivative Instruments for further information on the valuation of the contingent consideration.
To finance a portion of the 2018 acquisition purchase price, we drew in full on a $700 million unsecured credit agreement and the remainder of the transaction consideration was financed through the use of our revolving credit facilities.
We have accounted for the Silversea Cruises acquisition under the provisions of ASC 805, Business Combinations. The purchase price for the 2018 acquisition was allocated based on estimates of the fair value of assets acquired and liabilities assumed at the acquisition date, with the excess allocated to goodwill. Goodwill is not deductible for tax purposes and consisted primarily of the opportunity to expand our cruise operations in strategic growth areas. Our purchase price allocation was final during 2019. There were no material measurement period adjustments recorded for the year ended December 31, 2019.
On July 9, 2020, we acquired the remaining 33.3% interest in Silversea Cruises that we did not already own (the "noncontrolling interest") from Heritage. As a result of the acquisition of the noncontrolling interest, Silversea Cruises is now a wholly owned cruise brand. As consideration for our acquisition of the noncontrolling interest, we issued to Heritage 5.2 million shares of common stock, par value $0.01 per share, of Royal Caribbean Cruises Ltd. Pursuant to the agreement governing the acquisition of the noncontrolling interest, among other things, the parties terminated any existing obligation to issue Heritage any contingent consideration, at fair value, in connection with the 2018 acquisition. The share purchase did not result in a change of control. The purchase was accounted for as an equity transaction and no gain or loss was recognized in earnings. Refer to Note 11. Redeemable Noncontrolling Interest to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for further information regarding our acquisition of the noncontrolling interest.
For reporting purposes, we included Silversea Cruises’ results of operations on a three-month reporting lag from October 1, 2019 through September 30, 2020 in our consolidated results of operations for the year ended December 31, 2020; from October 1, 2018 through September 30, 2019 in our consolidated results of operations for the year ended December 31, 2019 and from the July 31, 2018 date of acquisition through September 30, 2018 in our consolidated results of operations for the year ended December 31, 2018. We have included Silversea Cruises' balance sheets as of September 30, 2020 and 2019 in our consolidated balance sheets as of December 31, 2020 and 2019, respectively. Refer to Note 1. General for further information on this three-month reporting lag.
Note 4. RevenuesRevenue
Revenue Recognition
Revenues are measured based on consideration specified in our contracts with customers and are recognized as the related performance obligations are satisfied.
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The majority of our revenues are derived from passenger cruise contracts which are reported within Passenger ticket revenues in our consolidated statements of comprehensive income (loss).loss. Our performance obligation under these contracts is to provide a cruise vacation in exchange for the ticket price. We satisfy this performance obligation and recognize revenue over the duration of each cruise, which generally rangeranges from two to 2419 nights.
Passenger ticket revenues include charges to our guests for port costs that vary with passenger head counts. These typetypes of port costs, along with port costs that do not vary by passenger head counts, are included in our operating expenses. The amounts of port costs charged to our guests and included within Passenger ticket revenues on a gross basis were $125.0$638.8 million,$666.8 $104.8 million and $611.4$125.0 million for the years ended December 31, 2020, 20192022, 2021 and 2018,2020, 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. We receive payment before or concurrently with the transfer of these goods and services to cruise passengers during a cruise and recognize revenue at the time of transfer over the duration of the related cruise.
As a practical expedient, we have omitted disclosures on our remaining performance obligations as the duration of our contracts with customers is less than a year.
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Disaggregated Revenues
The following table disaggregates our total revenues by geographic regions where we provide cruise itineraries (in thousands):
Year Ended December 31,Year Ended December 31,
202020192018202220212020
Revenues by itineraryRevenues by itineraryRevenues by itinerary
North America(1)North America(1)$1,342,429 $6,392,354 $5,399,951 North America(1)$5,716,169 $1,039,783 $1,342,429 
Asia/Pacific(2)Asia/Pacific(2)411,865 1,529,898 1,463,083 Asia/Pacific(2)372,237 128,348 411,865 
Europe(3)Europe(3)18,604 1,942,057 1,914,549 Europe(3)1,754,205 180,256 18,604 
Other regions241,590 567,904 348,145 
Other Regions(2)Other Regions(2)539,680 77,985 241,590 
Total revenues by itineraryTotal revenues by itinerary2,014,488 10,432,213 9,125,728 Total revenues by itinerary8,382,291 1,426,372 2,014,488 
Other revenues(4)(3)Other revenues(4)(3)194,317 518,448 368,121 Other revenues(4)(3)458,249 105,761 194,317 
Total revenuesTotal revenues$2,208,805 $10,950,661 $9,493,849 Total revenues$8,840,540 $1,532,133 $2,208,805 
(1)Includes the United States, Canada, Mexico and the Caribbean.
(2)Includes Southeast Asia (e.g., Singapore, Thailandseasonality impacted itineraries primarily in South and the Philippines), East Asia (e.g., China and Japan), South Asia (e.g., India and Pakistan) and Oceania (e.g., Australia and Fiji Islands) regions.Latin American countries.
(3)Includes European countries (e.g., the Nordics, Germany, France, Italy, Spain and the United Kingdom).
(4)Includes revenues primarily related to cancellation fees, vacation protection insurance and pre- and post-cruise tours and fees for operating certain port facilities. Amounts also include revenues related to our bareboat charter, procurement and management related services we perform on behalf of our unconsolidated affiliates. Refer to Note 87. 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 years ended December 31, 2020, 20192022, 2021 and 2018,2020, our guests were sourced from the following areas:
Year Ended December 31,Year Ended December 31,
202020192018202220212020
Passenger ticket revenues:Passenger ticket revenues:Passenger ticket revenues:
United StatesUnited States67 %65 %61 %United States75 %76 %67 %
United Kingdom%%10 %
All other countries (1)All other countries (1)26 %26 %29 %All other countries (1)25 %24 %33 %
(1)No other individual country's revenue exceeded 10% for the years ended December 31, 2020, 20192022, 2021 and 2018.2020.
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Customer Deposits and Contract Liabilities
Our payment terms generally require an upfront deposit to confirm a reservation, with the balance due prior to the cruise. Deposits received on sales of passenger cruises are initially recorded as Customer deposits in our consolidated balance sheets and subsequently recognized as passenger ticket revenues or onboard revenues during the duration of the cruise. Additionally, refunds payable to guests who have elected cash refunds for cancelled sailings are recorded in Accounts Payable. ASC 606, Revenues from Contracts with Customers, defines a “contract liability” as an entity’s obligation to transfer goods or services to a customer for which the entity has received consideration from the customer. We do not consider customer deposits to be a contract liability until the customer no longer retains the unilateral right, resulting from the passage of time, to cancel such customer's reservation and receive a full refund.
The current reduction in demand for cruising due to the COVID-19 pandemic has resulted in an unprecedented low level of advance bookings and the associated customer deposits received. At the same time, we experienced significant cancellations beginning in the second half of March 2020, which has led to issuance of refunds to customers, while other customers have been rebooked on future cruises or received credits in lieu of cash refunds.
As of December 31, 2020, refunds due to customers mostly as a result of booking cancellations were $95.8 million compared to $9.8 million as of December 31, 2019 and are included within Accounts payable in our consolidated balance sheets. Customer deposits also include deposits related to cancelled cruises prior to the election of a cash refund by guests. Due to the uncertainty around our return to sailing and the future demand for cruising, we are unable to estimate the amount of the December 31, 2020 customer deposits that will be recognized in earnings compared to amounts that will be refunded to customers or issued as a credit for future travel through the end of 2021. Customer deposits presented in our consolidated balance sheets include contract liabilities of $124.8 million$1.8 billion and $1.7$0.8 billion as of December 31, 20202022 and December 31, 2019,2021, respectively.
We have provided flexibility to guests with bookings on sailings cancelled due to COVID-19 by allowing guests to receive future cruise credits (“FCC”). As of December 31, 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. We will update our breakage analysis as future information is received.
Contract Receivables and Contract Assets
Although we generally require full payment from our customers prior to their cruise, we grant credit terms to a relatively small portion of our revenue sourced in select markets outside of the United States. 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
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voyage. 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 takes place or the funds are refunded to the customer. As of December 31, 2022, the cash reserve held by the processor was approximately $133.0 million and was reported within Trade and other receivables, net.
We have contract assets that are conditional rights to consideration for satisfying the construction services performance obligations under a service concession arrangement. As of December 31, 20202022 and 2019,2021, our contract assets were $53.7$167.9 million and $55.5$52.9 million, respectively, and were included within Other assets in our consolidated balance sheets. Given the short duration of our cruises and our collection terms, we do not have any other significant contract assets.
Assets Recognized from the Costs to Obtain a Contract with a Customer
Prepaid travel agentadvisor 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 agentadvisor commissions were $1.1$98.4 million and $163.2$75.4 million as of December 31, 20202022 and 2019,2021, respectively. OurSubstantially all of our prepaid travel agentadvisor commissions at December 31, 20192021 were expensed and reported primarily within Other operatingCommissions, transportation and other in our consolidated statements of comprehensive income (loss)loss during the year ended December 31, 2020.

2022.
Note 54. Goodwill
The impactAs of COVID-19 on our operating plans and projected cash flows resulted in the completion of interim impairment assessments in respect of certain reporting units as of March 31, 2020 and JuneNovember 30, 2020, in addition to2022, we performed our annual goodwill impairment assessment performed as of November 30, 2020. Refer to Note 1. Generalreview and determined there was no impairment for further information regarding COVID-19goodwill for the Silversea Cruises and its impact to the Company.
As a result of our evaluations, we determined that the fair value of the Royal Caribbean International reporting unit exceeded its carrying value as of March 31, 2020 and June 30, 2020 by approximately 30% and 8%, respectively, resulting in no impairment to the Royal Caribbean International goodwill in those periods. We did not perform an interim impairment evaluation of Royal Caribbean International's goodwill during the quarter ended September 30, 2020 as no triggering events were identified. units.
In respect to the Silversea Cruises reporting unit, we determined the carryingfair value of the Silversea Cruises reporting unit
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exceeded its faircarrying value by approximately 26%, as of March 31, 2020. Accordingly, we recognized a goodwill impairment charge of $576.2 million for the quarter ended March 31, 2020.November 30, 2022. We did not perform interim impairment evaluations of Silversea Cruises' reporting unit during the quarters ended March 31, 2022, June 30, 20202022, and September 30, 20202022 as no triggering events were identified.
As of November 30, 2020, we performed our annual goodwill impairment reviews and determined no incremental impairment losses existed at the date of this annual assessment. We determined the fair value of the Royal Caribbean International and Silversea Cruises reporting units exceeded their carrying values by approximately 14% and 12% respectively at the date of this annual assessment.
The suspension of operations, as further discussed in Note 1. General, and possibility of further suspensions create uncertainty in forecasting operating cash flows. The fair value of the Royal Caribbean International reporting unit as of March 31, 2020 was determined usingused a discounted cash flow model and a probability-weighted discounted cash flow model in combination with a market basedmarket-based valuation approach for the June 30, 2020 and November 30, 2020 assessments. For the Silversea reporting unit a probability-weighted discounted cash flow model in combination with a market based valuation approach was used for all periods assessed.unit. This requires the use of assumptions that are subject to risk and uncertainties. The principal assumptions used in the discounted cash flow analyses that support our Royal Caribbean International and Silversea Cruises reporting unit goodwill impairment assessmentsassessment consisted of:
The timing of our return to service, changes in market conditions and port or other restrictions;
Forecasted net revenues primarily the timing of returning to normalized operations, occupancyper available passenger cruise day;
Occupancy rates from existing and expected ship deliveries, including options, and terminaldeliveries;
Vessel operating expenses;
Terminal growth rate; and
Weighted average cost of capital (i.e., discount rate).
We determined the Silversea Cruises reporting unit carrying value exceeded its fair value as of March 31, 2020. Accordingly, we recognized a goodwill impairment loss of $576.2 million during the quarter ended March 31, 2020. As of November 30, 2021, we performed our annual goodwill impairment review and determined no incremental impairment losses existed.
For the Royal Caribbean International reporting unit, we performed a qualitative assessment to determine whether it was more-likely-than not that our Royal Caribbean International reporting unit's fair value was less than its carrying amount. The adversequalitative analysis included assessing the impact COVID-19 will continue to haveof certain factors such as general economic conditions, limitations on accessing capital, changes in forecasted operating results, changes in fuel prices and fluctuations in foreign exchange rates. Based on our business, operating results, cash flowsqualitative assessment, we concluded that it was more-likely-than-not that the estimated fair value of the Royal Caribbean International reporting unit exceeded its carrying value. We did not perform interim impairment evaluations during the quarters ended March 31, 2022, June 30, 2022, and overall financial condition is uncertain and may result in changes to the assumptions used in the impairment tests discussed above, which may result in impairments to these assets in the future.September 30, 2022 as no triggering events were identified.
The carrying value of goodwill attributable to our Royal Caribbean International, Celebrity Cruises and Silversea Cruises reporting units and the changes in such balances during the years ended December 31, 20202022 and 20192021 were as follows (in thousands):
Royal Caribbean InternationalCelebrity CruisesSilversea CruisesTotal
Balance at December 31, 2018$286,711 $1,632 $1,090,010 $1,378,353 
Silversea Goodwill adjustment (1)(5,224)(5,224)
Goodwill attributable to the purchase of photo operation onboard our ships (2)12,518 12,518 
Foreign currency translation adjustment(3)(3)
Balance at December 31, 2019299,226 1,632 1,084,786 1,385,644 
Impairment charge(576,208)(576,208)
Transfer of goodwill attributable to the 2019 purchase of photo operations onboard our ships(2,694)2,694 
Foreign currency translation adjustment44 44 
Balance at December 31, 2020$296,576 $4,326 $508,578 $809,480 

(1)In 2018, we acquired a 66.7% equity stake in Silversea Cruises. Our controlling interest purchase price allocation was final during 2019. In 2020, we acquired the remaining 33.3% minority interest, making Silversea Cruises a wholly owned brand. Refer to Note 1. General, Note 3. Business Combination, and Note 11. Redeemable Noncontrolling Interest for further information.
(2)In 2019, we purchased the photo operations onboard our ships from our former concessionaire. The acquisition was accounted for as a business purchase combination using the purchase method of accounting which requires the use of fair value measurements. The business combination, including purchase transaction and assets acquired, was immaterial to our consolidated financial statements.

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Royal Caribbean InternationalCelebrity CruisesSilversea CruisesTotal
Balance at December 31, 2020$296,576 $4,326 $508,578 $809,480 
Foreign currency translation adjustment(97)— — (97)
Balance at December 31, 2021296,479 4,326 508,578 809,383 
Foreign currency translation adjustment(106)— — (106)
Balance at December 31, 2022$296,373 $4,326 $508,578 $809,277 
Note 6.5. Intangible Assets
Intangible assets consist of finite and indefinite life assets and are reported within Other assets in our consolidated balance sheets.
The impact of COVID-19 on our operating plans and projected cash flows resulted in the completion of an interim impairment assessment for the Silversea Cruises trade name as of March 31, 2020, in addition to our annual indefinite-lived intangible asset impairment assessment performed as of November 30, 2020. Refer to Note 1. General for further information regarding COVID-19 and its impact to the Company.
As a result of our evaluation, we determined the carrying value of the Silversea Cruises trade name exceeded its fair value as of March 31, 2020. Accordingly, we recognized an impairment charge of $30.8 million for the quarter ended March 31, 2020. We did not perform interim impairment evaluations of Silversea Cruises' trade name during the quarters ended June 30, 2020 and September 30, 2020 as no triggering events were identified.
As of November 30, 2020,2022, we performed our annual trade name impairment review and determined no incremental impairment losses existed at the date of this annual assessment. We determined the fair value of the Silversea Cruises trade name exceeded its carrying value by approximately 3%25% at the date of this annual assessment. The adverse impact COVID-19 will continue to have on our business, operating results, cash flowsWe did not perform interim impairment evaluations during the quarters ended March 31, 2022, June 30, 2022, and overall financial condition is uncertain and may result in changes to the assumptions used in the impairment tests discussed above. In addition, further suspension beyond 2021 or changes to our planned ship deliveries could adversely impact our expected occupancy rates and may result in additional impairment charges of the Silversea Cruises trade name in the future.September 30, 2022 as no triggering events were identified.
The suspension of operations, as further discussed in Note 1. General, and possibility of further suspensions create uncertainty in forecasting operating cash flows. The determination of our trade name fair values using a discounted cash flow model and various valuation methods depending on the nature of the intangible asset, such as the relief-from-royalty method, requirerequires the use of assumptions that are subject to risk and uncertainties. The principal assumptions used in the discounted cash flow analyses that support the Silversea Cruises trade name impairment assessmentsassessment consisted of:
Forecasted net revenues primarily the timing of returning to normalized operations, occupancyper available passenger cruise day;
Occupancy rates from existing and expected ship deliveries, including options, and terminaldeliveries;
Terminal growth rate;
Royalty rate; and
Weighted average cost of capital (i.e., discount rate).
The following is a summary of our intangible assets as of December 31, 2020 (in thousands, except weighted average amortization period), with Silversea Cruises' trade name representing approximately $318.7 million of the indefinite-lived intangible asset balance:
As of December 31, 2020
Remaining Weighted Average Amortization Period (Years)Gross Carrying ValueAccumulated AmortizationAccumulated Impairment LossesNet Carrying Value
Finite-life intangible assets:
Customer relationships12.8$97,400 $14,069 $$83,331 
Galapagos operating license23.847,669 7,621 40,048 
Other finite-life intangible assets011,560 11,560 
Total finite-life intangible assets156,629 33,250 123,379 
Indefinite-life intangible assets (1)
352,275 — 30,800 321,475 
Total intangible assets, net$508,904 $33,250 $30,800 $444,854 
(1) Primarily relates toWe determined the Silversea Cruises trade name.

name carrying value exceeded its fair value as of March 31, 2020. Accordingly, we recognized an impairment charge of $30.8 million for the quarter ended March 31, 2020. As of November 30, 2021, we performed our annual trade name impairment review and determined no incremental impairment losses existed.
The following is a summary of our intangible assets as of December 31, 20192022 (in thousands, except weighted average amortization period):
As of December 31, 2022
Remaining Weighted Average Amortization Period (Years)Gross Carrying ValueAccumulated AmortizationAccumulated Impairment LossesNet Carrying Value
Finite-life intangible assets:
Customer relationships10.6$97,400 $28,679 $— $68,721 
Galapagos operating license21.647,669 11,487 — 36,182 
Other finite-life intangible assets011,560 11,560 — — 
Total finite-life intangible assets156,629 51,726 — 104,903 
Indefinite-life intangible assets (1)
352,275 — 30,800 321,475 
Total intangible assets, net$508,904 $51,726 $30,800 $426,378 
(1) Primarily relates to the Silversea Cruises trade name representing approximately $318.7 million.
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As of December 31, 2019
Remaining Weighted Average Amortization Period (Years)Gross Carrying ValueAccumulated AmortizationNet Carrying Value
Finite-life intangible assets:
Customer relationships13.8$97,400 $7,576 $89,824 
Galapagos operating license24.747,669 6,010 41,659 
Other finite-life intangible assets0.811,560 6,743 4,817 
Total finite-life intangible assets156,629 20,329 136,300 
Indefinite-life intangible assets (1)
352,275 — 352,275 
Total intangible assets, net$508,904 $20,329 $488,575 
The following is a summary of our intangible assets as of December 31, 2021 (in thousands, except weighted average amortization period):
As of December 31, 2021
Remaining Weighted Average Amortization Period (Years)Gross Carrying ValueAccumulated AmortizationAccumulated Impairment LossesNet Carrying Value
Finite-life intangible assets:
Customer relationships11.6$97,400 $22,186 $— $75,214 
Galapagos operating license22.647,669 9,802 — 37,867 
Other finite-life intangible assets011,560 11,560 — — 
Total finite-life intangible assets156,629 43,548 — 113,081 
Indefinite-life intangible assets (1)
352,275 — 30,800 321,475 
Total intangible assets, net$508,904 $43,548 $30,800 $434,556 
(1) Primarily relates to the Silversea Cruises trade name.name representing approximately $318.7 million.
The estimated future amortization for finite-life intangible assets for each of the next five years is as follows (in thousands):
YearYearYear
2021$8,179 
2022$8,179 
20232023$8,179 2023$8,179 
20242024$8,179 2024$8,179 
20252025$8,179 2025$8,179 
20262026$8,179 
20272027$8,179 

