UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



ý☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2017~~2022



o☐			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						98-0081645
(State or other jurisdiction of incorporation or organization)						(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)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

RCL

New York Stock Exchange

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 ý☒ No o☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). Yes ý☒ No o☐

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 x☒

Accelerated filer o☐

Non-accelerated filer o☐

Smaller reporting company o

☐

Emerging growth company o

☐

~~(Do not check if a smaller reporting 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. o☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐ No ý

☒

There were ~~214,088,950~~255,182,015 shares of common stock outstanding as of October ~~30, 2017.~~31, 2022.

Table of Contents

ROYAL CARIBBEAN CRUISES LTD.

TABLE OF CONTENTS

~~Table of Contents~~

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~INCOME (LOSS)~~LOSS

(unaudited; in thousands, except per share data)


	Quarter Ended September 30,
	2022		2021
Passenger ticket revenues	$	2,020,974	$	280,153
Onboard and other revenues	972,101		176,805
Total revenues	2,993,075		456,958
Cruise operating expenses:
Commissions, transportation and other	484,054		64,780
Onboard and other	220,216		42,703
Payroll and related	304,369		265,974
Food	194,966		48,950
Fuel	316,214		118,127
Other operating	436,444		273,157
Total cruise operating expenses	1,956,263		813,691
Marketing, selling and administrative expenses	373,116		323,422
Depreciation and amortization expenses	355,085		325,907
Impairment and credit losses (recoveries)	10,186		(238)
Operating Income (Loss)	298,425		(1,005,824)
Other income (expense):
Interest income	11,953		3,786
Interest expense, net of interest capitalized	(352,187)		(430,661)
Equity investment income (loss)	73,997		(29,085)
Other income	780		37,230
	(265,457)		(418,730)
Net Income (Loss)	$	32,968	$	(1,424,554)
Earnings (Loss) per Share:
Basic	$	0.13	$	(5.59)
Diluted	$	0.13	$	(5.59)
Weighted-Average Shares Outstanding:
Basic	255,071		254,713
Diluted	255,378		254,713
Comprehensive Loss
Net Income (Loss)	$	32,968	$	(1,424,554)
Other comprehensive loss:
Foreign currency translation adjustments	11,498		5,022
Change in defined benefit plans	7,226		(3,627)
Loss on cash flow derivative hedges	(259,949)		(13,264)
Total other comprehensive loss	(241,225)		(11,869)
Comprehensive Loss	$	(208,257)	$	(1,436,423)

Quarter Ended September 30,
2017 2016
Passenger ticket revenues $ 1,893,152
$ 1,899,956
Onboard and other revenues 676,392
663,785
Total revenues 2,569,544
2,563,741
Cruise operating expenses:

Commissions, transportation and other 409,597
400,933
Onboard and other 157,041
159,887
Payroll and related 210,764
214,081
Food 126,223
125,732
Fuel 160,752
178,772
Other operating 253,892
260,718
Total cruise operating expenses 1,318,269
1,340,123
Marketing, selling and administrative expenses 273,637
259,327
Depreciation and amortization expenses 240,150
229,328
Operating Income 737,488
734,963
Other income (expense):

Interest income 4,693
6,472
Interest expense, net of interest capitalized (73,233 ) (82,610 )
Equity investment income 85,120
46,539
Other expense (1,226 ) (12,107 )
15,354
(41,706 )
Net Income $ 752,842
$ 693,257
Earnings per Share:

Basic $ 3.51
$ 3.23
Diluted $ 3.49
$ 3.21
Weighted-Average Shares Outstanding:

Basic 214,694
214,819
Diluted 215,824
215,667
Comprehensive Income

Net Income $ 752,842
$ 693,257
Other comprehensive income (loss):

Foreign currency translation adjustments 5,889
4,043
Change in defined benefit plans (1,990 ) (5,051 )
Gain on cash flow derivative hedges 230,245
95,536
Total other comprehensive income 234,144
94,528
Comprehensive Income $ 986,986
$ 787,785

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

~~Table of Contents~~

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~INCOME (LOSS)~~LOSS

(unaudited; in thousands, except per share data)