Note 76. Property and Equipment
Property and equipment consists of the following (in thousands):
As of December 31,As of December 31,
2020201920222021
ShipsShips$29,872,655 $28,348,088 Ships$34,343,826 $31,357,703 
Ship improvementsShip improvements2,108,922 3,920,800 Ship improvements2,367,289 2,152,457 
Ships under constructionShips under construction1,078,243 1,110,962 Ships under construction1,060,736 1,180,486 
Land, buildings and improvements, including leasehold improvements and port facilitiesLand, buildings and improvements, including leasehold improvements and port facilities524,849 472,067 Land, buildings and improvements, including leasehold improvements and port facilities771,739 746,785 
Computer hardware and software, transportation equipment and otherComputer hardware and software, transportation equipment and other1,678,903 1,698,007 Computer hardware and software, transportation equipment and other1,531,837 1,650,249 
Total property and equipmentTotal property and equipment35,263,572 35,549,924 Total property and equipment40,075,427 37,087,680 
Less—accumulated depreciation and amortization(1)
Less—accumulated depreciation and amortization(1)
(10,016,977)(10,083,116)
Less—accumulated depreciation and amortization(1)
(12,528,982)(11,179,731)
$25,246,595 $25,466,808 $27,546,445 $25,907,949 
(1)Amount includes accumulated depreciation and amortization for assets in service.
Ships under construction include progress payments for the construction of new ships as well as planning, design, capitalized interest and other associated costs. We capitalized interest costs of $59.1$64.1 million, $56.5$58.8 million, and $49.6$59.1 million for the years ended December 31, 2020, 20192022, 2021 and 2018,2020, respectively.
During 2020, we took delivery of Celebrity Apex, Silver Origin and Silver Moon. Refer to Note 9. Debt for further information on the financings for Celebrity Apex and Silver Moon. The October 2020 Silversea Cruises delivery and related financing for the Silver Moon was reported in our consolidated financial statements as of and for the year ended December 31, 2020, regardless of the three month reporting lag for Silversea Cruises, due to the materiality of the transaction.
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During the first quarter 2020, we determined that the lease for Silver Explorer, operated by Silversea CruisesIn January of 2022 and previously classified as a finance lease, was an operating lease based on modification of the terms of the lease. Accordingly, Silver Explorer is included within Operating lease right-of use assets, Current portion of operating lease liabilities, and Long term lease liabilities in our consolidated balance sheets. Refer to Note 10. Leases for further information.
During 2019,April 2022, we took delivery of SpectrumWonder of the Seas and Celebrity Flora.Beyond, respectively. Refer to Note 98. Debt for further information. During 2019information on the financings for Wonder of the Seas and Celebrity Beyond. In our consolidated statement of cash flows for the year ended December 31, 2022, the acceptance of the ships and satisfaction of our obligations under the shipbuilding contract were classified as outflows and constructive disbursements within Investing Activities while the amounts novated and effectively advanced from our lenders under our previously committed financing arrangements were classified as inflows and constructive receipts within Financing Activities.
In July 2022, we purchased the Silver Endeavour for our Silversea Cruises terminatedbrand for $277 million, including transaction fees. The ship entered service during the operating lease forfourth quarter of 2022. For information regarding the financing of the ship, refer to Note 8. Debt.
During 2021, we took delivery of Odyssey of the Seas and Silver Discover.Dawn. The November 2021 delivery and related financing for the Silver Dawn was reported in our consolidated financial statements as of and for the year ended December 31, 2021, as a result of the elimination of the Silversea Cruises three month reporting lag. Refer to Note 9. Leases for for further information on the Silver Dawn finance lease.
Long-lived Assets impairments
We review our long-lived assets for impairment whenever events or circumstances indicate potential impairment losses exist. The impact of COVID-19 on our expected future operating cash flows, as well as decisions to dispose of certain vessels, resulted inNo triggering events were identified during the identification of impairment triggers for certain vessels. Refer to Note 1. General for further information regarding COVID-19years ended December 31, 2022 and its impact to the Company.2021.
We estimated the recoverability of certain vessels using undiscounted cash flow analyses at interim dates throughoutDuring 2020, and again at December 31,2020. Aa number of vessels were found to have net carrying values in excess of their estimated undiscounted future cash flows and, as such, were subject to fair value assessments. Fair value was determined based on our intended use of the identified vessels and, as such, we used a combination of discounted cash flows, replacement cost, scrap and residual value techniques to estimate fair value. Differences between the estimated fair values and the net carrying values were recorded as an impairment charge within the period the loss was identified. Consequently, we recorded $635.5 million of impairment losses during the year ended 2020. Included in this 2020 amount are $171.3 million impairment losses recorded for the 3three ships that we chartered to Pullmantur Holdings, prior to its filing for reorganization. Refer to Note 87. Other Assets for further information regarding Pullmantur's reorganization. During the quarter ended September 30, 2020, we sold the ships previously chartered to Pullmantur Holdings to third parties for amounts approximating their carrying values and no further impairment was recorded. Also included in the $635.5 million impairment loss for the year ended December 31, 2020, is a $166.8 million impairment charge for the 3three Azamara ships to be included in the sale of the Azamara brand, that is expected to close in the first quarter ofeffective March 19, 2021.
The suspension of operations, as discussed in Note 1. General, and the possibility of further suspensions create uncertainty in forecasting undiscounted cash flows, which are used to determine if a vessel is at risk of impairment and in estimating the fair value of our ships. Our principal assumptions used in our undiscounted cash flows consisted of:
The timing of our return to service, changesChanges in market conditions and port or other restrictions;
Forecasted revenues net revenues, primarily the timing of returning to normalized operations,our most significant variable costs, which are commissions, transportation and occupancyother expenses, and onboard and other expenses;
Occupancy rates; and
Intended use of the vessel for the remaining useful life.
The adverse impact COVID-19 will continue toWe believe we have onmade reasonable estimates and judgements as part of our business, operating results, cash flows and overall financial condition is uncertain andassessments. A change in principal assumptions may result in changesa need to the assumptions used in theperform additional impairment tests discussed above, which may result in additional impairments to these assets in the future.reviews.
During the yearyears ended December 31, 2022, 2021, and 2020 we also determined that certain construction in progress projects would be reduced in scope or would no longer be completed as a result of our capital cost containment measures in response to the COVID-19 impact on our liquidity. This led to anWe recorded property and equipment impairment chargecharges of $10.2 million and $55.2 million, and $91.5 million, ofduring the years ended December 31, 2022, 2021, and 2020, respectively, which primarily related to construction in progress assets.
These impairment charges were reported within Impairment and Credit Losses in our consolidated statements of comprehensive (loss) income.loss.
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Note 87. 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 (1) cannot directly or indirectly make decisions about the entity's activities through their voting rights or similar rights; (2) do not have the obligation to absorb the expected losses of the entity; (3) do not have the right to receive the expected residual returns of the entity; 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.
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. We have determined that we are not the primary beneficiary of TUIC. We believe that the power to direct the activities that most significantly impact TUIC’s economic performance areis shared between ourselves and TUI AG, our joint venture partner. All the significant operating and financial decisions of TUIC require the
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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.
On June 30, 2020, TUIC acquired Hapag-Lloyd Cruises, a luxury and expedition brand for German-speaking guests, from TUI AG for approximately €1.2 billion, or approximately $1.3 billion as of the purchase date. Hapag-Lloyd Cruises operates 2two luxury liners and 2two smaller expedition ships. We and TUI AG each made an equity contribution of €75.0 million, or approximately $84.2 million to TUIC to fund a portion of the purchase price, the remainder of which was financed by third-party financing.
As of December 31, 2020,2022, the net book value of our investment in TUIC was $538.4$466.0 million, primarily consisting of $387.5$361.5 million in equity and a loan of €118.9€87.2 million, or approximately $145.5$93.0 million, based on the exchange rate at December 31, 2020.2022. As of December 31, 2019,2021, the net book value of our investment in TUIC was $598.1$444.4 million, primarily consisting of $443.1$322.4 million in equity and a loan of €133.2€103.0 million, or approximately $149.5$117.2 million, based on the exchange rate at December 31, 2019.2021. The loan, which was made in connection with the sale of Splendour of the Seas in April 2016, accrues interest at a rate of 6.25% per annum and is payable over 10 years. 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. In June 2021, Hapag-Lloyd Cruises received delivery of the Hanseatic Spirit, a 230 berth luxury expedition cruise vessel.
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 TUIC below 37.55% through May 2033. Our investment amount and outstanding term loan are substantially our maximum exposure to loss in connection with our investment in TUIC.
In March 2009, we sold Celebrity Galaxy to TUI Cruises for €224.4 million, or $290.9 million as of the sale date, to serve as the original Mein Schiff 1. Due to the related party nature of this transaction, the gain on the sale of the ship of $35.9 million was deferred and was being recognized over the remaining life of the ship which was estimated to be 23 years. In April 2018, TUI Cruises sold the original Mein Schiff 1 and as a result we accelerated the recognition of the remaining balance of the deferred gain, which was $21.8 million. This amount is included within Other income (expense) in our consolidated statements of comprehensive income (loss) for the year ended December 31, 2018.
We have determined that Pullmantur Holdings, in which we have a 49% noncontrolling interest and Springwater Capital LLC has a 51% interest, is a VIE for which we are not the primary beneficiary as we do not have the power to direct the activities that most significantly impact the entity's economic performance. In 2020, Pullmantur Holdings and certain of its subsidiaries filed for reorganization under the terms of the Spanish insolvency laws due to the negative impact of the COVID-19 pandemic on the companies.companies, and on July 15, 2021, Pullmantur Holdings and certain of its subsidiaries filed for liquidation. We suspended the equity method of accounting for Pullmantur Holdings during the second quarter of 2020 as we do not intend to fund the entity's future losses and lost our ability to exert significant influence over the entity's activities as a result of the reorganization and liquidation process.
In connection with the reorganization, we terminated the agreements chartering 3three of our ships to Pullmantur Holdings and sold the ships to third parties during the quarter ended September 30, 2020 for amounts approximating their carrying values. Refer to Note 7.6. Property and Equipment for further discussion on the impact of the ships' sale on our consolidated financial statements. In addition, we recognized a loss of $69.0 million within Other expense income in our consolidated statements of comprehensive (loss) income,, during the quarter ended June 30, 2020 representing deferred currency translation adjustment losses, net of hedging, as we no longer had significant involvement in the Pullmantur operation.
During the quarter ended June 30, 2020, we entered into an agreement with Springwater Capital LLC to settle the guarantees previously issued by them and for costs that we incurred as a result of Pullmantur S.A.'s reorganization. As part of this settlement, we agreed to provide Pullmantur guests the option to apply their paid deposits toward a Royal Caribbean International or Celebrity Cruises sailing, or request a cash refund. An amount of $21.6 million, approximating theThe estimated total cash refundrefunds expected to be paid to
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Pullmantur guests and other expenses incurred as part of the reorganization, wasliquidation were approximately $10.2 million and $21.6 million for the years ended December 31, 2021 and 2020, respectively. These amount were recorded in Other expenseoperating and in Other (expense) income in our consolidated statements of comprehensive (loss) incomeloss for the quarteryears ended June 30, 2020.
As of December 31, 2020, we did not have any exposure to credit loss in Pullmantur Holdings. As of December 31, 2019, our maximum exposure to loss in Pullmantur Holdings was $49.7 million, consisting of loans2021 and other receivables. These amounts were included within Trade and other receivables, net and Other assets in our consolidated balance sheets.2020.
We have determined that Grand Bahama Shipyard Ltd. ("Grand Bahama"), a ship repair and maintenance facility in which we have a 40% noncontrolling interest, is a VIE. This facility serves cruise and cargo ships, oil and gas tankers and offshore units. We utilize this facility, among other ship repair facilities, for our regularly scheduled drydocks ship upgrades and certain emergency repairs as may be required. During the years ended December 31, 2020 and 2019, we made payments of $0.2 million. and $45.7 million, respectively, to Grand Bahama for ship repair and maintenance services. We have determined
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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.
GivenIn December 2022, we announced a new partnership with iCON Infrastructure Partners VI, L.P. ("iCON"), a fund, to develop strategic cruise port infrastructure. The proposed partnership will own, develop, and manage cruise terminal facilities and infrastructure in key ports of call, including PortMiami, and several development projects in Italy, Spain, and the impactU.S. Virgin Islands. We expect to close on the transaction in the first half of the COVID-19 pandemic to our business, we evaluated whether our equity method investments were other than temporarily impaired. During the quarter ended March 31, 2020, we performed an impairment evaluation on our investment in Grand Bahama. As a result of the evaluation, we did not deem our investment balance2023. Upon closing, PortMiami is expected to be recoverableconsidered a VIE for which we will be the primary beneficiary and recorded an impairment charge of $30.1 million bringing our investment balance to 0. The impairment assessment and the resulting charge on our equity method investment in Grand Bahama were determined based on management’s estimates and projections. We are currently recognizing our share of equity method losses against the carrying value of our loans receivable from Grand Bahama.

will remain consolidated.
For further information on the measurements used to estimate the fair value of our equity investments, refer to Note 18. 16.Fair Value Measurements and Derivative Instruments.
As of December 31, 2020, we had exposure to credit loss in Grand Bahama consisting of $19.1 million in loans. Our loans to Grand Bahama mature between December 2020 and March 2026 and bear interest at LIBOR plus 2.0% to 3.75%, capped at 5.75% for the majority of the outstanding loan balance. Interest payable on the loans is due on a semi-annual basis. We did not receive principal and interest payments during the year ended December 31, 2020. During the year ended December 31, 2019, we received principal and interest payments of $8.6 million. The loan balances are included within InstrumentsTrade and other receivables, net and Other assets in our consolidated balance sheets.
We monitor credit risk associated with the loans through our participation on Grand Bahama’s board of directors along with our review of Grand Bahama’s financial statements and projected cash flows. Effective April 1, 2020, we placed the loans in non-accrual status based on our review of Grand Bahama's projected cash flows which have been adversely affected by impacts to their operations caused by the 2019 crane accident related to Oasis of the Seas, Hurricane Dorian and most recently, COVID-19. During the year ended December 31, 2020, no credit losses were recorded related to these loans.
In April 2019, Grand Bahama experienced an incident involving one of its drydocks where Oasis of the Seas was undergoing maintenance.  The damage from the incident resulted in a write-off of the related drydock by Grand Bahama.  Our equity investment income for the year ended December 31, 2019 reflects our equity share of the write-off and other incidental expenses. Grand Bahama's management is working with its insurance underwriter to determine coverage under their existing policies..
The following tables set forth information regarding our investments accounted for under the equity method of accounting, including the entities discussed above (in thousands):
Year ended December 31,
202020192018
Share of equity (loss) income from investments$(213,286)$230,980 $210,756 
Dividends received (1)
$2,215 $150,177 $243,101 

Year ended December 31,
202220212020
Share of equity income (loss) from investments$56,695 $(135,469)$(213,286)
Dividends received (1)
$1,493 $— $2,215 
(1) ForRepresents dividends received from our investments accounted for under the yearequity method of accounting for the years ended December 31, 2019, TUI Cruises paid us dividends totaling €170.0 million, or approximately $190.3 million, based on the exchange rates at the time of the transactions.2022, 2021 and 2020, respectively. The amounts included in the table above are net of tax withholdings.
As of December 31,
20202019
Total notes receivable due from equity investments$164,596 $184,558 
Less-current portion (1)
29,501 25,933 
Long-term portion (2)
$135,095 $158,625 


As of December 31,
20222021
Total notes receivable due from equity investments$101,392 $130,587 
Less-current portion (1)
18,406 21,508 
Long-term portion (2)
$82,986 $109,079 

(1)     Included within Trade and other receivables, net in our consolidated balance sheets.
(2)    Included within Other assets in our consolidated balance sheets.
We also provide ship management services to TUI Cruises GmbH and provided management services to Pullmantur Holdings (which filed for reorganization in Spain in June 2020) and Skysea Holding (which ceased cruising operations in September 2018). Additionally, we bareboat chartered to Pullmantur Holdings the vessels previously operated by its brands, which were retained by us following the sale of our 51% interest in Pullmantur Holdings. These bareboat charters were
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terminated when Pullmantur Holdings filed for reorganization in Spain. We recorded the following as it relates to these services in our operating results within our consolidated statements of comprehensive income (loss) (in thousands):
Year ended December 31,
202020192018
Revenues$21,372 $47,242 $54,705 
Expenses$4,986 $4,304 $11,531 
Summarized financial information for our affiliates accounted for under the equity method of accounting was as follows (in thousands):
As of December 31,As of December 31,
2020201920222021
Current assetsCurrent assets$488,329 $435,152 Current assets$658,243 $736,263 
Non-current assetsNon-current assets5,456,061 4,019,394 Non-current assets4,838,287 5,241,302 
Total assetsTotal assets$5,944,390 $4,454,546 Total assets$5,496,530 $5,977,565 
Current liabilitiesCurrent liabilities$1,106,700 $1,094,552 Current liabilities$1,144,783 $1,225,032 
Non- current liabilitiesNon- current liabilities3,771,992 2,267,936 Non- current liabilities3,381,366 3,860,646 
Total liabilitiesTotal liabilities$4,878,692 $3,362,488 Total liabilities$4,526,149 $5,085,678 
Equity attributable to:
Noncontrolling interest$$1,784 

Year ended December 31,
202020192018
Total revenues$619,795 $2,354,744 $2,255,352 
Total expenses(939,481)(1,875,952)(1,779,160)
Net income$(319,686)$478,792 $476,192 

Year ended December 31,
202220212020
Total revenues$1,539,110 $679,137 $619,795 
Total expenses(1,416,325)(897,308)(939,481)
Net income (loss)$122,785 $(218,171)$(319,686)
Credit Losses
We reviewed our notes receivablereceivables for credit losses in connection with the preparation of our financial statements.statements for the year ended December 31, 2022. In evaluating the 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. Based on theseOur credit loss estimation factors, during the year endedallowance ending balances as of December 31, 2020, we recorded a loss provision of $187.1 million2022 and 2021, primarily relate to credit losses recognized on notes receivable for the previous sale of approximately $81.6 million related to our previous sales of property and equipment to third parties and on receivables of approximately $103.5 million mostly related to loans and other receivables due from Pullmantur Holdings. We also wrote-off a credit loss allowance amount of $107.3 million during 2020, primarily due to loans and other receivables related to Pullmantur Holdings.









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$81.6 million.
The following table summarizes our credit loss allowance related to receivables for the year ended December 31, 2020 (in thousands):


Credit Loss Allowance
Balance at January 1, 2020$5,635 
Loss provision for receivables187,128
Write-offs(107,316)
Balance at December 31, 20202021$85,447 
Credit loss (recovery), net43,822
Write-offs(29,077)
Balance at December 31, 2021100,192 
Credit loss (recovery), net(9,658)
Write-offs(7,307)
Balance at December 31, 2022$83,227 

Our credit loss allowance balance for the year ended December 31, 2020 primarily related to a $81.6 million loss provision recognized during 2020 on notes receivable related to our previous sale of property and equipment mostly to third parties.


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Note 98. Debt
Debt consists of the following (in thousands):
 As of December 31,
Interest Rate(1)
Maturities Through20202019
Fixed rate debt:
Unsecured senior notes2.65% - 9.13%2020 - 2028$2,464,994 $1,746,280 
Secured senior notes7.25% - 11.50%2023 - 20253,895,166 662,398 
Unsecured term loans2.53% - 5.41%2021 - 20323,210,161 2,806,774 
Convertible notes2.88% - 4.25%20231,454,488 
Total fixed rate debt11,024,809 5,215,452 
Variable rate debt:
Unsecured revolving credit facilities(2)
1.45%2022 - 20243,289,000 165,000 
Unsecured UK Commercial paper2021409,319 
USD Commercial paper0%1,434,180 
USD unsecured term loan0.74% - 4.05%2020- 20284,002,249 3,519,853 
Euro unsecured term loan1.15% -1.58%2021 - 2028705,064 676,740 
Total variable rate debt8,405,632 5,795,773 
Finance lease liabilities213,365 230,258 
Total debt (3)
19,643,806 11,241,483 
Less: unamortized debt issuance costs(314,763)(206,607)
Total debt, net of unamortized debt issuance costs19,329,043 11,034,876 
Less—current portion including commercial paper(1,371,087)(2,620,766)
Long-term portion$17,957,956 $8,414,110 
 As of December 31,
Interest Rate(1)
Maturities Through20222021
Fixed rate debt:
Unsecured senior notes3.70% - 11.63%2026 - 2029$7,199,331 $5,604,498 
Secured senior notes8.25% - 11.50%2025 - 20292,370,855 2,354,037 
Unsecured term loans1.28% - 5.89%2027 - 20344,561,129 2,860,567 
Convertible notes2.88% - 6.00%2023 - 20251,725,000 1,558,780 
Total fixed rate debt15,856,315 12,377,882 
Variable rate debt:
Unsecured revolving credit facilities(2)
5.72% -6.12%20242,744,105 2,899,342 
USD unsecured term loans5.54% - 9.27%2023 - 20374,335,973 5,018,740 
Euro unsecured term loans6.29% -6.92%2023 - 2028534,589 685,633 
Total variable rate debt7,614,667 8,603,715 
Finance lease liabilities351,332 472,275 
Total debt (3)
23,822,314 21,453,872 
Less: unamortized debt issuance costs(431,123)(363,532)
Total debt, net of unamortized debt issuance costs23,391,191 21,090,340 
Less—current portion(2,087,711)(2,243,131)
Long-term portion$21,303,480 $18,847,209 
(1)Interest rates based on outstanding loan balance as of December 31, 20202022 and, for variable rate debt, includeincludes either LIBOR, EURIBOR or EURIBOR Term SOFR plus the applicable margin.
(2)Total capacity of $3.0 billion, with $0.3 billion of undrawn capacity as of December 31, 2022. Includes $1.9 billion facility due in 2024 and $1.6$1.1 billion facility, which are due in 2022, eachApril 2024 as of which accrueDecember 31, 2022. Our $1.9 billion facility accrues interest at LIBOR plus a maximum interest rate margin of 1.30%, which interest rate was 1.54%5.72%, as of December 31, 20202022 and each is subject to a facility fee of a maximum of 0.20%. Our $1.1 billion facility accrues interest at LIBOR plus a maximum interest rate margin of 1.70%, which interest was 6.12% as of December 31, 2022 and is subject to a facility fee of a maximum of 0.30%.
(3)At December 31, 20202022 and 2019,2021, the weighted average interest rate for total debt was 6.02%6.23% and 3.99%5.47%, respectively.

In March 2020,Unsecured revolving credit facilities
As of December 31, 2022, we increased thehad aggregate borrowing capacity of $3.0 billion under our $1.7 billion and $1.2 billiontwo unsecured revolving credit facilities due inApril 2024, and 2022, by $200 million and $400 million, respectively, utilizing their respective accordion features. As of December 31, 2020, our aggregate revolving borrowing capacity was $3.5 billion and was fullywhich were mostly utilized through a combination of amounts drawn and letters of credit issued under the facilities. Certain of our surety agreements with third party providers for the benefit of certain agencies and associations that provide travel related bonds allow the surety to request collateral in the form of cash or letters of credit. As of December 31, 2020,2022, $0.3 billion remained undrawn under the facilities. In January 2023, we have posted collateralamended and extended the majority of our two unsecured revolving credit facilities. The amendment has extended the maturities of $2.3 billion of the $3.0 billion aggregate revolving capacity by one year to April 2025, with the remainder maturing in theApril 2024.
2023 Debt financing transactions
In February 2023, we issued $700 million aggregate principal amount of approximately $91 million.
In March 2020,7.25% senior guaranteed notes due January 2030 ("7.25% Priority Guaranteed Notes" and together with the 9.25% Priority Guaranteed Notes, the "Priority Guaranteed Notes"). Upon closing, we took delivery of Celebrity Apex. To financeterminated our commitment for the purchase, we borrowed $722.2$700 million under a previously committed unsecured364-day term loan which is 100% guaranteed by BpiFrance Assurance Export,facility. In addition, the official export credit agency of France. The loan amortizes semi-annually over 12 years and bears interest at a fixed rate of 3.23% per annum. In the second quarter of 2020 and the first quarter of 2021, we amended the agreement to defer the payment of all principal payments due between April 2020 and March 2022.The deferred amounts will be repayable starting in 2022 over a five year period.
In March 2020, we borrowed $2.2 billion pursuant to a 364-day senior secured term loan agreement. In May 2020, this secured term loanremaining $350 million backstop committed financing was increased by an additional $150 million through the exercise of the accordion feature. The increased secured term loan balance was repaid with proceeds from the $3.32 billion Secured Notes (as described below) issued in May 2020. This secured term loan would have matured 364 days after funding and could have been extended at our option for an additional 364 days subject to customary conditions, including the payment of a 1.00% extension fee. Interest accrued atalso terminated upon closing.
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LIBOR plus a margin of 2.25% which would have increased to 2.50% and 2.75% at 180 days and 365 days, respectively, after funding. We would have also been required to pay a duration fee in an amount equal to 0.25% of the aggregate loan principal amount every 60 days. Additionally, 2 of our board members each purchased a participation interest equal to $100 million. The repayment of this secured term loan in May 2020 resulted in a total loss on the extinguishment of debt of $41.1 million, which was recognized within Interest expense, net of interest capitalized within our consolidated statements of comprehensive income (loss).
In May 2020, we issued $3.32 billion of senior secured notes (the "Secured Notes") for net proceeds of approximately $3.2 billion. We repaid the $2.35 billion, 364-day senior secured term loan in its entirety with a portion of the proceeds of the Secured Notes. $1.0 billion of the notes accrue interest at 10.875% and mature in 2023 (the "2023 Secured Notes"). The remaining $2.32 billion of the Secured Notes accrue interest at 11.5% and mature in 2025 (the "2025 Secured Notes"). The Secured Notes are fully and unconditionally guaranteed by Celebrity Cruises Holdings Inc., Celebrity Cruises Inc., and certain of our wholly-owned vessel-owning subsidiaries. $1.66 billion of the obligations under the Secured Notes and the related guarantees are secured by first priority security interests in the collateral (which generally includes certain of our material intellectual property, a pledge of 100% of the equity interests of certain of our vessel-owning subsidiaries, the collateral account established pursuant to the indenture governing the Secured Notes (the "Secured Notes Indenture"), mortgages on the 28 vessels owned by such subsidiaries, and an assignment of insurance and earnings in respect of such vessels, subject to permitted liens and certain exclusions and release provisions), subject to certain adjustments after the date of issuance based on our debt rating as of the date of issuance and our lien basket amount in certain of our credit facilities. Prior to March 1, 2023, we may, at our option, redeem some or all of the 2023 Secured Notes at 100% of the principal amount thereof plus accrued and unpaid interest plus the applicable “make-whole premium” described in the Secured Notes Indenture. On or after March 1, 2023, we may, at our option, redeem some or all of the 2023 Secured Notes at a redemption price equal to 100% of the principal amount of the 2023 Secured Notes to be redeemed plus accrued and unpaid interest, if any, to, but excluding, the redemption date. Prior to June 1, 2022 we may, at our option, redeem some or all of the 2025 Secured Notes at 100% of the principal amount plus accrued and unpaid interest plus the applicable “make-whole premium” described in the Secured Notes Indenture. On or after June 1, 2022, we may, at our option, redeem some or all of the 2025 Secured Notes at the applicable redemption prices set forth in the Secured Notes Indenture. In addition, on or prior to June 1, 2022, we may, at our option, redeem up to 40% of the 2025 Secured Notes with the proceeds from certain equity offerings at the redemption price listed in the Secured Notes Indenture.In addition, we may redeem all, but not part, of the Secured Notes upon the occurrence of specified tax events set forth in the Secured Notes Indenture.Debt financing transactions
In June 2020,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 at a fixed rate of 5.375% per annum and is payable semi-annually in arrears. The proceeds from the January 2022 Unsecured Notes were used to repay principal payments on debt maturing in 2022 (including to pay fees and expenses in connection with such repayments).
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 notesterm loan which accrueis 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 9.125%a fixed rate of 3.18% per annum.
In April 2022, we took delivery of Celebrity Beyond. To finance the delivery, we borrowed a total of €0.7 billion or approximately $0.7 billion based on the exchange rate at December 31, 2022, 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 Silver Endeavour 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 2023. The notes are fully and unconditionally guaranteed by RCI Holdings LLC, which owns 100% of the equity interests in certain of our wholly-owned vessel-owning subsidiaries.July 2037.
In June 2020,August 2022, we issued $1.15 billion of convertible senior notes which accrue interest at 4.25%6.00% and mature in 2023. The notes are convertible into our shares of common stock, cash, or a combination of common stock and cash, at our election. The initialAugust 2025 (the "2025 Convertible Notes"). Upon conversion rate per $1,000 principal amount of the convertible notes is 13.8672 shares of our common stock, which is equivalent to an initial conversion price of approximately $72.11 per share, subject to adjustment in certain circumstances. Prior to March 15, 2023, the convertible notes will be convertible at the option of holders during certain periods, and only under the following conditions:
during any calendar quarter after September 30, 2020, 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 10 consecutive trading days (in which case the notes are convertible at any time during the 5 business day period following the 10 consecutive trading day period);
ifelection, we call the notes for a tax redemption; or
upon the occurrence of specified corporate events.
On or after March 15, 2023, 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.
Holders of the convertible notes may require us, upon the occurrence of certain events that constitute a fundamental change under the indenture, to offer to repurchase the convertible notes at a repurchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest.

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We allocated $907.9 million of the convertible notes' proceeds, net of debt issue costs, to Long-term debt and $209.0 million to Paid-in-capital on our Consolidated Balance Sheet. We recognized the equity component by ascribing the difference between the proceeds and the fair value of the convertible notes' debt component to Paid-in-capital and the corresponding debt discount will be amortized to interest expense over the term of the convertible notes using the straight-line method, which approximates the effective interest method. The fair value of the convertible notes' debt component was determined utilizing a present value calculation. Debt issuance costs on the convertible notes were allocated to the debt and equity components in proportion to the allocation of proceeds to those components. We incurred total debt issue costs of $33.1 million on the issuance of the debt and allocated $6.2 million to Paid-in-capital. Debt issuance costs attributable to debt will be amortized to interest expense over the term of the convertible notes.
In October 2020, we issued $575 million of senior convertible notes which accrue interest at 2.875% and mature in 2023. The notes are convertible intodeliver 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 12.121219.9577 shares of our common stock, which is equivalent to an initial conversion price of approximately $82.50$50.11 per share, subject to adjustment in certain circumstances. Prior to AugustMay 15, 2023,2025, the convertible notes will be convertible at the option of holders during certain periods, and only under certain circumstances set forth in the following conditions:2025 Convertible Notes Indenture.
during any calendar quarter after December 31, 2020, 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 10 consecutive trading days (in which case the notes are convertible at any time during the 5 business day period following the 10 consecutive trading day period);
if we call the notes for a tax redemption; or
upon the occurrence of specified corporate events.

On or after AugustMay 15, 2023,2025, 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 year ended December 31, 2022.
HoldersIn 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 convertibleoffering of $1.23 billion were used to repay debt that matured in 2022, including the $650 million 5.25% unsecured senior notes may require us, upondue November 2022, which resulted in an immaterial loss on extinguishment of debt.
In September 2022, we amended our $0.6 billion unsecured term loan due October 2023. The amendments, among other things, extend the occurrencematurity date of certain events that constitute a fundamental changeadvances under the indenture,facilities held by consenting lenders by 12 months to offer to repurchase the convertible notes atOctober 2024. Consenting lenders received a repurchase priceprepayment equal to 100%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 (the "9.25% Priority Guaranteed Notes") and $1.0 billion aggregate principal amount of 8.250% senior secured notes due 2029 (the "8.25% Secured Notes" and together with the 11.5% Secured Notes, the "Secured Notes"), both callable in April 2025. We used the combined net proceeds, of the principal amount thereof, plus accruedrespective offerings, together with cash on hand, to fund the redemption, including call premiums, fees and unpaid interest.
We allocated $463.0expenses, of our outstanding 9.125% senior priority guaranteed notes due 2023 and 10.875% senior secured notes due 2023, which resulted in a total loss on extinguishment of debt of $77.4 million, of the convertible notes' proceeds,which was recognized within Interest expense, net of debt issue costs, to Long-term debtinterest capitalized and $101.9 million to Paid-in-capital onwithin our Consolidated Balance Sheet. We recognizedconsolidated statements of comprehensive loss for the equity component by ascribing the difference between the proceeds and the fair value of the convertible notes' debt component to Paid-in-capital and the corresponding debt discount will be amortized to interest expense over the term of the convertible notes using the straight-line method, which approximates the effective interest method. The fair value of the convertible notes' debt component was determined utilizing a present value calculation. Debt issuance costs on the convertible notes were allocated to the debt and equity components in proportion to the allocation of proceeds to those components. We incurred total debt issue costs of $10.1 million on the issuance of the debt and allocated $1.8 million to year ended December 31, 2022.Paid-in-capital. Debt issuance costs attributable to debt will be amortized to interest expense over the term of the convertible notes.
The net carrying value of the liability component of the convertible notes was as follows:

(in thousands)As of December 31, 2020
Principal$1,725,000 
Less: Unamortized debt discount and transaction costs312,117 
$1,412,883 
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The interest expense recognized related to the convertible notes was as follows:
(in thousands)As of December 31, 2020
Contractual interest expense$30,832 
Amortization of debt discount and transaction costs52,518 
$83,350 

In June 2020, RCL Cruises Ltd., our subsidiary that operates and manages our business in the United Kingdom, established a commercial paper facility for the purpose of issuing short-term, unsecured Sterling-denominated notes that are eligible for purchase under the Joint HM Treasury and Bank of England’s COVID Corporate Financing Facility commercial paper program in an aggregate principal amount up to £300.0 million. The maturities of the commercial paper notes can vary by note, but cannot exceed 364 days from the date of issuance. As of December 31, 2020, we had £300.0 million, or approximately $409.9 million, based on the exchange rate at December 31, 2020, of commercial paper notes outstanding under this program.
In August 2020, we secured a binding commitment from Morgan Stanley Senior Funding Inc. for a $700 million term loan facility. We may draw on the facility at any time prior to August 12, 2021. Once drawn, the loan will bear interest at LIBOR + 3.75% and will mature 364 days from funding. The facility 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 million from time to time subject to the receipt of additional or increased commitments and the issuance of guarantees from additional subsidiaries.2021 Debt financing transactions
In October 2020,March 2021, we took delivery of Silver MoonOdyssey of the Seas. To finance the purchase, Silversea Cruise Holding Ltd., our wholly owned subsidiary,we borrowed $300$994.1 million under a previously committed unsecured term loan facility,which is 95% guaranteed by us, to pay a portionEuler Hermes Aktiengesellschaft (“Hermes”), the official export credit agency of the ship's contract price. The loan is due and payable at maturity in June 2028, provided however, that each lender may elect to cause us to repay the outstanding amount of any advances held by such lender on June 2026 upon 90 days advance notice.Germany. The loan amortizes semi-annually starting six months after funding, with 1/24th of the outstanding principal payable every six monthsover 12 years and the balance payable upon maturity. Interest on the loan currently accruesbears interest at a floating rate equal to LIBOR plus 2.00%a margin of 0.96%. The financingPrior to purchase Silver Moon is reflected in our Consolidated Balance Sheet for the year ended December 31, 2020.
During 2020, we amended certain export-credit backed ship debt facilities to benefit from a 12-month debt amortization deferral (the "Debt Deferral"). Under the Debt Deferral, deferred debt amortization of approximately $0.9 billion will be paid over a period of 4 years after the 12-month deferral period. The Debt Deferral was offered by certain export credit agencies as a result of the current impact to cruise-line borrowers as a result of COVID-19. Duringdelivery during the first quarter of 2021, we further amended our export-credit backed ship debt facilitiesthe credit agreement to (i) increase the maximum loan amount under the facility to make available to us a maximum amount equal to the US dollar equivalent of 80% of the vessel purchase price plus 100% of the premium payable to Hermes and deferred an additional $0.8 billion(ii) defer the payment of all principal payments due under these export facilities between April 2021 and March 2022. The newApril 2022, which amounts being deferred are scheduled towill be repaidrepayable semi-annually over a five year period starting in April 2022.
In March 2021, we issued $1.50 billion of senior unsecured notes that mature in 2028, for net proceeds of $1.48 billion. Interest on the senior notes accrues at 5.5% per annum and is payable semi-annually. We used the proceeds from the notes to repay principal payments on debt maturing or required to be paid in 2021 and 2022, and the remaining for general corporate purposes.
In June 2021, we issued $650.0 million of senior unsecured notes due in 2026 (the "June Unsecured Notes") for net proceeds of approximately $640.6 million. Interest accrues on the June Unsecured Notes at a fixed rate of 4.25% per annum and is payable semi-annually in arrears. We fully repaid the Silversea Cruises 7.25% senior secured notes due in 2025 (the "Silversea Notes"), in the amount of $619.8 million, with a portion of the proceeds from the June Unsecured Notes. We also funded call premiums, fees and expenses in connection with the redemption of the Silversea Notes with proceeds from the June Unsecured Notes. Additionally, during the second quarter of 2021, we repaid in full a $130 million term loan.
In August 2021, we issued $1.0 billion of senior notes due in 2026 (the "August Unsecured Notes") for net proceeds of approximately $986.0 million. Interest accrues on the August Unsecured Notes at a fixed rate of 5.50% per annum and is payable semi-annually in arrears. We used the proceeds of the August Unsecured Notes to replenish our capital as a result of the redemption of a portion of the 11.50% senior secured notes due 2025 (the "11.5% Secured Notes"), in the amount of $928.0 million plus accrued interest and premiums. As of December 31, 2022, approximately $1.4 billion of the 11.5% Secured Notes remains outstanding. The repayment of the 11.5% Secured Notes resulted in a total loss on the extinguishment of debt of $141.9 million, which was recognized within Interest expense, net of interest capitalized within our consolidated statements of comprehensive loss for the year ended December 31, 2021.
Export credit agency guarantees
Except for the financingsterm loans we incurred to acquire Celebrity FloraAzamara Pursuit 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. AsFor the majority of the loans as of December 31, 2020, in consideration for these guarantees, depending on the financing arrangement,2022, we pay to the applicable export credit agency, (1) a fee of 2.97% per annum baseddepending on the outstanding loan balance semi-annually over the term of the loan (subject to adjustments based upon our credit ratings) or (2)financing agreement, an upfront fee of 2.35% to 2.37%5.48% of the maximum loan amount.amount in consideration for these guarantees. We amortize the fees that are paid upfront over the life of the loan and those that are paid semi-annually over each respective payment period.loan. We classify these fees within Amortization of debt issuance costs 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. In our consolidated statements of cash flows, we classify these fees within Amortization of debt issuance costs.
Both ourDebt covenants
Our export credit facilities and our non-export credit facilities totalinghave an outstanding principal amount of approximately $11.2$12.1 billion as of December 31, 2020 contain covenants that, among other things, require us to maintain financial ratios, including in certain cases, a fixed charge coverage ratio of at least 1.25x and/or minimum shareholders' equity and limit our net debt-to-capital ratio.
During 2020, we amended all of our export credit2022. These facilities, all of our non-export credit facilities andas 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. 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 contain financial covenants, withour net debt to capitalization covenant will be tested during the period commencing immediately following the end of the waiver period (through the September 30, 2022 for non export and through December 31, 2022 for export facilities) and continuing through the end of 2025 and the amount of minimum stockholders' equity required to be maintained through 2025. The amendments continued to impose a monthly-tested minimum liquidity covenant of $350.0 million, which in the case of the non-export credit facilities terminated at the end of the waiver period (with the exception of a $130.0 million term loan duethe Revolver which was amended in January 2023 to include the minimum liquidity through April 2025) 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 continued to 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
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extend the financial covenant waiver through and including the fourth quarter of 2021. The $130.0 million term loan, which remains subject to a covenant waiver through the end of the first quarter of 2021, is prepayable at any time without penalty.
During the first quarter of 2021, we amended $4.9 billion of our non-export credit facilities and certain of our credit card processing agreements to extend the waiver of the financial covenants through and including the third quarter of 2022 or, if earlier, that date falling after January 1, 2022 on which we elect to comply with the modified covenants. In addition, pursuant to the amendments, we have modified the manner in which such covenants are calculated (temporarily in certain cases and permanently in others) as well as the levels at which our net debt to capitalization covenant will be tested during the period commencing immediately following the end of the waiver period and continuing through the end of 2023. The amendments also increase the monthly-tested minimum liquidity covenant to $500 million for the duration of the waiver period (subject to reduction to $350 million if we raise at least $500 million of additional capital).pay dividends or complete share repurchases. As of the date of these financial statements,December 31, 2022, we were in compliance with our debt covenants and we estimate we will be in compliance for the applicable minimum liquidity covenant. Pursuant to these amendments, the restrictions on paying cash dividends and effectuating share repurchases were extended through and including the third quarter of 2022.next twelve months.
During the first quarter of 2021, we also amended $6.2 billion of our export credit facilities to extend the waiverThe net carrying value of the financial covenants through and including at least the end of the third quarter of 2022. These amendments also allow for the deferral of up to $1.1 billion of principal payments due between April 2021 and April 2022 subject to the satisfaction of various conditions precedent. As of February 19, 2021, the conditions precedent have been satisfied for 13 of the 15 amended facilities, which will allow us to defer $0.8 billion of amortization payments due during this period. There can be no assurances that the conditions precedent will be met for the remaining two facilities. convertible notes was as follows:
(in thousands)As of December 31, 2022As of December 31, 2021
Principal$1,725,000 $1,725,000 
Less: Unamortized debt issuance costs24,110 188,764 
$1,700,890 $1,536,236 
The deferred amounts will be repayable semi-annually over a five-year period starting in April 2022. Pursuant to these amendments, we have agreed to implement the same liquidity covenant that applies in our non-export credit facilities. The amendments also provide for mandatory prepayment of the deferred amounts upon the taking of certain actions. Subject to a number of carveouts, these include, but are not limited to, issuance of dividends, completion of share repurchases, issuances of debt other than for crisis and recovery purposes, the making of loans and the sale of assets other than at arm’s length
In the fourth quarter of 2020 and the first quarter of 2021, we entered into amendments to our drawn and undrawn ECA facilities to provide for the issuance of guarantees in satisfaction of existing obligations under these facilities. Following issuance (which, in the case of the undrawn facilities, will occur once the debt is drawn), the guarantees will be released under certain circumstances as other debt is repaid or refinanced on an unsecured and unguaranteed basis. In connection with and following the issuance of the guarantees, the guarantor subsidiaries are restricted from issuing additional guarantees in favor of lenders (other than those lenders who are party to the ECA facilities), and certain of the guarantor subsidiaries are restricted from incurring additional debt. In addition, the ECA facilities will benefit from guarantees to be issued by intermediary parent companies of subsidiaries that take delivery of any new vessels subject to export-credit backed financing.
For informationinterest expense recognized related to the covenants in our Port of Miami Terminal "A" operating lease agreement, refer to Note 10. Leases.convertible notes was as follows:
Under certain of our agreements, the contractual interest rate, facility fee and/or export credit agency fee vary with our debt rating. On August 24, 2020, Moody’s downgraded our senior unsecured rating from Ba2 to B2, and on August 31, 2020, S&P Global downgraded our senior unsecured rating from BB to B+. On February 25, 2021, S&P Global further downgraded our senior unsecured rating from B+ to B.
In April 2019, we amended our $1.4 billion unsecured revolving credit facility due in 2020 to extend the termination date through April 2024, increase the facility size to $1.7 billion and reduce pricing. The interest rate and facility fee vary with our senior debt rating set at LIBOR plus 1.0% per annum and 0.125% per annum, respectively. These amendments did not result in the extinguishment of debt. In addition, in May 2019, we amended our $1.15 billion unsecured revolving credit facility due in 2022 to reduce pricing to match pricing on our $1.7 billion unsecured revolving credit facility due in 2024.
In April 2019, we entered into and drew in full on an unsecured three-year term loan agreement in the amount of $1.0 billion. The loan accrues interest at a floating rate of LIBOR plus an applicable margin, which varies with our senior debt rating set at 1.075% per annum. Proceeds of this loan were used to repay the $700 million 364-day loan due July 2019 related to the acquisition of Silversea Cruises and the remaining balance of the unsecured term loan originally incurred in 2010 to purchase Allure of the Seas. The repayment of these loans resulted in a total loss on the extinguishment of debt of $6.3 million, which was recognized within Other (expense) income within our consolidated statements of comprehensive income (loss) for the twelve months ended December 31, 2019.
In April 2019, we took delivery of Spectrum of the Seas. To finance the purchase, we borrowed $908.0 million under a previously committed unsecured term loan which is 95% guaranteed by Euler Hermes Aktiengesellschaft, the official export credit agency of Germany. The loan amortizes semi-annually over 12 years and bears interest at a fixed rate of 3.45% per
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annum.In the second quarter of 2020 and the first quarter of 2021, we amended the agreement to defer the payment of all principal payments due between April 2020 and March 2022.The deferred amounts will be repayable starting in 2022 over a five year period.
In May 2019, we took delivery of Celebrity Flora. The purchase was financed through an unsecured term loan facility entered into in November 2017 in an amount up to €80.0 million, or approximately $97.9 million based on the exchange rate at December 31, 2020. As of December 31, 2020, we had fully drawn on this facility. The loan is due and payable at maturity in November 2024. Interest on the loan accrues at a floating rate based on EURIBOR plus the applicable margin. The applicable margin varies with our debt rating and was 1.195% as of December 31, 2019.
In June 2018, we established a commercial paper program pursuant to which we may issue short-term unsecured notes from time to time in an aggregate amount of up to $1.2 billion, which was increased to $2.9 billion in August 2019. The commercial paper issued is backstopped by our revolving credit facilities. As of December 31, 2019 we had $1.4 billion of commercial paper notes outstanding with a weighted average interest rate of 2.19% and a weighted average maturity of approximately 21 days. We terminated this commercial paper program as of August 5, 2020.
(in thousands)As of December 31, 2022As of December 31, 2021
Contractual interest expense$75,519 $65,406 
Amortization of debt issuance costs16,145 118,566 
$91,664 $183,972 
Following is a schedule of annual maturities on our total debt net of debt issuance costs, and including finance leases, and commercial paper, as of December 31, 20202022 for each of the next five years (in thousands):
YearYearYearAs of December 31, 2022 (1)
2021$1,371,087 
20224,143,884 
202320234,433,261 2023$2,090,457 
20242,862,486 
2024 (2)2024 (2)4,662,837 
202520253,480,961 20253,663,440 
202620262,754,876 
202720273,493,703 
ThereafterThereafter3,037,364 Thereafter7,157,001 
$19,329,043 $23,822,314 
(1)    Debt denominated in other currencies is calculated based on the applicable exchange rate at December 31, 2022.
(2)    In January 2023, we amended and extended $2.3 billion of our two unsecured revolving credit facilities by one year from April 2024 to April 2025.