	Nine Months Ended September 30,
	2022		2021
Passenger ticket revenues	$	4,091,035	$	323,782
Onboard and other revenues	2,145,513		226,104
Total revenues	6,236,548		549,886
Cruise operating expenses:
Commissions, transportation and other	964,256		72,917
Onboard and other	450,225		55,782
Payroll and related	981,128		530,250
Food	450,376		74,618
Fuel	779,873		219,058
Other operating	1,206,036		569,383
Total cruise operating expenses	4,831,894		1,522,008
Marketing, selling and administrative expenses	1,138,571		867,021
Depreciation and amortization expenses	1,046,094		959,512
Impairment and credit losses (recoveries)	(584)		39,934
Operating Loss	(779,427)		(2,838,589)
Other income (expense):
Interest income	21,765		13,317
Interest expense, net of interest capitalized	(932,552)		(1,007,986)
Equity investment income (loss)	29,759		(137,044)
Other income	4,699		66,771
	(876,329)		(1,064,942)
Net Loss	$	(1,655,756)	$	(3,903,531)
Loss per Share:
Basic	$	(6.49)	$	(15.56)
Diluted	$	(6.49)	$	(15.56)
Weighted-Average Shares Outstanding:
Basic	254,953		250,808
Diluted	254,953		250,808
Comprehensive Loss
Net Loss	$	(1,655,756)	$	(3,903,531)
Other comprehensive (loss) income:
Foreign currency translation adjustments	31,958		11,255
Change in defined benefit plans	34,991		3,748
(Loss) Gain on cash flow derivative hedges	(148,541)		48,514
Total other comprehensive (loss) income	(81,592)		63,517
Comprehensive Loss	$	(1,737,348)	$	(3,840,014)

Nine Months Ended September 30,
2017 2016
Passenger ticket revenues $ 4,892,760
$ 4,794,653
Onboard and other revenues 1,880,618
1,792,145
Total revenues 6,773,378
6,586,798
Cruise operating expenses:

Commissions, transportation and other 1,060,176
1,060,391
Onboard and other 395,472
399,739
Payroll and related 636,861
671,955
Food 369,198
371,759
Fuel 508,914
531,283
Other operating 780,257
857,161
Total cruise operating expenses 3,750,878
3,892,288
Marketing, selling and administrative expenses 874,957
852,435
Depreciation and amortization expenses 710,836
661,712
Operating Income 1,436,707
1,180,363
Other income (expense):

Interest income 16,756
14,875
Interest expense, net of interest capitalized (230,182 ) (226,803 )
Equity investment income 120,359
94,832
Other expense (including a $21.7 million loss related to the first quarter 2016 elimination of the Pullmantur reporting lag) (6,546 ) (40,965 )
(99,613 ) (158,061 )
Net Income $ 1,337,094
$ 1,022,302
Earnings per Share:

Basic $ 6.22
$ 4.74
Diluted $ 6.19
$ 4.72
Weighted-Average Shares Outstanding:

Basic 214,882
215,663
Diluted 215,905
216,575
Comprehensive Income

Net Income $ 1,337,094
$ 1,022,302
Other comprehensive income (loss):

Foreign currency translation adjustments 14,210
8,423
Change in defined benefit plans (6,280 ) (12,148 )
Gain on cash flow derivative hedges 381,660
254,624
Total other comprehensive income 389,590
250,899
Comprehensive Income $ 1,726,684
$ 1,273,201

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

~~Table of Contents~~

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)


	As of
	September 30,		December 31,
	2022		2021
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	1,566,213	$	2,701,770
Trade and other receivables, net of allowances of $10,542 and $13,411 at September 30, 2022 and December 31, 2021, respectively	534,414		408,067
Inventories	237,186		150,224
Prepaid expenses and other assets	435,709		286,026
Derivative financial instruments	63,524		54,184
Total current assets	2,837,046		3,600,271
Property and equipment, net	27,693,240		25,907,949
Operating lease right-of-use assets	554,424		542,128
Goodwill	809,201		809,383
Other assets, net of allowances of $72,160 and $86,781 at September 30, 2022 and December 31, 2021, respectively	1,570,279		1,398,624
Total assets	$	33,464,190	$	32,258,355
Liabilities and Shareholders’ Equity
Current liabilities
Current portion of long-term debt	$	3,945,145	$	2,243,131
Current portion of operating lease liabilities	75,179		68,922
Accounts payable	623,565		545,978
Accrued interest	274,022		251,974
Accrued expenses and other liabilities	858,936		887,575
Derivative financial instruments	242,648		127,236
Customer deposits	3,774,499		3,160,867
Total current liabilities	9,793,994		7,285,683
Long-term debt	19,384,226		18,847,209
Long-term operating lease liabilities	542,576		534,726
Other long-term liabilities	537,970		505,181
Total liabilities	30,258,766		27,172,799