Note 109. Leases
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,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 sheetsheets as of December 31, 2020.2022 and 2021. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet. We recognize lease expense for these leases on a straight-line basis over the lease term. During the first quarter of 2020, we determined that the lease forOur operating leases include Silver Explorer, operated by Silversea Cruises and previously classified as a finance lease, was an operating lease based on modification of the terms of the lease.Cruises. The operating lease for Silver Explorer will expire in 2023.
In June 2019, the Company entered into a new master lease agreement (“Master Lease”) with Miami-Dade County relating to the buildings and surrounding land located at its Miami headquarters, which are classified as finance leases in accordance with ASC 842. Prior to entering into the Master Lease, the buildings were classified as operating lease assets. The finance lease for the buildings and land will expire in 2072, which includes an initial 43 years lease term and 2 five-year options to extend the lease. We consider the possibility of exercising the 2 five-year options reasonably certain.
For some of our real estate leases and berthing agreements, we do have the option to extend our current lease term. For those lease agreements with renewal options, the renewal periods for real estate leases range from one to 10 years and the renewal periods for berthing agreements range from one year to 20 years. Generally, we do not include renewal options as a component of our present value calculation for berthing agreements. However, for certain real estate leases, we include them.
We have a residual value guarantee associated withIn June of 2021, we exercised our Port of Miami Terminal "A"option under our operating lease agreement ("Portwith SMBC Leasing and Finance, Inc (the "Lessor") to purchase Terminal A at PortMiami in July 2021 for the pre-agreed purchase price of Miami terminal lease") that approximates a percentage$220.0 million. Upon purchase of the costterminal
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)


in July 2021, the underlying asset was recorded as a leasehold improvement within Property and equipment, net. Our July 2021 purchase of the inception of the lease. We consider the possibility of incurring costs associated withPortMiami eliminated the residual value guarantee to be remote.
Also in connection with the Port of Miami terminal lease, we are required to deliver on or before July 18, 2021, cash collateral in an amount equal to the lesser of our residual value guarantee or the aggregate balance of the lenders' terminal
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construction debt, estimated at $181.1 million as of December 31, 2020. The collateral is to be returned when all amounts due by usand a requirement under the lease have been paidto post $181.1 million of cash collateral.
Additionally, we remeasured the ground lease related to the Terminal A lease based on a reassessed lease term resulting from our purchase option exercise. We determined that the ground lease should remain as an operating lease with adjustments to the operating lease liability and the related right-of-use asset in full.
During the second quarter of 2020, we amended our Port of Miami terminal lease to increase the lien basket in line with our debt facilities. We further amended this lease in the first quarter of 2021 to and obtain a financial covenant waiver through the third quarter of 2022. This obligation is prepayable at any time without penalty. As of December 31, 2020, we were in compliance with the amended covenants under the lease agreement.Consolidated Balance Sheet.
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. Treasury note rates corresponding to lease terms increased by the Company’s credit risk spread and reduced by the estimated impact of collateral. We used the incremental borrowing rate as of the adoption date for operating leases that commenced prior to that date. In addition, we have lease agreements with lease and non-lease components, which are generally accounted for separately. However, for berthing agreements, we account for the lease and non-lease components as a single lease component.
Commencing in 2016 when we sold our 51% interest in the Pullmantur brand to Pullmantur Holdings, and continuing through the quarter ended June 30, 2020, we bareboat chartered to Pullmantur Holdings the vessels operated by the Pullmantur brand. On June 22, 2020, Pullmantur S.A., a subsidiary of Pullmantur Holdings, filed for reorganization in Spain, at which time we terminated these bareboat charters. See Note 8. Other Assets for further discussion of Pullmantur Holdings. We accounted for the bareboat charters of these vessels as operating leases for which we were the lessor.
Finance Leases
Silversea Cruises operates theOur finance leases primarily relate to buildings and surrounding land located at our Miami headquarters, and our Silver WhisperDawn, under a finance lease. The finance lease for the and Silver Whisper will expire 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 December 31, 2022 subjectand 2021.
The Company's master lease agreement (“Master Lease”) with Miami-Dade County related to the buildings and surrounding land located at our Miami headquarters, has been classified as a finance lease in accordance with ASC 842, Leases. In January 2022, we executed a modification to the Master Lease to extend the expiration of the lease from 2072 to 2074. Subsequently, in December 2022 we amended the lease to further extend its expiration from 2074 to 2076 after coming to an optionagreement with Miami-Dade County on the financing plans for the continued development of the buildings and surrounding land at our Miami headquarters. The Master Lease continues to purchaseinclude the ship.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 modifications 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 $55.5 million and $127.0 million as of December 31, 2022 and December 31, 2021, respectively.
Silversea Cruises operates Silver Dawn under a sale-leaseback agreement with a bargain purchase option at the end of the 15 year lease term. Due to the bargain purchase option at the end of the lease term in 2036 whereby Silversea Cruises is reasonably certain of obtaining ownership of the ship, Silver Dawn is accounted for as a finance lease. 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 $31.5$264.8 million and $55.6$283.7 million as of December 31, 2022 and December 31, 2021, respectively. The lease payments on the Silver Dawn are subject to adjustments based on the LIBOR rate.
Silversea Cruises operates Silver Whisper under a finance lease. The finance lease for Silver Whisper will expire in 2023, subject to an option to purchase the ship, which we expect to exercise. The total aggregate amount of finance lease liabilities recorded for this ship was $8.9 million and $24.1 million at December 31, 20202022 and December 31, 2019,2021, respectively. The lease payments on the Silver Whisper are subject to adjustments based on the LIBOR rate.









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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Supplemental balance sheet information for leases was as follows (in thousands):

As of December 31, 2020As of December 31, 2019As of December 31, 2022As of December 31, 2021
Lease assets:Lease assets:Lease assets:
Finance lease right-of-use assets, net:Finance lease right-of-use assets, net:Finance lease right-of-use assets, net:
Property and equipment, grossProperty and equipment, gross$364,910 $376,159 Property and equipment, gross$668,801 $737,444 
Accumulated depreciationAccumulated depreciation(71,288)(57,955)Accumulated depreciation(123,567)(94,729)
Property and equipment, netProperty and equipment, net293,622 318,204 Property and equipment, net545,234 642,715 
Operating lease right-of-use assetsOperating lease right-of-use assets599,985 687,555 Operating lease right-of-use assets537,559 542,128 
Total lease assetsTotal lease assets$893,607 $1,005,759 Total lease assets$1,082,793 $1,184,843 
Lease liabilities:Lease liabilities:Lease liabilities:
Finance lease liabilities:Finance lease liabilities:Finance lease liabilities:
Current portion of debtCurrent portion of debt51,856 33,561 Current portion of debt$34,154 $51,470 
Long-term debt Long-term debt161,509 196,697  Long-term debt317,178 420,805 
Total finance lease liabilitiesTotal finance lease liabilities213,365 230,258 Total finance lease liabilities351,332 472,275 
Operating lease liabilities:Operating lease liabilities:Operating lease liabilities:
Current portion of operating lease liabilitiesCurrent portion of operating lease liabilities102,677 96,976 Current portion of operating lease liabilities79,760 68,922 
Long-term operating lease liabilitiesLong-term operating lease liabilities563,876 601,641 Long-term operating lease liabilities523,006 534,726 
Total operating lease liabilitiesTotal operating lease liabilities666,553 698,617 Total operating lease liabilities602,766 603,648 
Total lease liabilitiesTotal lease liabilities$879,918 $928,875 Total lease liabilities$954,098 $1,075,923 


0TheThe components of lease expensecosts were as follows (in thousands):
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Consolidated Statement of Comprehensive Income (Loss) ClassificationYear ended December 31, 2020Year ended December 31, 2019
Lease costs:
Operating lease costsCommission, transportation and other$38,349 $76,226 
Operating lease costsOther operating expenses30,955 27,868 
Operating lease costsMarketing, selling and administrative expenses21,971 18,837 
Finance lease costs:
Amortization of right-of-use-assetsDepreciation and amortization expenses6,901 22,044 
Interest on lease liabilitiesInterest expense, net of interest capitalized4,429 8,355 
Total lease costs$102,605 $153,330 

Consolidated Statement of Comprehensive Income (Loss) ClassificationYear ended December 31, 2022Year ended December 31, 2021Year ended December 31, 2020
Lease costs:
Operating lease costsCommission, transportation and other$127,315 $18,860 $38,349 
Operating lease costsOther operating expenses22,085 23,261 30,955 
Operating lease costsMarketing, selling and administrative expenses18,646 18,027 21,971 
Finance lease costs:
Amortization of right-of-use-assetsDepreciation and amortization expenses24,428 16,814 6,901 
Interest on lease liabilitiesInterest expense, net of interest capitalized21,550 2,593 4,429 
Total lease costs$214,024 $79,555 $102,605 
In addition, certain of our berth agreements include variable lease costs based on the number of passengers berthed. During the twelve months ended December 31, 2020,2022, we had $24.3$66.2 million of variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive income (loss).loss. During the twelve months ended December 31, 2021, we had no variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive loss.


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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)





Weighted average of the remaining lease terms and weighted average discount rates are as follows:
As of December 31, 2020As of December 31, 2019
Weighted average of the remaining lease term
Operating leases7.810.3
Finance leases41.230.22
Weighted average discount rate
Operating leases4.59 %4.65 %
Finance leases6.89 %4.47 %

As of December 31, 2022As of December 31, 2021
Weighted average of the remaining lease term
Operating leases17.6918.18
Finance leases19.2623.96
Weighted average discount rate
Operating leases6.92 %6.52 %
Finance leases6.43 %5.54 %
Supplemental cash flow information related to leases is as follows (in thousands):
Year ended December 31, 2020Year ended December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$89,179 $125,307 
Operating cash flows from finance leases$4,429 $8,355 
Financing cash flows from finance leases$19,778 $32,090 

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Year ended December 31, 2022Year ended December 31, 2021Year ended December 31, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$126,797 $42,759 $89,179 
Operating cash flows from finance leases$21,550 $2,593 $4,429 
Financing cash flows from finance leases$48,199 $23,522 $19,778 
As of December 31, 2020,2022, maturities related to lease liabilities were as follows (in thousands):
YearsOperating LeasesFinance Leases
2021$124,108 $62,501 
2022117,698 23,822 
2023109,125 12,789 
202481,696 12,529 
202572,123 12,566 
Thereafter368,666 395,007 
Total lease payments873,416 519,214 
Less: Interest(206,863)(305,849)
Present value of lease liabilities$666,553 $213,365 

Operating lease payments do not include any costs related to options to extend lease terms as none are reasonably certain of being exercised.
Under ASC 840, Leases, future minimum lease payments under noncancelable operating leases, primarily for offices, warehouses and motor vehicles, as of December 31, 2018 were as follows (in thousands):
Year
2019$67,682 
202064,237 
202156,142 
202252,759 
202352,522 
Thereafter383,974 
$677,316 

Total expense for operating leases, primarily for offices, warehouses and motor vehicles amounted to $32.2 million for the year ended December 31, 2018.
In July 2016, we executed an agreement with Miami Dade County (“MDC”), which was simultaneously assigned to Sumitomo Banking Corporation (“SMBC”), to lease land from MDC and construct a new cruise terminal of approximately 170,000 square feet at PortMiami in Miami, Florida, which was completed during the fourth quarter of 2018 and serves as a homeport. During the construction period, SMBC funded the costs of the terminal’s construction and land lease. Once the terminal was substantially completed, we commenced operating and leasing the terminal from SMBC for a five-year term. We determined that the lease arrangement between SMBC and us should be accounted for as an operating lease.
YearsOperating LeasesFinance Leases
2023$115,636 $53,617 
2024101,801 44,465 
202596,290 43,974 
202690,178 38,412 
202770,424 37,358 
Thereafter789,158 706,070 
Total lease payments1,263,487 923,896 
Less: Interest(660,721)(572,564)
Present value of lease liabilities$602,766 $351,332 
Right-of-use assets impairments
During the year ended December 31, 2020, we identified that the undiscounted cash flows for certain right-of-use assets were less than their carrying values due to the negative impact of COVID-19. We evaluated these assets pursuant to our long-lived asset impairment test, resulting in an impairment charge of $65.9 million to write down these assets to their estimated fair values during the year ended December 31, 2020. For the years ended December 31, 2022 and December 31, 2021, there were no impairments to right-of-use assets.

Note 11. Redeemable Noncontrolling Interest
In connection with the 2018 Silversea Cruises acquisition, we recorded redeemable noncontrolling interest due to the put options held by the noncontrolling interest shareholder. At the date of the 2018 acquisition, the estimated fair value of the noncontrolling interest was based on 33.3% of Silversea Cruises' equity value, which was determined based on the transaction price paid for 66.7% of Silversea Cruises in the 2018 acquisition.
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On July 9, 2020, we acquired the remaining 33.3% noncontrolling interest in Silversea Cruises from Heritage in exchange for 5.2 million shares of common stock, par value $0.01 per share, of Royal Caribbean Cruises Ltd. Pursuant to the agreement governing the acquisition of the noncontrolling interest, among other things, the parties terminated any existing obligation to issue Heritage any contingent consideration, at fair value, in connection with our acquisition of a 66.7% interest in Silversea Cruises in 2018. The purchase of the noncontrolling interest was accounted for as an equity transaction during the quarter ended September 30, 2020 and no gain or loss was recognized in earnings. The carrying amount of the noncontrolling interest was adjusted to 0 and the difference between the carrying amount of the noncontrolling interest and the fair value of the consideration paid was recognized as additional paid in capital.
The noncontrolling interest's share in the net earnings (loss) and contractual accretion requirements associated with the put options, for periods prior to our acquisition of the noncontrolling interest, are included in Net income attributable to noncontrolling interest in our consolidated statements of comprehensive income (loss). As of December 31, 2019, the noncontrolling interest shareholder's interest is presented as Redeemable noncontrolling interest and is classified outside of shareholders' equity in our consolidated balance sheets.
The following table presents changes in the redeemable noncontrolling interest as of December 31, 2020 (in thousands):
Balance as of January 1, 2019$542,020 
Net income attributable to noncontrolling interest, including the contractual accretion of the put options28,713 
Distribution to noncontrolling interest(752)
Balance at December 31, 2019$569,981 
Net income attributable to noncontrolling interest, including the contractual accretion of the put options22,332 
Acquisition of noncontrolling interest(592,313)
Balance at December 31, 2020$

Note 12.10. Shareholders' Equity
Common Stock Issued
During October 2020,On January 1, 2022, we issued 9.6 million shares of common stock, par value $0.01 per share, atadopted ASU 2020-06 using the modified retrospective approach to recognize our convertible notes as single liability instruments. As a price of $60.00 per share. We received net proceeds of $557.4 million from the sale of our common stock, after deducting the underwriters’ discount and the estimated offering expenses payable by us.
During December 2020, we issued 13.0 million shares of common stock, par value $0.01 per share, at an average price of $76.65 per share. We received net proceeds of $994.6 million after deducting the underwriters’ discount and the estimated offering expenses payable by us. Of the total proceeds, $868.6 million was received as of December 31, 2020 and the remainder was received in January of 2021.
Dividends Declared
During the first quarter of 2020 we declared a cash dividend on our common stock of $0.78 per share which was paid in the second quarter of 2020.
During the second quarter of 2020, we agreed with certain of our lenders not to pay dividends or engage in common stock repurchases for so long as our debt covenant waivers are in effect. In addition, in the event we declare a dividend or engage in share repurchases, we will need to repay the amounts deferred under our export credit facilities as partresult of the Debt Deferral. Accordingly, we did not declare a dividend duringadoption of this pronouncement, the second, third, and fourth quarters of 2020.cumulative effect to 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.Shareholders' equity
During the fourth and third quarters of 2019, we declared a cash dividend on our common stock of $0.78 per share which was paid in the first quarter of 2020 and fourth quarter of 2019, respectively. During the first and second quarters of 2019, we declared a cash dividend on our common stock of $0.70 per share which was paid in the second and third quarters of 2019, respectively.
Common Stock Repurchase Program
During the quarter ended on June 30, 2020, the 24-month common stock repurchase program authorized by our board of directors on May 9, 2018 had expired. In connection with our debt covenant waivers, we agreed with our lenders not to engage
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)


ina 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, repurchases for so long as our debt covenant waivers are in effect. Effective inpar value $0.01 per share, at a price of $91.00 per share. We received net proceeds of $1.5 billion from the first quarter of 2021, the agreement with our lenders to suspend stock repurchases is extended through the third quarter of 2022.
During the year ended December 31, 2019, we repurchased 0.9 million sharessale of our common stock, after deducting the estimated offering expenses payable by us.
Dividends Declared
We did not declare any dividends during the years ended December 31, 2022 and December 31, 2021. During this period, we were restricted under this program, forcertain 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 total of $99.6 million, in open market transactions that were recorded within Treasury stock individend, we will need to repay the principal amounts deferred under our consolidated balance sheets.export credit facilities.