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; 283,198,625 and 282,703,246 shares issued, September 30, 2022 and December 31, 2021, respectively)	2,832		2,827
Paid-in capital	7,270,521		7,557,297
(Accumulated deficit) retained earnings	(1,207,223)		302,276
Accumulated other comprehensive loss	(792,477)		(710,885)
Treasury stock (28,018,385 and 27,882,987 common shares at cost, September 30, 2022 and December 31, 2021, respectively)	(2,068,229)		(2,065,959)
Total shareholders’ equity	3,205,424		5,085,556
Total liabilities and shareholders’ equity	$	33,464,190	$	32,258,355

As of
September 30, December 31,
2017 2016
(unaudited)
Assets

Current assets

Cash and cash equivalents $ 139,950
$ 132,603
Trade and other receivables, net 285,332
291,899
Inventories 119,949
114,087
Prepaid expenses and other assets 200,125
209,716
Derivative financial instruments 52,796
—
Total current assets 798,152
748,305
Property and equipment, net 19,688,872
20,161,427
Goodwill 288,517
288,386
Other assets 1,323,773
1,112,206
$ 22,099,314
$ 22,310,324
Liabilities and Shareholders’ Equity

Current liabilities
Current portion of long-term debt $ 1,515,708
$ 1,285,735
Accounts payable 384,536
305,313
Accrued interest 92,914
46,166
Accrued expenses and other liabilities 748,442
692,322
Derivative financial instruments 89,333
146,592
Customer deposits 2,226,179
1,965,473
Total current liabilities 5,057,112
4,441,601
Long-term debt 6,076,499
8,101,701
Other long-term liabilities 530,215
645,610
Commitments and contingencies (Note 7)

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; 235,134,180 and 234,613,486 shares issued, September 30, 2017 and December 31, 2016, respectively) 2,351
2,346
Paid-in capital 3,375,969
3,328,517
Retained earnings 8,862,369
7,860,341
Accumulated other comprehensive loss (526,894 ) (916,484 )
Treasury stock (21,059,191 and 20,019,237 common shares at cost, September 30, 2017 and December 31, 2016, respectively) (1,278,307 ) (1,153,308 )
Total shareholders’ equity 10,435,488
9,121,412
$ 22,099,314
$ 22,310,324

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

~~Table of Contents~~

~~ROYAL CARIBBEAN CRUISES LTD.~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(unaudited; in thousands)~~


ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
	Nine Months Ended September 30,
	2022		2021
Operating Activities
Net Loss	$	(1,655,756)	$	(3,903,531)
Adjustments:
Depreciation and amortization	1,046,094		959,512
Impairment and credit losses (recoveries)	(584)		39,934
Net deferred income tax benefit	(14,345)		(31,395)
Loss (gain) on derivative instruments not designated as hedges	175,686		(11,560)
Share-based compensation expense	24,285		55,435
Equity investment (income) loss	(29,759)		137,044
Amortization of debt issuance costs	118,307		94,511
Amortization of debt discounts and premiums	11,650		93,517
Loss on extinguishment of debt	16,449		138,759
Changes in operating assets and liabilities:
Increase in trade and other receivables, net	(173,555)		(225,535)
Increase in inventories	(86,962)		(26,711)
Increase in prepaid expenses and other assets	(108,429)		(123,935)
Increase in accounts payable	79,249		107,215
Increase (decrease) in accrued interest	22,053		(3,685)
Decrease in accrued expenses and other liabilities	(18,973)		(5,911)
Increase in customer deposits	613,632		1,031,930
Other, net	(113,783)		1,637
Net cash used in operating activities	(94,741)		(1,672,769)
Investing Activities
Purchases of property and equipment	(2,543,266)		(1,654,271)
Cash received on settlement of derivative financial instruments	42,958		27,497
Cash paid on settlement of derivative financial instruments	(389,387)		(54,916)
Investments in and loans to unconsolidated affiliates	(614)		(70,084)
Cash received on loans to unconsolidated affiliates	14,030		25,647
Proceeds from the sale of property and equipment and other assets	66		175,439
Other, net	5,262		(9,546)
Net cash used in investing activities	(2,870,951)		(1,560,234)