Note 13.11. Stock-Based Employee Compensation
We currently have awards outstanding under 1one stock-based compensation plan, our 2008 Equity Plan, which provides for awards to our officers, directors and key employees. The plan consists of a 2008 Equity Plan, as amended, provides for the issuance of up to 14,000,00010,083,570 shares of our common stock pursuant to grants of (i) incentive and non-qualified stock options, (ii) stock appreciation rights, (iii) stock awards (including time-based and/or performance-based stock awards) and (iv) restricted stock units (including time-based and performance-based restricted stock units). During any calendar year, no one individual (other than non-employee members of our board of directors) may be granted awards of more than 500,000 shares and no non-employee member of our board of directors may be granted awards with a value, in excessmeasured as of $500,000 at the grant date.date, which together with cash compensation paid to such director for such calendar year, would exceed $750,000. Options and restricted stock units outstanding as of December 31, 20202022, generally vest in equal installments over four years from the date of grant. In addition, performance shares and performance share units generally vest in three years. With certain limited exceptions, awards are forfeited if the recipient ceases to be an employee before the shares vest.
Prior to 2012, our officers received a combination of We have not issued stock options since 2016, and restrictedall stock units. Beginning in 2012, ouroptions have been exercised as of December 31, 2021. Stock option expense for the years ended December 31, 2022, 2021 and 2020, are not material.
Our officers instead receive their long-term incentive awards through a combination of performance share units and restricted stock units. Each performance share unit award is expressed as a target number of performance share units based upon the fair market value of our common stock on the date the award is issued. The actual number of shares underlying each award (not to exceed 200% of the target number of performance share units) will be determined based upon the Company's achievement of a specified performance target range. In 2020,2022, we issued a target number of 245,417209,020 performance share units, which will vest approximately three years following the award issue date. The performance payout of these grants will be based on return on ourthe Company's invested capital ("ROIC") and, earnings per share ("EPS"), leverage and certain Environmental, Social, and Governance metrics ("ESG") for the year ended December 31, 2022,2024, as may be adjusted by the Talent and Compensation Committee of our board of directors in early 20232025 for events that are outside of management's control.
Beginning in 2016, ourOur senior officers meeting certain minimum age and service criteria receive their long-term incentive awards through a combination of restricted stock awards and restricted stock units. The restricted stock awards are subject to both performance and time-based vesting criteria while the restricted stock units are subject only to time-based vesting criteria. Each restricted stock award is issued in an amount equal to 200% of the target number of shares underlying the award based upon the fair market value of our common stock on the date the award is issued. Declared dividends accrue (but do not get paid) on the restricted stock awards during the vesting period, with the accrued amounts to be paid out following vesting only on the number of shares underlying the award which actually vest based on satisfaction of the performance criteria. The actual number of shares that vest (not to exceed 200% of the shares) will be determined based upon the Company's achievement of a specified performance target range.
In 2020,2022, we issued 260,924171,240 restricted stock awards, representing 200% of the target number of shares underlying the award, all of which are considered issued and outstanding from the date of issuance, however;issuance; however, grantees will only retain those shares earned as the result of the Company achieving the performance goals during the measurement period. The performance payout of the 20202022 awards will be based on the Company's ROIC, EPS, leverage and EPScertain ESG metrics for the year ended December 31, 2022,2024, as may be adjusted by the Talent and Compensation Committee of our board of directors in early 20232025 for events that are outside of management's control.
On January 24, 2018, the Company issued a one-time bonus award for all non-officer employees. These awards vest, in equal installments, over the 3 years following the award issue date. For shoreside eligible employees, awards were issued as equity-settled restricted stock units. As
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)


We also provide an Employee Stock Purchase Plan ("ESPP") to facilitate the purchase by employees of up to 1,300,0002,800,000 shares of common stock in the aggregate. Offerings to employees are made on a quarterly basis. Subject to certain limitations, the purchase price for each share of common stock is equal to 85% of the average of the market prices of the common stock as reported on the New York Stock Exchange on the first business day of the purchase period and the last business day of each month of the purchase period. During the years ended December 31, 2022, 2021 and 2020, 2019171,279, 136,480 and 2018, 184,936 91,586 and 74,100 shares of our common stock were purchased under the ESPP at a weighted-average price of $44.01, $70.95 and $48.08, $98.20 and $97.50, respectively.
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Total compensation expense recognized for employee stock-based compensation for the years ended December 31, 2020, 20192022, 2021 and 20182020 was as follows (in thousands):
Employee Stock-Based Compensation
Classification of expense202020192018
Marketing, selling and administrative expenses$39,780 $75,930 $46,061 
Total compensation expense$39,780 $75,930 $46,061 
The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model. The estimated fair value of stock options, less estimated forfeitures, is amortized over the vesting period using the graded-vesting method. We did not issue any stock options during the years ended December 31, 2020, 2019 and 2018.
Stock option activity and information about stock options outstanding are summarized in the following table:
Stock Option ActivityNumber of
Options
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value(1)
(years)(in thousands)
Outstanding at January 1, 202064,987 $41.22 0.87$5,990 
Granted— — 
Exercised(15,340)$25.18 — — 
Canceled$— — 
Outstanding at December 31, 202049,647 $46.18 0.11$1,355 
Vested at December 31, 202049,647 $46.18 0.11$1,355 
Options Exercisable at December 31, 202049,647 $46.18 0.11$1,355 

(1)The intrinsic value represents the amount by which the fair value of stock exceeds the option exercise price.
The total intrinsic value of stock options exercised during the years ended December 31, 2020, 2019 and 2018 was $1.5 million, $8.1 million and $11.1 million, respectively. As of December 31, 2020, there was 0 unrecognized compensation cost, net of estimated forfeitures, related to stock options granted under our stock incentive plan.
Employee Stock-Based Compensation
Classification of expense202220212020
Marketing, selling and administrative expenses$36,116 $63,638 $39,780 
Total compensation expense$36,116 $63,638 $39,780 
Restricted stock units are converted into shares of common stock upon vesting or, if applicable, are settled on a 1-for-oneone-for-one basis. The cost of these awards is determined using the fair value of our common stock on the date of the grant, and compensation expense is recognized over the vesting period. Restricted stock activity is summarized in the following table:
Restricted Stock Units ActivityNumber of
Awards
Weighted-
Average
Grant Date
Fair Value
Non-vested share units as of January 1, 2020801,835 108.48 
Granted598,433 78.51 
Vested(315,541)104.38 
Canceled(112,135)109.43 
Non-vested share units as of December 31, 2020972,592 91.26 

Restricted Stock Units ActivityNumber of
Awards
Weighted-
Average
Grant Date
Fair Value
Non-vested share units as of January 1, 2022995,038 $88.19 
Granted570,432 72.21 
Vested(464,492)86.29 
Canceled(117,905)81.78 
Non-vested share units as of December 31, 2022983,073 $80.58 
The weighted-average estimated fair value of restricted stock units granted during the years ended December 31, 20192021 and 20182020 was $112.13$85.08 and $122.12,$78.51, respectively. The total fair value of shares released on the vesting of restricted stock units during the years ended December 31, 2022, 2021 and 2020 2019 and 2018 was $31.2$29.7 million, $30.8$36.1 million, and $33.9$31.2 million, respectively. As of December 31, 2020,2022, we had $42.3$38.2 million of total unrecognized compensation expense, net of estimated forfeitures, related to restricted stock unit grants, which will be recognized over the weighted-average period of 1.151.13 years.
Performance share units are converted into shares of common stock upon vesting on a 1-for-oneone-for-one basis. We estimate the fair value of each performance share when the grant is authorized and the related service period has commenced. We remeasure
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the fair value of our performance shares in each subsequent reporting period until the grant date has occurred, which is the date when the performance conditions are satisfied. We recognize compensation cost over the vesting period based on the probability of the service and performance conditions being achieved adjusted for each subsequent fair value measurement until the grant date. If the specified service and performance conditions are not met, compensation expense will not be recognized and any previously recognized compensation expense will be reversed. Performance share units activity is summarized in the following table:
Performance Share Units ActivityPerformance Share Units ActivityNumber of
Awards
Weighted-
Average
Grant Date
Fair Value
Performance Share Units ActivityNumber of
Awards
Weighted-
Average
Grant Date
Fair Value
Non-vested share units as of January 1, 2020286,017 105.76 
Non-vested share units as of January 1, 2022Non-vested share units as of January 1, 2022466,352 $92.45 
GrantedGranted245,417 95.81 Granted209,020 79.80 
VestedVested(221,016)89.41 Vested(64,614)110.01 
CanceledCanceled(42,696)110.72 Canceled(57,711)89.42 
Non-vested share units as of December 31, 2020267,722 109.34 
Non-vested share units as of December 31, 2022Non-vested share units as of December 31, 2022553,047 $85.93 

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The weighted-average estimated fair value of performance share units granted during the years ended December 31, 20192021 and 20182020 was $87.39$84.83 and $97.98,$95.81 respectively. The total fair value of shares released on the vesting of performance share units during the years ended December 31, 2022, 2021 and 2020 2019 and 2018 was $24.6$5.2 million, $23.0$5.6 million and $27.3$24.6 million, respectively. As of December 31, 2020,2022, we had $7.0$8.6 million of total unrecognized compensation expense, net of estimated forfeitures, related to performance share unit grants, which will be recognized over the weighted-average period of 1.32 year.1.22 years.
The shares underlying our restricted stock awards to age and service eligible senior officers are issued as of the grant date in an amount equal to 200% of the target number of shares. Following the vesting date, the restrictions will lift with respect to the number of shares for which the performance criteria was met and any excess shares will be canceled. Dividends will accrue on the issued restricted shares during the vesting period, but will not be paid to the recipient until the awards vest and the final number of shares underlying the award is determined, at which point, the dividends will be paid in cash only on the earned shares. We estimate the fair value of each restricted stock award when the grant is authorized and the related service period has commenced. We remeasure the fair value of these restricted stock awards in each subsequent reporting period until the grant date has occurred, which is the date when the performance conditions are satisfied. We recognize compensation cost over the vesting period based on the probability of the service and performance conditions being achieved adjusted for each subsequent fair value measurement until the grant date. If the specified service and performance conditions are not met, compensation expense will not be recognized, any previously recognized compensation expense will be reversed, and any unearned shares will be returned to the Company. Restricted stock awards activity is summarized in the following table:
Restricted Stock Awards ActivityNumber of
Awards
Weighted-
Average
Grant Date
Fair Value
Non-vested share units as of January 1, 2020452,456 114.01 
Granted260,924 110.21 
Vested(137,948)95.04 
Canceled
Non-vested share units as of December 31, 2020575,432 116.83 

Restricted Stock Awards ActivityNumber of
Awards
Weighted-
Average
Grant Date
Fair Value
Non-vested share units as of January 1, 2022797,212 $101.25 
Granted171,240 79.80 
Vested(87,521)118.08 
Canceled(106,965)118.08 
Non-vested share units as of December 31, 2022773,966 $92.28 
The weighted-average estimated fair value of restricted stock awards granted during the years ended December 31, 20192021 and 20182020 was $118.08$84.83 and $129.23,$110.21, respectively. As of December 31, 2020,2022, we had $2.2$0.86 million of total unrecognized compensation expense, net of estimated forfeitures, related to restricted stock award grants, which will be recognized over the weighted-average period of 1.371.06 years.
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Note 1412. (Loss) EarningsLoss Per Share
A reconciliation between basic and diluted earningsloss per share is as follows (in thousands, except per share data):
Year Ended December 31,
202020192018
Net (Loss) Income attributable to Royal Caribbean Cruises Ltd. for basic and diluted (loss) earnings per share$(5,797,462)$1,878,887 $1,811,042 
Weighted-average common shares outstanding214,335 209,405 210,570 
Dilutive effect of stock-based awards525 984 
Diluted weighted-average shares outstanding214,335 209,930 211,554 
Basic (loss) earnings per share$(27.05)$8.97 $8.60 
Diluted (loss) earnings per share$(27.05)$8.95 $8.56 
Year Ended December 31,
202220212020
Net Loss attributable to Royal Caribbean Cruises Ltd. for basic and diluted loss per share$(2,155,962)$(5,260,499)$(5,797,462)
Weighted-average common shares outstanding255,011 251,812 214,335 
Diluted weighted-average shares outstanding255,011 251,812 214,335 
Basic loss per share$(8.45)$(20.89)$(27.05)
Diluted loss per share$(8.45)$(20.89)$(27.05)

Basic loss per share is computed by dividing
Net loss attributable to Royal Caribbean Cruises Ltd. 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. There were approximately 31,027,815, 504,250 and 282,118 antidilutive shares for the year ended December 31, 2020, compared to 0 antidilutive shares for the years ended December 31, 20192022, 2021 and 2018.2020, respectively.
Since the Company expects to settle in cash the principal outstanding under our convertible notes that mature in 2023, we currently useEffective January 1, 2022, ASU 2020-06 eliminated the treasury stock method when calculating their potential dilutive effect, if any. While no sharesand instead required the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share when instruments may be settled in cash or shares. Under the if-converted method, shares related to our convertible notes, to the extent dilutive, are currentlyassumed to be converted into common stock at the beginning of the reporting period. The required use of the if-converted method for our convertible they would be anti-dilutivenotes did not impact our diluted loss per share for the year ended December 31, 2020.2022 as the if-converted calculation was antidilutive for the period. For further information regarding the adoption of ASU 2020-06, refer to Note 2. Summary of Significant Accounting Policies.
Note 1513. Retirement Plan
We maintain a defined contribution plan covering shoreside employees. Effective January 1, 2016, we commenced annual, non-elective contributions to the plan on behalf of all eligible participants equal to 3% of participants' eligible earnings. RemainingAdditional annual contributions to the plan are discretionary and are based on fixed percentages of participants' salaries and years of service, not to exceed certain maximums. Contribution expenses were $18.4$19.6 million, $21.2$17.9 million and $18.9$18.4 million for the years ended December 31, 2020, 20192022, 2021 and 2018,2020, respectively.
Note 1614. Income Taxes
We are subject to corporate income taxes in countries where we have operations or subsidiaries. We and the majority of our ship-operating and vessel-owning subsidiaries are currently exempt from U.S. corporate income tax on U.S. source income from the international operation of ships pursuant to Section 883 of the Internal Revenue Code. Regulations under Section 883 have limited the activities that are considered the international operation of a ship or incidental thereto. Accordingly, our provision for U.S. federal and state income taxes includes taxes on certain activities not considered incidental to the international operation of our ships.
Additionally, one of our ship-operating subsidiaries is subject to tax under the tonnage tax regime of the United Kingdom. Under this regime, income from qualifying activities is subject to corporate income tax, but the tax is computed by reference to the tonnage of the ship or ships registered under the relevant provisions of the tax regimes (the "relevant shipping profits"), which replaces the regular taxable income base. Income from activities not considered qualifying activities, which we do not consider significant, remains subject to United-Kingdom corporate income tax.
For the year ended December 31, 2020,2022, we had an income tax benefitexpense of approximately $15$4.2 million primarily driven by income tax from our non-US operations and items not qualifying under Section 883. For the years ended December 31, 20192021 and 2018,2020 we had an income tax expense was $32.6benefit of approximately $45.2 million and $20.9$15.0 million, respectively for items not qualifying under Section 883, tonnage tax and income taxes for the remainder of our subsidiaries. Income taxes are recorded within Other income (expense). In addition, all interest expense and penalties related to income tax liabilities are classified as income tax expense within Other income (expense).
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For a majority of our subsidiaries, we do not expect to incur income taxes on future distributions of undistributed earnings. Accordingly, no deferred income taxes have been provided for the distribution of these earnings. Where we do expect to incur income taxes on future distributions of undistributed earnings, we have provided for deferred taxes, which we do not consider significant to our operations.
As of December 31, 2020,2022, the Company had deferred tax assets for U.S. and foreign net operating losses (“NOLs”) of approximately $41.2$74.2 million. We have provided a valuation allowance for approximately $28.6$23.7 million of these NOLs. $18.3$6.3 million of the NOLs deferred tax assets relate to NOLs which are subject to expireexpiration between 20212023 and 2030.
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2041.
Our deferred tax assets and deferred tax liabilities and corresponding valuation allowances related to our operations were not material as of December 31, 20202022 and 2019.2021.
We regularly review deferred tax assets for recoverability based on our history of earnings, expectations of future earnings, and tax planning strategies. Realization of deferred tax assets ultimately depends on the existence of sufficient taxable income to support the amount of deferred taxes. A valuation allowance is recorded in those circumstances in which we conclude it is not more-likely-than-not we will recover the deferred tax assets prior to their expiration.

Note 1715. Changes in Accumulated Other Comprehensive (Loss) Income (Loss)
The following table presents the changes in accumulated other comprehensive loss by component for the years ended December 31, 2020, 20192022, 2021 and 20182020 (in thousands):
Changes related to cash flow derivative hedgesChanges in defined
benefit plans
Foreign currency translation adjustmentsAccumulated other comprehensive (loss) incomeChanges related to cash flow derivative hedgesChanges in defined
benefit plans
Foreign currency translation adjustmentsAccumulated other comprehensive (loss) income
Accumulated comprehensive loss at January 1, 2018$(250,355)$(33,666)$(50,244)$(334,265)
Accumulated comprehensive loss at January 1, 2020Accumulated comprehensive loss at January 1, 2020$(688,529)$(45,558)$(63,626)$(797,713)
Other comprehensive income (loss) before reclassificationsOther comprehensive income (loss) before reclassifications(297,994)6,156 (14,251)(306,089)Other comprehensive income (loss) before reclassifications(41,109)(22,051)(28,698)(91,858)
Amounts reclassified from accumulated other comprehensive lossAmounts reclassified from accumulated other comprehensive loss11,133 1,487 12,620 Amounts reclassified from accumulated other comprehensive loss79,119 2,067 69,044 150,230 
Net current-period other comprehensive income (loss)Net current-period other comprehensive income (loss)(286,861)7,643 (14,251)(293,469)Net current-period other comprehensive income (loss)38,010 (19,984)40,346 58,372 
Accumulated comprehensive loss at January 1, 2019(537,216)(26,023)(64,495)(627,734)
Accumulated comprehensive loss at January 1, 2021Accumulated comprehensive loss at January 1, 2021(650,519)(65,542)(23,280)(739,341)
Other comprehensive income (loss) before reclassificationsOther comprehensive income (loss) before reclassifications(146,108)(20,314)869 (165,553)Other comprehensive income (loss) before reclassifications(16,667)4,790 15,703 3,826 
Amounts reclassified from accumulated other comprehensive lossAmounts reclassified from accumulated other comprehensive loss(5,205)779 (4,426)Amounts reclassified from accumulated other comprehensive loss20,713 3,917 — 24,630 
Net current-period other comprehensive (loss) incomeNet current-period other comprehensive (loss) income(151,313)(19,535)869 (169,979)Net current-period other comprehensive (loss) income4,046 8,707 15,703 28,456 
Accumulated comprehensive loss at January 1, 2020(688,529)(45,558)(63,626)(797,713)
Accumulated comprehensive loss at January 1, 2022Accumulated comprehensive loss at January 1, 2022(646,473)(56,835)(7,577)(710,885)
Other comprehensive (loss) income before reclassificationsOther comprehensive (loss) income before reclassifications(41,109)(22,051)(28,698)(91,858)Other comprehensive (loss) income before reclassifications171,040 45,599 10,295 226,934 
Amounts reclassified from accumulated other comprehensive lossAmounts reclassified from accumulated other comprehensive loss79,119 2,067 69,044 150,230 Amounts reclassified from accumulated other comprehensive loss(162,578)3,315 — (159,263)
Net current-period other comprehensive (loss) incomeNet current-period other comprehensive (loss) income38,010 (19,984)40,346 58,372 Net current-period other comprehensive (loss) income8,462 48,914 10,295 67,671 
Accumulated comprehensive loss at December 31, 2020$(650,519)$(65,542)$(23,280)$(739,341)
Accumulated comprehensive loss at December 31, 2022Accumulated comprehensive loss at December 31, 2022$(638,011)$(7,921)$2,718 $(643,214)