Nine Months Ended September 30,
2017 2016
Operating Activities

Net income $ 1,337,094
$ 1,022,302
Adjustments:

Depreciation and amortization 710,836
661,712
Net deferred income tax expense 516
1,601
(Gain) loss on derivative instruments not designated as hedges (56,836 ) 6,353
Share-based compensation expense 52,469
22,041
Equity investment income (120,359 ) (94,832 )
Amortization of debt issuance costs 37,562
39,425
Gain on sale of property and equipment (30,902 ) —
Changes in operating assets and liabilities:

Decrease in trade and other receivables, net 16,245
9,823
Increase in inventories (6,131 ) (6,379 )
Decrease (increase) in prepaid expenses and other assets 10,211
(8,794 )
Increase (decrease) in accounts payable 77,436
(17,313 )
Increase in accrued interest 46,748
56,787
Increase in accrued expenses and other liabilities 12,870
17,929
Increase in customer deposits 256,855
197,277
Dividends received from unconsolidated affiliates 107,267
71,370
Other, net 2,720
21,650
Net cash provided by operating activities 2,454,601
2,000,952
Investing Activities

Purchases of property and equipment (387,335 ) (2,313,831 )
Cash received (paid) on settlement of derivative financial instruments 57,004
(172,878 )
Investments in and loans to unconsolidated affiliates —
(8,611 )
Cash received on loans to unconsolidated affiliates 31,633
22,470
Proceeds from the sale of property and equipment 230,000
—
Other, net ⁽¹⁾
(9,313 ) (44,709 )
Net cash used in investing activities (78,011 ) (2,517,559 )
Financing Activities

Debt proceeds 3,682,000
6,038,560
Debt issuance costs (25,987 ) (83,793 )
Repayments of debt (5,598,198 ) (4,818,262 )
Purchases of treasury stock (124,999 ) (299,959 )
Dividends paid (309,162 ) (243,557 )
Proceeds from exercise of common stock options 2,499
1,782
Other, net 4,137
2,179
Net cash (used in) provided by financing activities (2,369,710 ) 596,950
Effect of exchange rate changes on cash 467
(23,480 )
Net increase in cash and cash equivalents 7,347
56,863
Cash and cash equivalents at beginning of period 132,603
121,565
Cash and cash equivalents at end of period $ 139,950
$ 178,428
Supplemental Disclosure

Cash paid during the period for:

Interest, net of amount capitalized $ 147,789
$ 140,335
Non-cash Investing Activities

Notes receivable issued upon sale of property and equipment $ —
$ 213,042

⁽¹⁾ ~~Amount includes $26.0 million in 2016 related to cash included in the divestiture of our 51% interest in Pullmantur Holdings.~~

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

~~Table of Contents~~


ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
	Nine Months Ended September 30,
	2022		2021
Financing Activities
Debt proceeds	7,207,566		4,144,077
Debt issuance costs	(222,787)		(159,147)
Repayments of debt	(5,135,323)		(2,212,510)
Premium on repayment of debt	—		(135,372)
Repayments of commercial paper notes	—		(414,570)
Proceeds from common stock issuances	—		1,621,860
Other, net	(16,556)		(5,779)
Net cash provided by financing activities	1,832,900		2,838,559
Effect of exchange rate changes on cash and cash equivalents	(2,765)		(704)
Net decrease in cash and cash equivalents	(1,135,557)		(395,148)
Cash and cash equivalents at beginning of period	2,701,770		3,684,474
Cash and cash equivalents at end of period	$	1,566,213	$	3,289,326
Supplemental Disclosure
Cash paid during the period for:
Interest, net of amount capitalized	$	752,623	$	630,740
Non-cash Investing Activities
Notes receivable issued upon sale of property and equipment and other assets	$	—	$	16,000
Purchase of property and equipment included in accounts payable and accrued expenses and other liabilities	$	26,026	$	22,925
Acquisition of property and equipment from assumed debt	$	275,000	$	—
Non-cash Financing Activity
Debt related to acquisition of property and equipment	$	275,000	$	—

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

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(unaudited; in thousands)


	Common Stock		Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Treasury Stock		Total Shareholders' Equity
Balance at July 1, 2022	$	2,831	$	7,254,939	$	(1,240,191)	$	(551,252)	$	(2,068,229)	$	3,398,098
Activity related to employee stock plans	1		15,582		—		—		—		15,583




Changes related to cash flow derivative hedges	—		—		—		(259,949)		—		(259,949)
Change in defined benefit plans	—		—		—		7,226		—		7,226
Foreign currency translation adjustments	—		—		—		11,498		—		11,498

Net Income	—		—		32,968		—		—		32,968
Balance at September 30, 2022	$	2,832	$	7,270,521	$	(1,207,223)	$	(792,477)	$	(2,068,229)	$	3,205,424


	Common Stock		Paid-in Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Loss		Treasury Stock		Total Shareholders' Equity
Balance at January 1, 2022	$	2,827	$	7,557,297	$	302,276	$	(710,885)	$	(2,065,959)	$	5,085,556
Activity related to employee stock plans	5		20,864		37		—		—		20,906

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


Changes related to cash flow derivative hedges	—		—		—		(148,541)		—		(148,541)
Change in defined benefit plans	—		—		—		34,991		—		34,991
Foreign currency translation adjustments	—		—		—		31,958		—		31,958
Purchase of treasury stock	—		—		—		—		(2,270)		(2,270)
Net Loss	—		—		(1,655,756)		—		—		(1,655,756)
Balance at September 30, 2022	$	2,832	$	7,270,521	$	(1,207,223)	$	(792,477)	$	(2,068,229)	$	3,205,424

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

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(unaudited; in thousands)


	Common Stock		Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Shareholders' Equity
Balance at July 1, 2021	$	2,826	$	7,527,305	$	3,083,798	$	(663,955)	$	(2,065,959)	$	7,884,015
Activity related to employee stock plans	1		20,045		—		—		—		20,046
Common stock issuance	—		(140)		—		—		—		(140)
Changes related to cash flow derivative hedges	—		—		—		(13,264)		—		(13,264)
Change in defined benefit plans	—		—		—		(3,627)		—		(3,627)
Foreign currency translation adjustments	—		—		—		5,022		—		5,022
Net Loss attributable to Royal Caribbean Cruises Ltd.	—		—		(1,424,554)		—		—		(1,424,554)
Balance at September 30, 2021	$	2,827	$	7,547,210	$	1,659,244	$	(675,824)	$	(2,065,959)	$	6,467,498


	Common Stock		Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Shareholders' Equity
Balance at January 1, 2021	$	2,652	$	5,998,574	$	5,562,775	$	(739,341)	$	(2,063,991)	$	8,760,669
Activity related to employee stock plans	5		52,799		—		—		—		52,804
Common stock issuance	170		1,495,837		—		—		—		1,496,007
Changes related to cash flow derivative hedges	—		—		—		48,514		—		48,514
Change in defined benefit plans	—		—		—		3,748		—		3,748
Foreign currency translation adjustments	—		—		—		11,255		—		11,255
Purchase of treasury stock	—		—		—		—		(1,968)		(1,968)
Net Loss attributable to Royal Caribbean Cruises Ltd.	—		—		(3,903,531)		—		—		(3,903,531)
Balance at September 30, 2021	$	2,827	$	7,547,210	$	1,659,244	$	(675,824)	$	(2,065,959)	$	6,467,498

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

ROYAL CARIBBEAN CRUISES LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

As used in this Quarterly Report on Form 10-Q,the terms “Royal Caribbean,” "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”~~Cruises,” and ~~“Azamara Club Cruises”~~"Silversea Cruises" refer to our ~~wholly-owned~~wholly owned global cruise brands. Throughout this Quarterly Report on Form 10-Q, we also refer to ~~regional~~our partner brands in which we hold an ownership interest, including “TUI ~~Cruises,” “Pullmantur”~~Cruises” and ~~“SkySea~~"Hapag-Lloyd Cruises.”" However, because these ~~regional~~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 Quarterly Report on Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, ~~2016, including the audited consolidated financial statements and related notes included therein.~~

2021.