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The following table presents reclassifications out of accumulated other comprehensive loss for the years ended December 31, 2020, 20192022, 2021 and 20182020 (in thousands):
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into (Loss) Income
Details about Accumulated Other Comprehensive Loss ComponentsYear Ended December 31, 2020Year Ended December 31, 2019Year Ended December 31, 2018Affected Line Item in Statements of Comprehensive Income (Loss)
Gain (loss) on cash flow derivative hedges:
Interest rate swaps(25,267)(4,289)(10,931)Interest expense, net of interest capitalized
Foreign currency forward contracts(14,679)(14,063)(12,843)Depreciation and amortization expenses
Foreign currency forward contracts(7,315)(5,080)12,855 Other income (expense)
Fuel swaps3,549 (1,292)(1,580)Other income (expense)
Fuel swaps(35,407)29,929 1,366 Fuel
(79,119)5,205 (11,133)
Amortization of defined benefit plans:
Actuarial loss(2,067)(779)(1,487)Payroll and related
Prior service costsPayroll and related
(2,067)(779)(1,487)
Release of foreign cumulative translation due to sale or liquidation of businesses:
Foreign cumulative translation(69,044)Other operating
Total reclassifications for the period$(150,230)$4,426 $(12,620)

Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into (Loss) Income
Details about Accumulated Other Comprehensive Loss ComponentsYear Ended December 31, 2022Year Ended December 31, 2021Year Ended December 31, 2020Affected Line Item in Statements of Comprehensive Income (Loss)
Gain (loss) on cash flow derivative hedges:
Interest rate swaps$(12,635)$(43,185)$(25,267)Interest expense, net of interest capitalized
Foreign currency forward contracts(17,085)(15,359)(14,679)Depreciation and amortization expenses
Foreign currency forward contracts(2,703)(2,797)(7,315)Other (expense) income
Fuel swaps(360)(409)3,549 Other (expense) income
Fuel swaps195,361 41,037 (35,407)Fuel
162,578 (20,713)(79,119)
Amortization of defined benefit plans:
Actuarial loss(3,315)(3,917)(2,067)Payroll and related
(3,315)(3,917)(2,067)
Release of foreign cumulative translation due to sale or liquidation of businesses:
Foreign cumulative translation— — (69,044)Other operating
Total reclassifications for the period$159,263 $(24,630)$(150,230)

During the year ended December 31, 2020, a $69.0 million net loss was recorded within Other expense in our consolidated statements of comprehensive (loss) income. The amount was recognized in earnings in connection with the Pullmantur reorganization, as we no longer have significant involvement in the Pullmantur operations and these amounts were previously deferred in Accumulated other comprehensive loss. The net loss, consistedconsisting of a $92.6 million loss resulting from the recognition of a currency translation adjustment, partially offset by the recognition of a deferred $23.6 million foreign exchange gain related to the Pullmantur net investment hedge. OfIn connection with the $69.0 million loss, $34.3 millionPullmantur reorganization in 2020, we no longer have significant involvement in the Pullmantur operations and $34.7 million was released fromthese amounts previously deferred in Accumulated othercomprehensive loslosss during the quarters ended June 30, 2020 and September 30, 2020, respectively.

were recognized in earnings.
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Note 1816.. Fair Value Measurements and Derivative Instruments
Fair Value Measurements
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 December 31, 2020Fair Value Measurements at December 31, 2019Fair Value Measurements at December 31, 2022Fair Value Measurements at December 31, 2021
DescriptionDescriptionTotal Carrying AmountTotal Fair Value
Level 1(1)
Level 2(2)
Level 3(3)
Total Carrying AmountTotal Fair Value
Level 1(1)
Level 2(2)
Level 3(3)
DescriptionTotal Carrying AmountTotal Fair Value
Level 1(1)
Level 2(2)
Level 3(3)
Total Carrying AmountTotal Fair Value
Level 1(1)
Level 2(2)
Level 3(3)
Assets:Assets:Assets:
Cash and cash equivalents(4)Cash and cash equivalents(4)$3,684,474 $3,684,474 $3,684,474 $243,738 $243,738 $243,738 Cash and cash equivalents(4)$1,935,005 $1,935,005 $1,935,005 $— $— $2,701,770 $2,701,770 $2,701,770 $— $— 
Total AssetsTotal Assets$3,684,474 $3,684,474 $3,684,474 $$$243,738 $243,738 $243,738 $$Total Assets$1,935,005 $1,935,005 $1,935,005 $— $— $2,701,770 $2,701,770 $2,701,770 $— $— 
Liabilities:Liabilities:Liabilities:
Long-term debt (including current portion of long-term debt)(5)Long-term debt (including current portion of long-term debt)(5)$18,706,359 $20,981,040 $20,981,040 $9,370,438 $10,059,055 $10,059,055 Long-term debt (including current portion of long-term debt)(5)$23,039,859 $22,856,306 $— $22,856,306 $— $20,618,065 $22,376,480 $— $22,376,480 $— 
Total LiabilitiesTotal Liabilities$18,706,359 $20,981,040 $$20,981,040 $$9,370,438 $10,059,055 $$10,059,055 $Total Liabilities$23,039,859 $22,856,306 $— $22,856,306 $— $20,618,065 $22,376,480 $— $22,376,480 $— 

(1)Inputs based on quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Valuation of these items does not entail a significant amount of judgment.
(2)Inputs other than quoted prices included within Level 1 that are observable for the liability, either directly or indirectly. For unsecured revolving credit facilities and unsecured term loans, fair value is determined utilizing the income valuation approach. This valuation model takes into account the contract terms of our debt such as the debt maturity and the interest rate on the debt. The valuation model also takes into account the creditworthiness of the Company.
(3)Inputs that are unobservable. The Company did not use any Level 3 inputs as of December 31, 20202022 and 2019.2021.
(4)Consists of cash and marketable securities with original maturities of less than 90 days.
(5)Consists of unsecured revolving credit facilities, senior notes, senior debentures, term loans and convertible notes. These amounts do not include our capitalfinance lease obligations or commercial paper.obligations.
Other Financial Instruments
The carrying amounts of accounts receivable, accounts payable, accrued interest, and accrued expenses and commercial paper approximate fair value as of December 31, 20202022 and 2019.2021.
Assets and liabilities that are recorded at fair value have been categorized based upon the fair value hierarchy. The following table presents information about the Company's financial instruments recorded at fair value on a recurring basis (in thousands):
Fair Value Measurements at December 31, 2020Fair Value Measurements at December 31, 2019Fair Value Measurements at December 31, 2022Fair Value Measurements at December 31, 2021
DescriptionDescriptionTotal Fair Value
Level 1(1)
Level 2(2)
Level 3(3)
Total Fair Value
Level 1(1)
Level 2(2)
Level 3(3)
DescriptionTotal Fair Value
Level 1(1)
Level 2(2)
Level 3(3)
Total Fair Value
Level 1(1)
Level 2(2)
Level 3(3)
Assets:Assets:Assets:
Derivative financial instruments(4)
Derivative financial instruments(4)
$108,539 $$108,539 $$39,994 $$39,994 $
Derivative financial instruments(4)
$203,802 $— $203,802 $— $69,808 $— $69,808 $— 
Total AssetsTotal Assets$108,539 $$108,539 $$39,994 $$39,994 $Total Assets$203,802 $— $203,802 $— $69,808 $— $69,808 $— 
Liabilities:Liabilities:Liabilities:
Derivative financial instruments(5)
Derivative financial instruments(5)
$259,705 $$259,705 $$257,728 $$257,728 $
Derivative financial instruments(5)
$135,608 $— $135,608 $— $200,541 $— $200,541 $— 
Contingent consideration(6)
62,400 62,400 
Total LiabilitiesTotal Liabilities$259,705 $$259,705 $$320,128 $$257,728 $62,400 Total Liabilities$135,608 $— $135,608 $— $200,541 $— $200,541 $— 

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(1)Inputs based on quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Valuation of these items does not entail a significant amount of judgment.
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(2)Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. For foreign currency forward contracts, interest rate swaps and fuel swaps, fair value is derived using valuation models that utilize the income valuation approach. These valuation models take into account the contract terms, such as maturity as well as other inputs, such as foreign exchange rates and curves, fuel types, fuel curves and interest rate yield curves. Derivative instrument fair values take into account the creditworthiness of the counterparty and the Company.
(3)Inputs that are unobservable. No Level 3 inputs were used in fair value measurements of other financial instruments as of December 31, 2022 and 2021
(4)Consists of foreign currency forward contracts, interest rate swaps and fuel swaps. Refer to the "Fair Value of Derivative Instruments" table for breakdown by instrument type.
(5)Consists of foreign currency forward contracts, interest rate swaps and fuel swaps. Refer to the "Fair Value of Derivative Instruments" table for breakdown by instrument type.
(6)Any obligation under the contingent consideration related to the 2018 Silversea Cruises acquisition was terminated during the quarter ended September 30, 2020 as a result of our purchase of the remaining 33.3% non-controlling interest in Silversea Cruises. In prior periods, the contingent consideration was estimated by applying a Monte-Carlo simulation method using our closing stock price along with significant inputs not observable in the market, including the probability of achieving the milestones and estimated future operating results. The Monte-Carlo simulation is a generally accepted statistical technique used to generate a defined number of valuation paths in order to develop a reasonable estimate of fair value. Refer to Note 1. General, Note 3. Business Combination, and Note 11. Redeemable Noncontrolling Interest for further information on the Silversea Cruises acquisitions. For the twelve months ended December 31, 2020, we recorded income for the change in fair value of the contingent consideration of $45.1 million within Other (expense) income in our consolidated statements of comprehensive income (loss).
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 December 31, 20202022 or 2019,2021, or that will be realized in the future, and do not include expenses that could be incurred in an actual sale or settlement.
Nonfinancial Instruments Recorded at Fair Value on a Nonrecurring Basis
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 Measurement at December 31, 2020 Using
DescriptionTotal Carrying AmountTotal Fair ValueLevel 3Total Impairment for the year ended December 31, 2020
Silversea Goodwill(1)508,578 508,578 508,578 576,208 
Indefinite-life intangible asset(2)318,700 318,700 318,700 30,800 
Long-lived assets(3)577,193 577,193 577,193 727,063 
Right-of-use assets(4)67,265 67,265 67,265 65,909 
Equity-method investments(5)39,735 
Total1,471,736 1,471,736 1,471,736 1,439,715 
Fair Value Measurements at December 31, 2022
DescriptionTotal Carrying AmountTotal Fair ValueLevel 3Total Impairment for the year ended December 31, 2022 (1)
Long-lived assets— — — $10,186 
Total— — — $10,186 

(1) We estimatedAmount is primarily composed of construction in progress assets that were impaired during the fair value ofyear ended December 31, 2022 due to a reduction in scope or the Silversea Cruises reporting unit using a probability-weighted discounted cash flow model in combination with a market based valuation approach.decision to not complete the projects. The principal assumptions used in the discounted cash flow modelimpairments were (i) the timing of our return to service, changes in market conditions and port or other restrictions; (ii) forecasted net revenues, primarily the timing of returning to normalized operations, occupancy rates from existing and expected ship deliveries, including options, and terminal growth rate; and (iii) weighted average cost of capital (i.e., discount rate). The discounted cash flow model used our 2020 projected operating results as a base. To that base we added future years’ cash flows through 2030 assuming multiple revenue and expense scenarios that reflect the impact of different global economic environments for this period on the Silversea Cruises' reporting unit. We assigned a probability to each revenue and expense scenario. We discounted the projected cash flows using rates specific to the Silversea Cruises' reporting unitcalculated based on its weighted-average cost of capital, which was determined to be 12.75%. orderly liquidation values.The fair value of Silversea Cruises’ goodwillthese assets was estimated as of March 31, 2020, the date the asset wasassets were last impaired.

Fair Value Measurements at December 31, 2021
DescriptionTotal Carrying AmountTotal Fair ValueLevel 3Total 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.



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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)


(2) Amount represents the Silversea Cruises trade name which makes up the majority of our indefinite-life intangible assets, totaling $321.5 million. We estimated the fair value of our the Silversea Cruises trade name using a discounted cash flow model and the relief-from-royalty method and used a discount rate of 13.25%. Significant inputs in performing the fair value assessment for the trade name were (i) forecasted net revenues, primarily the timing of returning to normalized operations, occupancy rates from existing and expected ship deliveries, including options, and terminal growth rate; (ii) the royalty rate of 3.0%; and (iii) weighted average cost of capital (i.e., discount rate). The fair value of the Silversea Cruises trade name was estimated as of March 31, 2020, the date the asset was last impaired.

(3) Impairments primarily relate to certain vessels during 2020. In addition, certain construction in progress projects generated impairments during the quarter ended September 30, 2020 and quarter ended December 31, 2020. For the vessels impaired during the quarter ended March 31, 2020, we estimated the fair value of two of our vessels using a blended indication from the income and cost approaches and the fair value of the remaining vessels was estimated primarily based on their orderly liquidation values. For the vessels impaired during the quarter ended June 30, 2020, we estimated the fair value of the vessels using a modified market approach based on the carrying values and orderly liquidation values of the vessels. For the vessels impaired during the quarter ended December 31, 2020, we estimated the fair value of the three Azamara vessels using a market approach. A significant input in performing the fair value assessments for these vessels was management's expected use of the vessels, which takes into consideration forecasted operating results. During the quarter ended September 30, 2020 and quarter ended December 31, 2020, construction in progress assets were impaired due to a reduction in scope or the decision to not complete the projects. The impairment was calculated based on orderly liquidation values. The fair value of these assets were estimated as of the date the asset was last impaired.

(4) Impairments to our right-of-use assets relate to certain of our berthing arrangements and a ship operating lease. We estimated the fair value of the berthing arrangements using estimated projected discounted cash flows and the fair value of the ship operating lease was estimated using a market approach. The fair value of the berthing arrangements was estimated as of March 31, 2020, the date these assets were last impaired. A significant input in performing the fair value assessments for these assets was our expected passenger headcount. The fair value of the ship operating lease was estimated as of December 31, 2020, the date this asset was last impaired, and significant inputs in performing the fair value assessment using the market approach for this asset were the expected rate of return and remaining lease payments.

(5) We estimated the fair value of our other than temporarily impaired equity-method investments using a discounted cash flow model. A significant input in performing the fair value assessments for these assets was forecasted operating results for these investments. The fair value of these equity-method investments was estimated as of March 31, 2020, the date these assets were last impaired. For further information on our equity method investments, refer to Note 8. Other Assets.

Master Netting Agreements
We have master International Swaps and Derivatives Association (“ISDA”) agreements in place with our derivative instrument counterparties. These ISDA agreements generally provide for final close out netting with our counterparties for all positions in the case of default or termination of the ISDA agreement. We have determined that our ISDA agreements provide us with rights of setoff on the fair value of derivative instruments in a gain position and those in a loss position with the same counterparty. We have elected not to offset such derivative instrument fair values in our consolidated balance sheets.
See Credit Related Contingent Features for further discussion on contingent collateral requirements for our derivative instruments.
The following table presents information about the Company’s offsetting of financial assets under master netting agreements with derivative counterparties (in thousands):
Gross Amounts not Offset in the Consolidated Balance Sheet that are Subject to Master Netting AgreementsGross Amounts not Offset in the Consolidated Balance Sheet that are Subject to Master Netting Agreements
As of December 31, 2020As of December 31, 2019As of December 31, 2022As of December 31, 2021
Gross Amount of Derivative Assets Presented in the Consolidated Balance SheetGross Amount of Eligible Offsetting
Recognized
Derivative Liabilities
Cash Collateral
Received
Net Amount of
Derivative Assets
Gross Amount of Derivative Assets Presented in the Consolidated Balance SheetGross Amount of Eligible Offsetting
Recognized
Derivative Liabilities
Cash Collateral
Received
Net Amount of
Derivative Assets
Gross Amount of Derivative Assets Presented in the Consolidated Balance SheetGross Amount of Eligible Offsetting
Recognized
Derivative Liabilities
Cash Collateral
Received
Net Amount of
Derivative Assets
Gross Amount of Derivative Assets Presented in the Consolidated Balance SheetGross Amount of Eligible Offsetting
Recognized
Derivative Liabilities
Cash Collateral
Received
Net Amount of
Derivative Assets
Derivatives subject to master netting agreementsDerivatives subject to master netting agreements$108,539 $(80,743)$$27,796 $39,994 $(39,994)$$Derivatives subject to master netting agreements$203,802 $(105,228)$— $98,574 $69,808 $(67,995)$— $1,813 
TotalTotal$108,539 $(80,743)$$27,796 $39,994 $(39,994)$$Total$203,802 $(105,228)$— $98,574 $69,808 $(67,995)$— $1,813 
The following table presents information about the Company’s offsetting of financial liabilities under master netting agreements with derivative counterparties (in thousands):
Gross Amounts not Offset in the Consolidated Balance Sheet that are Subject to Master Netting Agreements
As of December 31, 2022As of December 31, 2021
Gross Amount of Derivative Liabilities Presented in the Consolidated Balance SheetGross Amount of Eligible Offsetting
Recognized
Derivative Assets
Cash Collateral
Pledged
Net Amount of
Derivative Liabilities
Gross Amount of Derivative Liabilities Presented in the Consolidated Balance SheetGross Amount of Eligible Offsetting
Recognized
Derivative Assets
Cash Collateral
Pledged
Net Amount of
Derivative Liabilities
Derivatives subject to master netting agreements$(135,608)$105,228 $— $(30,380)$(200,541)$67,995 $44,411 $(88,135)
Total$(135,608)$105,228 $— $(30,380)$(200,541)$67,995 $44,411 $(88,135)

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The following table presents information about the Company’s offsetting of financial liabilities under master netting agreements with derivative counterparties (in thousands):
Gross Amounts not Offset in the Consolidated Balance Sheet that are Subject to Master Netting Agreements
As of December 31, 2020As of December 31, 2019
Gross Amount of Derivative Liabilities Presented in the Consolidated Balance SheetGross Amount of Eligible Offsetting
Recognized
Derivative Assets
Cash Collateral
Pledged
Net Amount of
Derivative Liabilities
Gross Amount of Derivative Liabilities Presented in the Consolidated Balance SheetGross Amount of Eligible Offsetting
Recognized
Derivative Assets
Cash Collateral
Pledged
Net Amount of
Derivative Liabilities
Derivatives subject to master netting agreements$(259,705)$80,743 $57,273 $(121,689)$(257,728)$39,994 $$(217,734)
Total$(259,705)$80,743 $57,273 $(121,689)$(257,728)$39,994 $$(217,734)


Concentrations of Credit Risk
We monitor our credit risk associated with financial and other institutions with which we conduct significant business, and to minimize these risks, we select counterparties with credit risks acceptable to us and we seek to limit our exposure to an individual counterparty. 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 December 31, 2020,2022, we had counterparty credit risk exposure under our derivative instruments of $26.9$103.3 million, which was limited to the cost of replacing the contracts in the event of non-performance by the counterparties to the contracts, the majority of which are currently our lending banks. We do not anticipate nonperformance by any of our significant counterparties. In addition, we have established guidelines we follow regarding credit ratings and instrument maturities to maintain safety and liquidity. We do not normally require collateral or other security to support credit relationships; however, in certain circumstances this option is available to us.
Derivative Instruments
We are exposed to market risk attributable to changes in interest rates, foreign currency exchange rates and fuel prices. We try to mitigate these risks through a combination of our normal operating and financing activities and through the use of derivative financial instruments pursuant to our hedging practices and policies. The financial impact of these hedging instruments is primarily offset by corresponding changes in the underlying exposures being hedged. We achieve this by closely matching the notional amount, term and conditions of the derivative instrument with the underlying risk being hedged. Although certain of our derivative financial instruments do not qualify or are not accounted for under hedge accounting, our objective is not to hold or issue derivative financial instruments for trading or other speculative purposes.
We enter into various forward, swap and option contracts to manage our interest rate exposure and to limit our exposure to fluctuations in foreign currency exchange rates and fuel prices. These instruments are recorded on the balance sheet at their fair value and the vast majority are designated as hedges. We also use non-derivative financial instruments designated as hedges of our net investment in our foreign operations and investments.
At inception of the hedge relationship, a derivative instrument that hedges the exposure to changes in the fair value of a firm commitment or a recognized asset or liability is designated as a fair value hedge. A derivative instrument that hedges a forecasted transaction or the variability of cash flows related to a recognized asset or liability is designated as a cash flow hedge.
Changes in the fair value of derivatives that are designated as fair value hedges are offset against changes in the fair value of the underlying hedged assets, liabilities or firm commitments. Gains and losses on derivatives that are designated as cash flow hedges are recorded as a component of Accumulated other comprehensive loss until the underlying hedged transactions are recognized in earnings. The foreign currency transaction gain or loss of our non-derivative financial instruments and the changes in the fair value of derivatives designated as hedges of our net investment in foreign operations and investments are recognized as a component of Accumulated other comprehensive loss along with the associated foreign currency translation adjustment of the foreign operation or investment. In certain hedges of our net investment within foreign operations and investments, we exclude forward points from the amortizationassessment of excluded components affectinghedge effectiveness and amortize the related amounts directly into earnings.
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On an ongoing basis, we assess whether derivatives used in hedging transactions are "highly effective" in offsetting changes in the fair value or cash flow of hedged items. For our net investment hedges, we use the dollar offset method to measure effectiveness. For all other hedging programs, we use the long-haul method to assess hedge effectiveness using regression analysis for each hedge relationship. 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. High effectiveness is achieved when a statistically valid relationship reflects a high degree of offset and correlation between the changes in the fair values of the derivative instrument and the hedged item. If it is determined that a derivative is not highly effective as a hedge or hedge accounting is discontinued, any change in fair value of the derivative since the last date at which it was determined to be highly effective is recognized in earnings.
Cash flows from derivative instruments that are designated as fair value or cash flow hedges are classified in the same category as the cash flows from the underlying hedged items. In the event that hedge accounting is discontinued, cash flows subsequent to the date of discontinuance are classified within investing activities. Cash flows from derivative instruments not designated as hedging instruments are classified as investing activities.
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We consider the classification of the underlying hedged item’s cash flows in determining the classification for the designated derivative instrument’s cash flows. We classify derivative instrument cash flows from hedges of benchmark interest rate or hedges of fuel expense as operating activities due to the nature of the hedged item. Likewise, we classify derivative instrument cash flows from hedges of foreign currency risk on our newbuild ship payments as investing activities.
Interest Rate Risk
Our exposure to market risk for changes in interest rates primarily relates to our debt obligations including future interest payments. At December 31, 20202022 and 2019,2021, approximately 64.5%75.0% and 62.1%65.7%, respectively, of our debt was effectively fixed.fixed-rate debt. We use interest rate swap agreements to modify our exposure to interest rate movements and to manage our interest expense.
Market risk associated with our fixed ratefixed-rate debt is the potential increase in fair value resulting from a decrease in interest rates. 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, 2020,During the quarter ended September 30, 2022, we maintainedredeemed 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 the following fixed-rate debt instruments:
Debt InstrumentSwap Notional as of December 31, 2020 (In thousands)MaturityDebt Fixed RateSwap Floating Rate: LIBOR plusAll-in Swap Floating Rate as of December 31, 2020
Oasis of the Seas term loan
$35,000 October 20215.41%3.87%4.12%
Unsecured senior notes650,000 November 20225.25%3.63%3.85%
$685,000 
Thesethese notes. At December 31, 2022, there were no interest rate swap agreements are accounted for as fair value hedges.fixed-rate debt instruments.
Market risk associated with our long-term floating rate debt is the potential increase in interest expense from an increase in interest rates. We use interest rate swap agreements that effectively convert a portion of our floating-rate debt to a fixed-rate basis to manage this risk.the risk of increasing interest rates. At December 31, 2020,2022, we maintained interest rate swap agreements on the following floating-rate debt instruments:
Debt InstrumentDebt InstrumentSwap Notional as of December 31, 2020 (In thousands)MaturityDebt Floating RateAll-in Swap Fixed RateDebt InstrumentSwap Notional as of December 31, 2022 (In thousands)MaturityDebt Floating RateAll-in Swap Fixed Rate
Celebrity Reflection term loan
Celebrity Reflection term loan
$218,167 October 2024LIBOR plus0.40%2.85%
Celebrity Reflection term loan
$109,083 October 2024LIBOR plus0.40%2.85%
Quantum of the Seas term loan
Quantum of the Seas term loan
367,500 October 2026LIBOR plus1.30%3.74%
Quantum of the Seas term loan
245,000 October 2026LIBOR plus1.30%3.74%
Anthem of the Seas term loan
Anthem of the Seas term loan
392,708 April 2027LIBOR plus1.30%3.86%
Anthem of the Seas term loan
271,875 April 2027LIBOR plus1.30%3.86%
Ovation of the Seas term loan
Ovation of the Seas term loan
518,750 April 2028LIBOR plus1.00%3.16%
Ovation of the Seas term loan
380,417 April 2028LIBOR plus1.00%3.16%
Harmony of the Seas term loan (1)
Harmony of the Seas term loan (1)
530,191 May 2028EURIBOR plus1.15%2.26%
Harmony of the Seas term loan (1)
338,990 May 2028EURIBOR plus1.15%2.26%
Odyssey of the Seas term loan(2)
Odyssey of the Seas term loan(2)
460,000 October 2032LIBOR plus0.95%3.20%
Odyssey of the Seas term loan(2)
383,333 October 2032LIBOR plus0.96%3.21%
Odyssey of the Seas term loan(2)
Odyssey of the Seas term loan(2)
191,667 October 2032LIBOR plus0.95%2.83%
Odyssey of the Seas term loan(2)
191,667 October 2032LIBOR plus0.96%2.84%
$2,678,983 $1,920,365 

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)


(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 December 31, 2020.2022.
(2)    Interest rate swap agreements hedging the term loan of Odyssey of the Seas include LIBOR zero-floors matching the debt LIBOR zero-floor. The effective dates of the $460.0$383.3 million and $191.7 million interest rate swap agreements are October 2020 and October 2022, respectively. The anticipated unsecured term loan for the financing of Odyssey of the Seaswas initially expected to be drawn in October 2020. However, due to the impact of COVID-19 to shipyard operations, there is a delay in the ship delivery.on March 2021.
These interest rate swap agreements are accounted for as cash flow hedges.
The notional amount of interest rate swap agreements related to outstanding debt and our current unfunded financing arrangements as of December 31, 20202022 and 20192021 was $3.4$1.9 billion and $3.5$2.9 billion, respectively.
Foreign Currency Exchange Rate Risk
Derivative Instruments
Our primary exposure to foreign currency exchange rate risk relates to our ship construction contracts denominated in Euros, our foreign currency denominated debt and our international business operations. We enter into foreign currency forward contracts to manage portions of the exposure to movements in foreign currency exchange rates. As of December 31, 2020,2022, the aggregate cost of our ships on order was $14.2$9.8 billion, of which we had deposited $684.8$831.6 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 any ships on order by our Partner Brands and any ships on order placed by Silversea Cruises during the reporting lag period.Brands. Refer to Note 1917.. Commitments and Contingencies, for further information on our ships on order. At December 31, 20202022 and 2019,2021, approximately 66.3%52.3% and 65.9%59.0%, respectively, of the aggregate cost of the ships under construction was exposed to
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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 year ended December 31, 2020,2022, we maintained an average of approximately $364.0 million$1.1 billion of these foreign currency forward contracts. These instruments are not designated as hedging instruments. For the years ended December 31, 2020, 20192022, 2021 and 2018,2020, changes in the fair value of the foreign currency forward contracts resulted in gains (losses)losses of $(19.0)$(101.8) million, $1.4$(30.9) million and $(62.4)$(19.0) million, respectively, which offset gains (losses) arising from the remeasurement of monetary assets and liabilities denominated in foreign currencies in those same years of $(1.5)$93.0 million, $0.4$24.3 million and $57.6$(1.5) million, respectively. These amounts were recognized in earnings within Other (expense) income (expense) in our consolidated statements of comprehensive income (loss).loss.
We consider our investments in our foreign operations to be denominated in relatively stable currencies and of a long-term nature. As of December 31, 2020, we maintained foreign currency forward contracts and designated them as hedges of a portion of our net investments primarily in TUI Cruises of €245.0 million, or approximately $299.7 million based on the exchange rate at December 31, 2020. These forward currency contracts mature in October 2021.
The notional amount of outstanding foreign exchange contracts, excluding the forward contracts entered into to minimize remeasurement volatility, as of December 31, 20202022 and 20192021 was $3.1$2.9 billion and $2.9$3.4 billion, respectively.
Non-Derivative Instruments
We alsoconsider our investments in our foreign operations to be denominated in relatively stable currencies and 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 €215.0€433.0 million, or approximately $263.0$461.9 million, as of December 31, 2020.2022. As of December 31, 2019,2021, we had designated debt as a hedge of our net investments primarily in TUI Cruises of €319.0€97.0 million, or approximately $358.1$110.3 million.
Fuel Price Risk
Our exposure to market risk for changes in fuel prices relates primarily to the consumption of fuel on our ships. We use fuel swap agreements to mitigate the financial impact of fluctuations in fuel prices.
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 (expense) 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
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)


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.

The currentPrior suspension of our cruise operations due to the COVID-19 pandemic and our 2020 and expected 2021 ship disposalsgradual resumption of cruise operations resulted in reductions to our forecasted fuel purchases. As ofDuring the year ended December 31, 2020,2021, we discontinued cash flow hedge accounting on 0.60.2 million metric tons of our fuel swap agreements maturing in 20202021 and 2021,2022, which resulted in the reclassification of a net$104.4 $0.7 million loss from Accumulated other comprehensive loss to Other expense income (expense)during. During the year ended December 31, 2020.2022, 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 expense(expense) income for each reporting period.

period through the maturity dates of the fuel swaps.
Future suspension of our operations or modifications to our itineraries may affect our expected forecasted fuel purchases which could result in further discontinuance of fuel swap cash flow hedge accounting and the reclassification of deferred gains or losses from Accumulated other comprehensive loss into earnings.Refer to Risk Factors in Part 1, Item 1A. for further discussion on risks related to the COVID-19 pandemic.
At December 31, 2020,2022, we have hedged the variability in future cash flows for certain forecasted fuel transactions occurring through 2023. As of December 31, 20202022 and December 31, 2019,2021, we had the following outstanding fuel swap agreements:
Fuel Swap Agreements
As of December 31, 2020As of December 31, 2019
(metric tons)
Designated as hedges:
2021385,050 488,900 
2022389,650 322,900 
202382,400 82,400 

Fuel Swap Agreements
As of December 31, 2020As of December 31, 2019
(% hedged)
Designated hedges as a % of projected fuel purchases:
202140 %30 %
202223 %19 %
2023%%


Fuel Swap Agreements
As of December 31, 2020As of December 31, 2019
(metric tons)
Not designated as hedges:
2021229,850 
202214,650 

At December 31, 2020 there was $13.1 million of estimated unrealized net loss associated with our cash flow hedges pertaining to fuel swap agreements to be reclassified to earnings from Accumulated other comprehensive loss within the next twelve months when compared to none at December 31, 2019. Reclassification is expected to occur as the result of fuel consumption associated with our hedged forecasted fuel purchases.
Fuel Swap Agreements
As of December 31, 2022As of December 31, 2021
(metric tons)
Designated as hedges:
2023825,651 249,050 
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Fuel Swap Agreements
As of December 31, 2022As of December 31, 2021
(% hedged)
Designated hedges as a % of projected fuel purchases:
202350 %15 %

At December 31, 2022, there was $7.9 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 $23.8 million of estimated unrealized net loss at December 31, 2021. Reclassification is expected to occur as the result of fuel consumption associated with our hedged forecasted fuel purchases.
The fair value and line item caption of derivative instruments recorded within our consolidated balance sheets were as follows (in thousands):
Fair Value of Derivative InstrumentsFair Value of Derivative Instruments
Asset DerivativesLiability DerivativesAsset DerivativesLiability Derivatives
Balance Sheet
Location
As of December 31, 2020As of December 31, 2019Balance Sheet
Location
As of December 31, 2020As of December 31, 2019Balance Sheet
Location
As of December 31, 2022As of December 31, 2021Balance Sheet
Location
As of December 31, 2022As of December 31, 2021
Fair ValueFair ValueFair ValueFair ValueFair ValueFair ValueFair ValueFair Value
Derivatives designated as hedging instruments under ASC 815-20(1)
Derivatives designated as hedging instruments under ASC 815-20(1)
Derivatives designated as hedging instruments under ASC 815-20(1)
Interest rate swapsInterest rate swapsOther assets$17,271 $11 Other long-term liabilities$144,653 $64,168 Interest rate swapsOther assets$115,049 $— Other long-term liabilities$— $62,080 
Interest rate swapsInterest rate swapsDerivative financial instruments261 Derivative Financial InstrumentsInterest rate swapsDerivative financial instruments— 6,478 Derivative Financial Instruments— — 
Foreign currency forward contractsForeign currency forward contractsDerivative financial instruments63,894 Derivative financial instruments13,294 75,260 Foreign currency forward contractsDerivative financial instruments18,892 7,357 Derivative financial instruments84,953 116,027 
Foreign currency forward contractsForeign currency forward contractsOther assets20,836 9,380 Other long-term liabilities7,306 64,711 Foreign currency forward contractsOther assets25,504 2,070 Other long-term liabilities150 8,813 
Fuel swapsFuel swapsDerivative financial instruments5,093 16,922 Derivative financial instruments25,203 16,901 Fuel swapsDerivative financial instruments40,191 31,919 Derivative financial instruments46,359 7,944 
Fuel swapsFuel swapsOther assets350 8,677 Other long-term liabilities50,117 33,965 Fuel swapsOther assets4,166 13,452 Other long-term liabilities4,147 1,202 
Total derivatives designated as hedging instruments under ASC 815-20Total derivatives designated as hedging instruments under ASC 815-20107,705 34,990 240,573 255,005 Total derivatives designated as hedging instruments under ASC 815-20203,802 61,276 135,609 196,066 
Derivatives not designated as hedging instruments under ASC 815-20Derivatives not designated as hedging instruments under ASC 815-20Derivatives not designated as hedging instruments under ASC 815-20
Foreign currency forward contractsDerivative financial Instruments3,186 Derivative financial instruments160 2,419 
Foreign currency forward contractsOther assetsOther long-term liabilities
Fuel swapsFuel swapsDerivative financial instruments834 1,643 Derivative financial instruments18,028 295 Fuel swapsDerivative financial instruments— 8,430 Derivative financial instruments— 3,264 
Fuel swapsFuel swapsOther assets175 Other long-term liabilities944 Fuel swapsOther assets— 102 Other long-term liabilities— 1,211 
Total derivatives not designated as hedging instruments under ASC 815-20Total derivatives not designated as hedging instruments under ASC 815-20834 5,004 19,132 2,723 Total derivatives not designated as hedging instruments under ASC 815-20— 8,532 — 4,475 
Total derivativesTotal derivatives$108,539 $39,994 $259,705 $257,728 Total derivatives$203,802 $69,808 $135,609 $200,541 

(1)Accounting Standard CodificationSubtopic 815-20 "Derivatives and Hedging."Hedging-General” under ASC 815.
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The location and amount of gain or (loss) recognized in income on fair value and cash flow hedging relationships were as follows (in thousands):
Year Ended December 31, 2020Year Ended December 31, 2019
Fuel ExpenseDepreciation and Amortization ExpensesInterest Income (Expense)Other Income (Expense)Fuel ExpenseDepreciation and Amortization ExpensesInterest Income (Expense)Other Income (Expense)
Total amounts of income and expense line items presented in the statement of financial performance in which the effects of fair value or cash flow hedges are recorded$371,015$1,279,254$(823,202)$(137,085)$697,962$1,245,942$(381,568)$(24,513)
The effects of fair value and cash flow hedging:
Gain or (loss) on fair value hedging relationships in Subtopic 815-20
Interest contracts
Hedged itemsn/an/a$(18,813)0n/an/a(23,464)$
Derivatives designated as hedging instrumentsn/an/a$23,819 0n/an/a$16,607 $
Gain or (loss) on cash flow hedging relationships in Subtopic 815-20
Interest contracts
Amount of gain or (loss) reclassified from accumulated other comprehensive loss into incomen/an/a$(25,267)n/an/an/a$(4,289)n/a
Commodity contracts
Amount of gain or (loss) reclassified from accumulated other comprehensive loss into income$(35,407)n/an/a$3,549 $29,929 n/an/a$(1,292)
Foreign exchange contracts
Amount of gain or (loss) reclassified from accumulated other comprehensive loss into incomen/a$(14,679)n/a$(7,315)n/a$(14,063)n/a$(5,080)

Year Ended December 31, 2018
Fuel ExpenseDepreciation and Amortization ExpensesInterest Income (Expense)Other Income (Expense)
Total amounts of income and expense line items presented in the statement of financial performance in which the effects of fair value or cash flow hedges are recorded$710,617 $1,033,697 $(300,872)$11,107 
The effects of fair value and cash flow hedging:
Gain or (loss) on fair value hedging relationships in Subtopic 815-20
Interest contracts
Hedged itemsn/an/a$4,673 $
Derivatives designated as hedging instrumentsn/an/a$(8,854)$
Gain or (loss) on cash flow hedging relationships in Subtopic 815-20
Interest contracts
Amount of gain or (loss) reclassified from accumulated other comprehensive loss into incomen/an/a$(10,931)n/a
Commodity contracts
Amount of gain or (loss) reclassified from accumulated other comprehensive loss into income$1,366 n/an/a$(1,580)
Foreign exchange contracts
Amount of gain or (loss) reclassified from accumulated other comprehensive loss into incomen/a$(12,843)n/a$12,855 
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The carrying value and line item caption of non-derivative instruments designated as hedging instruments recorded within our consolidated balance sheets were as follows (in thousands):
Carrying ValueCarrying Value
Non-derivative instrument designated as
hedging instrument under ASC 815-20
Non-derivative instrument designated as
hedging instrument under ASC 815-20
Balance Sheet LocationAs of December 31, 2020As of December 31, 2019Non-derivative instrument designated as
hedging instrument under ASC 815-20
Balance Sheet LocationAs of December 31, 2022As of December 31, 2021
Foreign currency debtForeign currency debtCurrent portion of long-term debt$43,696 $73,572 Foreign currency debtCurrent portion of long-term debt$62,282 $75,518 
Foreign currency debtForeign currency debtLong-term debt219,335 284,506 Foreign currency debtLong-term debt399,577 34,795 
$263,031 $358,078 $461,859 $110,313 
The effect of derivative instruments qualifying and designated as hedging instruments and the related hedged items in fair value hedges on the consolidated statements of comprehensive income (loss) was as follows (in thousands):
Location of Gain (Loss) Recognized in Income on Derivative and Hedged ItemAmount of Gain (Loss) Recognized in Income on DerivativeAmount of Gain (Loss) Recognized in Income on Hedged ItemLocation of Gain (Loss) Recognized in Income on Derivative and Hedged ItemAmount of Gain (Loss) Recognized in Income on DerivativeAmount of Gain (Loss) Recognized in Income on Hedged Item
Derivatives and related Hedged Items under ASC 815-20 Fair Value Hedging RelationshipsDerivatives and related Hedged Items under ASC 815-20 Fair Value Hedging RelationshipsYear Ended December 31, 2020Year Ended December 31, 2019Year Ended December 31, 2018Year Ended December 31, 2020Year Ended December 31, 2019Year Ended December 31, 2018Derivatives and related Hedged Items under ASC 815-20 Fair Value Hedging RelationshipsYear Ended December 31, 2022Year Ended December 31, 2021Year Ended December 31, 2020Year Ended December 31, 2022Year Ended December 31, 2021Year Ended December 31, 2020
Interest rate swapsInterest rate swapsInterest expense (income), net of interest capitalized$23,819 $16,607 $(8,854)$(18,813)$(23,464)$4,673 Interest rate swapsInterest expense, net of interest capitalized$(3,569)$(1,349)$23,819 $4,534 $11,083 $(18,813)
$(3,569)$(1,349)$23,819 $4,534 $11,083 $(18,813)
$23,819 $16,607 $(8,854)$(18,813)$(23,464)$4,673 
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 IncludedLine Item in the Statement of Financial Position Where the Hedged Item is IncludedCarrying Amount of the Hedged LiabilitiesCumulative amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged LiabilitiesLine Item in the Statement of Financial Position Where the Hedged Item is IncludedCarrying Amount of the Hedged LiabilitiesCumulative amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Liabilities
As of December 31, 2020As of December 31, 2019As of December 31, 2020As of December 31, 2019As of December 31, 2022As of December 31, 2021As of December 31, 2022As of December 31, 2021
Current portion of long-term debt and Long-term debtCurrent portion of long-term debt and Long-term debt$700,331 $715,234 $17,512 $(1,301)Current portion of long-term debt and Long-term debt$— $655,502 $— $6,428 
$700,331 $715,234 $17,512 $(1,301)$— $655,502 $— $6,428 
The effect of derivative instruments qualifying and designated as cash flow hedging instruments on the consolidated financial statements was as follows (in thousands):
Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) on DerivativeLocation of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into IncomeAmount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into IncomeAmount of Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) on Derivative
Derivatives under ASC 815-20 Cash Flow Hedging RelationshipsDerivatives under ASC 815-20 Cash Flow Hedging RelationshipsYear Ended December 31, 2020Year Ended December 31, 2019Year Ended December 31, 2018Year Ended December 31, 2020Year Ended December 31, 2019Year Ended December 31, 2018Derivatives under ASC 815-20 Cash Flow Hedging RelationshipsYear Ended December 31, 2022Year Ended December 31, 2021Year Ended December 31, 2020
Interest rate swapsInterest rate swaps$(112,960)$(72,732)$18,578 Interest expense$(25,267)$(4,289)$(10,931)Interest rate swaps$165,377 $45,572 $(112,960)
Foreign currency forward contractsForeign currency forward contracts130,426 (148,881)(222,645)Depreciation and amortization expenses(14,679)(14,063)(12,843)Foreign currency forward contracts(145,832)(203,129)130,426 
Foreign currency forward contractsOther income (expense)(7,315)(5,080)12,855 
Foreign currency forward contractsOther indirect operating expenses
Foreign currency collar optionsDepreciation and amortization expenses
Fuel swapsOther income (expense)3,549 (1,292)(1,580)
Fuel swapsFuel swaps(58,575)75,505 (93,927)Fuel(35,407)29,929 1,366 Fuel swaps151,495 140,890 (58,575)
$(41,109)$(146,108)$(297,994)$(79,119)$5,205 $(11,133)$171,040 $(16,667)$(41,109)
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The table below represents amounts excluded from the assessment of effectiveness for our net investment hedging instruments for which the difference between changes in fair value and periodic amortization is recorded in accumulated other comprehensive income (loss)loss (in thousands):
Gain (Loss) Recognized in Income (Net Investment Excluded Components)Year Ended December 31, 20202022
Net inception fair value at January 1, 20202022$(8,008)(554)
Amount of gain recognized in income on derivatives for the year ended December 31, 202020226,620554 
Amount of loss remaining to be amortized in accumulated other comprehensive loss as of December 31, 20202022(528)— 
Fair value at December 31, 20202022$(1,916)— 
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 Income (Loss)
Amount of Gain (Loss)
Recognized in Other Comprehensive Income (Loss)
Non-derivative instruments under ASC 815-20
Net Investment Hedging Relationships
Non-derivative instruments under ASC 815-20
Net Investment Hedging Relationships
Year Ended December 31, 2020Year Ended December 31, 2019Year Ended December 31, 2018Non-derivative instruments under ASC 815-20
Net Investment Hedging Relationships
Year Ended December 31, 2022Year Ended December 31, 2021Year Ended December 31, 2020
Foreign Currency DebtForeign Currency Debt$(28,062)$6,111 $13,210 Foreign Currency Debt$4,757 $7,837 $(28,062)
$(28,062)$6,111 $13,210 $4,757 $7,837 $(28,062)
The effect of derivatives not designated as hedging instruments on the consolidated financial statements was as follows (in thousands):
Amount of Gain (Loss) Recognized
in Income on Derivative
Amount of Gain (Loss) Recognized
in Income on Derivative
Derivatives Not Designated as Hedging
Instruments under ASC 815-20
Derivatives Not Designated as Hedging
Instruments under ASC 815-20
Location of Gain (Loss)
Recognized in Income
on Derivative
Year Ended December 31, 2020Year Ended December 31, 2019Year Ended December 31, 2018Derivatives Not Designated as Hedging
Instruments under ASC 815-20
Location of Gain (Loss)
Recognized in Income
on Derivative
Year Ended December 31, 2022Year Ended December 31, 2021Year Ended December 31, 2020
Foreign currency forward contractsForeign currency forward contractsOther income (expense)$(18,961)$1,356 $(62,423)Foreign currency forward contractsOther (expense) income$(101,837)$(30,903)$(18,961)
Fuel swapsFuel swapsFuel(37)1,161 Fuel swapsOther (expense) income(108)33,720 (102,740)
Fuel swapsOther income (expense)(102,740)112 114 
$(121,701)$1,431 $(61,148)$(101,945)$2,817 $(121,701)
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. 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 December 31, 2020,2022, our senior unsecured debt credit rating was B+B by Standard & Poor's and B2B3 by Moody's. As of December 31, 2020, 72022, 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 term of at least five years requiring usnet asset position, and accordingly, we were not required to post any collateral as of $57.3 million to satisfy our obligations under our interest rate derivative agreements, taking into account collateral waivers issued by certain banks. On February 25, 2021, Standard & Poor's further downgraded our senior unsecured debt credit rating from B+ to B. We believe the maximum additional collateral we may need to provide under these agreements in the next twelve months is approximately $33.3 million.such date.


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Note 1917.. Commitments and Contingencies
Ship Purchase Obligations
Our future capital commitments consist primarily of new ship orders. As of December 31, 2020,2022, we had 1 Quantum-classone Oasis-class ship 2 Oasis-class ships and 3three ships of a new generation, known as our Icon-class, on order for our Royal Caribbean International brand with an aggregate capacity of approximately 32,40022,500 berths. As of December 31, 2020,2022, we had 2one Edge-class shipsship on order for our Celebrity brand with an aggregate capacity of approximately 6,5003,250 berths. Additionally as of December 31, 2020,2022, we had 3two ships on order with an aggregate capacity of approximately 1,7501,460 berths for our Silversea Cruises brand. The following provides further information on recent developments with respect to our ship orders.
In September 2019, Silversea Cruises entered into 2two credit agreements, guaranteed by us, for the unsecured financing of the first and second Evolution-class ships for an amount of up to 80% of each ship's contract price through facilities to be guaranteed 95% by Euler Hermes, the official export credit agency of Germany. The maximum loan amount under each facility is not to exceed the United States dollar equivalent of €351.6 million in the case of the first Evolution-class ship and €359.0 million in the case of the second Evolution-class ship, or approximately $430.1$375.0 million and $439.2$382.9 million, respectively, based on the exchange rate at December 31, 2020.2022. Each loan, once funded, will amortize semi-annually and will mature 12 years following the delivery of each ship. At our election, interest on each loan will accrue either (1) at a fixed rate of 4.14% and 4.18%, respectively (inclusive of the applicable margin) or (2) at a floating rate equal to LIBOR plus 0.79% and 0.83%, respectively. The first and second Evolution-class ships will each have a capacity of approximately 600730 berths. In September 2021, we amended the credit agreements for the first and second Evolution-class ships to increase their maximum loan amounts by €175.6 million on an aggregate basis, or approximately $187.3 million based on the exchange rate at December 31, 2022. At our election, interest on incremental portion of each loan will accrue either (1) at a fixed rate of 4.34% and 4.38%, respectively (inclusive of the applicable margin) or (2) at a floating rate equal to LIBOR plus 0.99% and 1.03%, respectively.
In December 2019, we entered into a credit agreement for the unsecured financing of the sixth Oasis-class ship for up to 80% of the ship’s contract price through a facility to be guaranteed 100% by BpiFrance Assurance Export, the official export credit agency of France. Under the financing arrangement, we have the right, but not the obligation, to satisfy the obligations to be incurred upon delivery and acceptance of the ship under the shipbuilding contract by assuming, at delivery and acceptance, the debt indirectly incurred by the shipbuilder during the construction of the ship. The maximum loan amount under the facility is not to exceed the United States dollar equivalent of €1.3 billion, or approximately $1.6$1.4 billion based on the exchange rate at December 31, 2020.2022. The loan will amortize semi-annually and will mature 12 years following delivery of the ship. Interest on the loan will accrue at a fixed rate of 3.00% (inclusive of margin). The sixth Oasis-class ship will have a capacity of approximately 5,700 berths.
In December 2019, we entered into a credit agreement for the unsecured financing of the third Icon-class ship for up to 80% of the ship’s contract price. Finnvera plc, the official export credit agency of Finland, has agreed to guarantee 95% of the substantial majority of the financing, with a smaller portion of the financing to be 95% guaranteed by Euler Hermes, the official German export credit agency.Hermes. The maximum loan amount under the facility is not to exceed the United States dollar equivalent of €1.4 billion, or approximately $1.7$1.5 billion based on the exchange rate at December 31, 2020.2022. The loan, once funded, will amortize semi-annually and will mature 12 years following the delivery of the ship. Approximately 60% of the loan will accrue interest at a fixed rate of 3.29%. The balance of the loan will accrue interest at a floating rate of LIBOR plus 0.85%. The third Icon-class ship will have a capacity of approximately 5,600 berths.berths
During 2017, we entered into credit agreements for the unsecured financing of the 2first two Icon-class ships for up to 80% of each ship’s contract price. For each ship, the official Finnish export credit agency, Finnvera plc, has agreed to guarantee 100% of a substantial majority of the financing to the lenders, with a smaller portion of the financing to be 95% guaranteed by Euler Hermes, the official German export credit agency.Hermes. The maximum loan amount under each facility is not to exceed €1.4 billion, or approximately $1.7$1.5 billion, based on the exchange rate at December 31, 2020.2022. Interest on approximately 75% of each loan will accrue at a fixed rate of 3.56% and 3.76% for the first and the second Icon-class ships, respectively, and the balance will accrue interest at a floating rate ranging from LIBOR plus 1.10% to 1.15% and LIBOR plus 1.15% to 1.20% for the first and the second Icon-class ships, respectively. Each loan will amortize semi-annually and will mature 12 years following delivery of each ship. The first and second Icon-class ships will each have a capacity of approximately 5,600 berths.
During 2017, we entered into credit agreements for the unsecured financing of the third and fourth Edge-class ships and the fifth Oasis-class ship for up to 80% of eachthe ship’s contract price through facilities to be guaranteed 100% by Bpifrance Assurance Export, the official export credit agency of France.Export. Under these financing arrangements, we have the right, but not the obligation, to satisfy the obligations to be incurred upon delivery and acceptance of eachthe ship under the shipbuilding contract by assuming, at delivery and acceptance, the debt indirectly incurred by the shipbuilder during the construction of eachthe ship. The maximum loan amount under eachthe facility is not to exceed €684.2 million in the case of the third Edge-class ship and the United States dollar equivalent of €714.6 million and €1.1 billion in the case of the fourth Edge-class ship and fifth Oasis-class ship, or approximately $874.2 million and $1.3 billion, respectively, based on the exchange rate at December 31, 2020. The loans will amortize semi-annually and will mature 12 years following delivery of each ship. Interest on the loans will accrue at a fixed rate of 1.28% for the third Edge-class ship and at a fixed rate of 3.18% for both, the fourth Edge-class ship and
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the fifth Oasis-class ship. The third and fourth Edge-class ships, each of which will have a capacity of approximately 3,250 berths. The fifth Oasis-class ship will have a capacity of approximately 5,700 berths.
During 2015, we entered into a credit agreement for the unsecured financing of Odyssey of the Seas for up to 80% of the ship’s contract price, through a facility to be guaranteed 95% by Euler Hermes, official export credit agency of Germany. Hermes has agreed to guarantee to the lender payment of 95% of the financing. The ship will have a capacity of approximately 4,200 berths. This credit agreement makes available to us an unsecured term loan in an amount up to the United States dollar equivalent of €777.5€714.6 million or approximately $951.2$762.2 million based on the exchange rate at December 31, 2020.2022. The loan will amortize semi-annually and will mature 12 years following delivery of the ship. At our election, prior to delivery of the ship, interestInterest on the loansloan will accrue either (1) at a fixed rate of 3.45% (inclusive3.18%. The fourth Edge-class ships will have a capacity of the applicable margin) or (2) at a floating rate equal to LIBOR plus 0.95%.approximately 3,250 berths.
Our future capital commitments consist primarily of new ship orders. As of December 31, 2020,2022, the dates that ships on order by our Global and Partner Brands have the following ships on order. COVID-19 has impacted shipyard operations which have and may continue to result in delays of our previously contracted ship deliveries. As of December 31, 2020, the expected dates that the ships on order are expected to be delivered, subject to change in the event of construction delays, and their approximate berths are as follows:
ShipShipyardExpected to be deliveredApproximate
Berths
Royal Caribbean International —
Oasis-class:
WonderUtopia of the SeasChantiers de l’Atlantique1st Quarter 20225,700
   UnnamedChantiers de l’Atlantique2nd Quarter 20245,700
Quantum-class:
Odyssey of the SeasMeyer Werft1st Quarter 20214,200
Icon-class:
UnnamedIcon of the SeasMeyer Turku Oy3rd4th Quarter 20235,600
UnnamedMeyer Turku Oy2nd Quarter 20255,600
UnnamedMeyer Turku Oy2nd Quarter 20265,600
Celebrity Cruises —
Edge-class:
Celebrity BeyondChantiers de l’Atlantique2nd Quarter 20223,250
UnnamedAscentChantiers de l’Atlantique4th Quarter 20233,250
Silversea Cruises — (1)
Muse-class:
Silver DawnFincantieri4th Quarter 2021550
Evolution-class:
UnnamedSilver NovaMeyer Werft1st2nd Quarter 20222023600730
UnnamedSilver RayMeyer Werft1st2nd Quarter 20232024600730
TUI Cruises (50% joint venture) —
Mein Schiff 7Meyer Turku Oy2nd Quarter 202320242,900
UnnamedFincantieri3rd4th Quarter 20244,100
UnnamedFincantieri1st2nd Quarter 20264,100
Hapag-Lloyd Cruises (50% joint venture) —
Hanseatic SpiritVard Fincantieri2nd Quarter 2021230
Total Berths51,98038,310
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(1)    The revenue impact from Silversea Cruises' new ships will be recognized on a three month reporting lag from when the ships enter service. Refer to Note 1. General for further information.
In addition, as of December 31, 2020,2022, 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 December 31, 2020,2022, the aggregate cost of our ships on order, presented in the above table, not including any ships on order by our Partner Brands, and the Silversea Cruises ships that remain contingent upon final documentation and financing, was approximately $14.2$9.8 billion, of which we had deposited $684.8 million as of such date.$831.6 million. Approximately 66.3%52.3% of the aggregate cost was exposed to fluctuations in the Euro exchange rate at December 31, 2020.2022. Refer to Note 1816.. Fair Value Measurements and Derivative Instruments for further information.
Litigation
As previously reported, 2two lawsuits were filed against Royal Caribbean Cruises Ltd.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.government. The complaints further allege that Royal Caribbean Cruises Ltd.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. Royal Caribbean Cruises Ltd. filed its answer to each complaint in October 2019 and on October 15, 2020, and the
The Court dismissed the Port of Santiago Action with prejudice on the basis that the plaintiffsplaintiff acquired his interest in that action lacked standingthe Port of Santiago after the enactment of the Helms-Burton Act. In November 2022, the United States Court of Appeals for the 11th Circuit affirmed the Court's dismissal of the lawsuit.
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In the Havana Docks Action, the Court entered final judgment in December 2022 in favor of the plaintiff and awarded damages and attorneys' fees to bring the claim. This decisionplaintiff 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 been appealed bycross-appealed with regards to the plaintiffs.interest calculation used for purposes of determining damages. We believe we have meritorious defensesgrounds for and intend to vigorously pursue our appeal. During the claims alleged in bothfourth quarter of 2022, we recorded a charge of approximately $130.0 million to Other (expense) income within our consolidated statements of comprehensive loss related to the Havana Docks Action, including post-judgment interest and the Port of Santiago Action,related legal defense costs and we intend to vigorously defend ourselves against them. We believe that it is unlikely that the outcome of either action will have a material adverse impact to our financial condition, results of operations or cash flows. However, the outcome of litigation is inherently unpredictable and subject to significant uncertainties, and there can be no assurances that the final outcome of this case will not be material.

bonding fees.
As previously reported, on October 7, 2020, a shareholder filed a putative class action complaint against us, and three officers, Richard Fain, Jason Liberty and Michael Bayley, in the United States District Court for the Southern District of Florida (the "Court"), alleging misrepresentations relating to COVID-19 in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5, seeking unspecified damages on behalf of a purported class consisting of all persons and entities (subject to specified exceptions) that purchased or otherwise acquired our securities from February 4, 2020 through March 17, 2020. As previously disclosed, on October 27, 2020, a second complaint was filed by another shareholder against us and these same officers in the Court alleging the same misrepresentations relating to COVID-19. As is the case with the first action, the second action seeks unspecified damages on behalf of a purported class consisting of all persons and entities (subject to specified exceptions) that purchased or otherwise acquired our securities from February 4, 2020 through March 17, 2020. On December 23, 2020, these cases were consolidated with a new lead plaintiff, Indiana Public Retirement System. We cannot predict the duration or outcome of this lawsuit at this time, although management believes the claims are without merit. Depending on how this case progresses, it could be costly to defend and could divert the attention of management and other resources from operations. Accordingly, even if ultimately resolved in our favor, this action could have a material adverse effect on our business, financial condition, results of operations and liquidity. On February 25, 2021, the lead plaintiff filed with the Court a voluntary dismissal of the action without prejudice.

WeIn addition, we are routinely involved in other claims regulatory investigations and inquiries, and consumer complaints, including those related to COVID-19, that are typical within the travel and tourismcruise vacation industry. The majority of these claims are covered by insurance. We believe the outcome of such claims, net of expected insurance recoveries, will not have a material adverse impact on our financial condition or results of operations and cash flows.
Other
Some of the contracts that we enter into include indemnification provisions that obligate us to make payments to the counterparty if certain events occur. These contingencies generally relate to changes in taxes, increased lender capital costs and other similar costs. The indemnification clauses are often standard contractual terms and are entered into in the normal course of business. There are no stated or notional amounts included in the indemnification clauses and we are not able to estimate the maximum potential amount of future payments, if any, under these indemnification clauses. We have not been required to make any payments under such indemnification clauses in the past and, under current circumstances, we do not believe an indemnification in any material amount is probable.
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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 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.
At December 31, 2020,2022, we have future commitments to pay for our usage of certain port facilities, marine consumables, services and maintenance contracts as follows (in thousands):
YearYearYear
2021$202,618 
2022299,347 
2023202328,324 2023$187,855 
202420246,911 2024101,324 
202520257,273 202596,798 
2026202655,872 
2027202752,883 
ThereafterThereafter22,720 Thereafter455,858 
$567,193 $950,590 

Note 20. Restructuring Charges
Centralization of Global Sales and Marketing Structure
During the year ended December 31, 2019, we implemented a strategy related to the restructuring and centralization of our international sales and marketing structure. Activities related to this strategy focused on moving from a multi-brand sales model to a brand dedicated sales model, which resulted in the consolidation of some of our international offices and personnel reorganization among our sales and marketing teams. The personnel reorganization resulted in the recognition of a liability for one-time termination benefits during the twelve months ended December 31, 2019. We also incurred contract termination costs related to the closure of some of our international offices and other related costs consisting of legal and consulting fees to implement this initiative. As a result of these actions, we incurred restructuring exit costs of $12.0 million for the year ended December 31, 2019, which were reported within Marketing, selling and administrative expenses in our consolidated statements of comprehensive income (loss). As of December 31, 2020, we incurred $22.7 million restructuring costs as it relates to the restructuring activities of this strategy.
The following table summarizes our restructuring exit costs (in thousands):
Beginning Balance January 1, 2020AccrualsPaymentsEnding Balance December 31, 2020Cumulative Charges Incurred
Termination benefits$8,389 $2,711 $3,192 $7,908 $11,591 
Contract termination costs338 338 338 
Other related costs2,785 7,989 9,473 1,301 10,797 
Total$11,512 $10,700 $12,665 $9,547 $22,726 

Operating Expense Reduction in Workforce
In April 2020, we reduced our US shoreside workforce by approximately 23% through permanent layoffs. We incurred severance costs of $28.0 million during the year ended December 31, 2020.
The following table summarizes our restructuring costs as it relates to the April 2020 reduction in our workforce (in thousands):
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Beginning Balance January 1, 2020AccrualsPaymentsEnding Balance December 31, 2020Cumulative Charges Incurred
Termination benefits$$27,953 $23,696 $4,257 $27,953 
Total$$27,953 $23,696 $4,257 $27,953 

Note 21. Quarterly Selected Financial Data (Unaudited)
(In thousands, except per share data)
First QuarterSecond QuarterThird QuarterFourth Quarter
20202019202020192020201920202019
Total revenues(1)(2)
$2,032,750 $2,439,767 $175,605 $2,806,631 $(33,688)$3,186,850 $34,138 $2,517,413 
Operating (Loss) income$(1,306,407)$318,831 $(1,282,487)$573,653 $(996,114)$890,792 $(1,016,549)$299,425 
Net (Loss) Income attributable to Royal Caribbean Cruises Ltd.$(1,444,479)$249,681 $(1,639,292)$472,830 $(1,346,756)$883,240 $(1,366,935)$273,136 
(Loss) Earnings per share
Basic$(6.91)$1.19 $(7.83)$2.26 $(6.29)$4.21 $(6.09)$1.31 
Diluted$(6.91)$1.19 $(7.83)$2.25 $(6.29)$4.20 $(6.09)$1.30 
Dividends declared per share$0.78 $0.70 $$0.70 $$0.78 $$0.78 

(1)Our revenues are seasonal based on the demand for cruises. Demand is strongest for cruises during the Northern Hemisphere's summer months and holidays.
(2)Total revenues forthe quarter ended September 30, 2020 includes a charge of $67.9 million that was recorded to Onboard and other revenues to correct cancellation revenue, for certain immaterial bookings, that was incorrectly recognized during the six months ended June 30, 2020. The charge is offsetting cancellation and other revenue recognized during the quarter ended September 30, 2020 and was considered immaterial to our financial statements.
F-61