This Quarterly Report on Form 10-Q 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.

Note 1. General

~~Note 1. General~~

Description of Business

We are a global cruise company. ~~As of September 30, 2017, we~~We own and operate three global cruise brands: Royal Caribbean International, Celebrity Cruises and ~~Azamara Club~~Silversea Cruises (collectively, our "Global Brands"). We also own a 50% joint venture interest in TUI Cruises GmbH ("TUIC"), which operates the German ~~brand~~brands TUI Cruises ~~a 49% interest in the Spanish brand Pullmantur~~ and ~~have a minority interest in the Chinese brand SkySea~~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 have a combined fleet of 64 ships as of September 30, 2022. Our ships offer a selection of worldwide itineraries that call on more than 1,000 destinations on all seven continents.

Management's Plan and Liquidity

~~Prior~~During 2021, we restarted our global cruise operations in a phased manner, following our voluntary suspension of global cruise operations that commenced in March of 2020 in response to the COVID-19 pandemic. Since then, we have steadily increased the number of ships that have returned to service, with our full fleet in service by June 2022. Effective July 18, 2022, the U.S. Centers for Disease Control and Prevention ended its COVID-19 Program for Cruise Ships, which has allowed us to modify our health and safety protocols to more closely align with the broader travel industry. We announced the easing of testing and vaccination protocols for most itineraries on August 23, 2022.

Since the start of the pandemic, we have implemented a number of proactive measures to mitigate the financial and operational impacts of COVID-19 and to manage our liquidity. As part of our liquidity management, we rely on estimates of our future liquidity requirements, which include numerous assumptions that are subject to various risks and uncertainties. The principal assumptions used to estimate our future liquidity requirements consist of:

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

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

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

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

As of September 30, 2022, we had liquidity of $3.1 billion, including $0.8 billion of undrawn revolving credit facility capacity, $1.6 billion in cash and cash equivalents, and a $0.7 billion commitment for a 364-day term loan facility available to draw on at any time on or prior to August ~~2016, Pullmantur Holdings S.L. ("Pullmantur Holdings"),~~11, 2023. Our revolving credit facilities were utilized through a combination of amounts drawn and letters of credit issued under the ~~parent company~~facilities as of September 30, 2022.

During the ~~Pullmantur brand (formerly known as Royal Caribbean Holdings de España S.L.), was wholly owned by us. Effective July 31, 2016,~~nine months ended September 30, 2022, we ~~sold 51%~~entered into various transactions to refinance $6.9 billion of 2022 and 2023 debt maturities. Refer to Note 7. Debt for further information regarding these transactions.

Based on our ~~interest in Pullmantur Holdings. We retain a 49% interest in Pullmantur Holdings~~refinancing actions as well as ~~full ownership~~our present financial condition and the aforementioned assumptions on liquidity, we believe that we have sufficient financial resources to fund our obligations for at least the next twelve months from the issuance of these financial statements. Additionally, we will continue to pursue various opportunities to raise additional

capital to fund obligations associated with future debt maturities and/or to extend the ~~four vessels currently operated by the Pullmantur brand under bareboat charter arrangements. We account~~maturity dates associated with our existing indebtedness or facilities. Actions to raise capital may include issuances of debt, convertible debt or equity in private or public transactions or entering into new or extended credit facilities.

As of September 30, 2022, we were in compliance with our financial covenants and we estimate we will be in compliance for the ~~bareboat charters of~~next twelve months. If the ~~vessels~~Company is unable to ~~Pullmantur Holdings as~~comply with the applicable financial covenants, including maintaining the applicable minimum liquidity requirement, it could have a significant adverse effect on the Company’s business, financial condition and operating ~~leases. We also provide certain ship management services and other related services to Pullmantur Holdings.~~

results.

Basis for Preparation of Consolidated Financial Statements

The unaudited consolidated financial statements are presented pursuant to the rules and regulations of the Securities and Exchange Commission. In our opinion, these statements include all adjustments necessary for a fair statement of the results of the interim periods reported herein. Adjustments consist only of normal recurring items, except for any items discussed in the notes below. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted as permitted by such Securities and Exchange Commission rules and regulations. Estimates are required for the preparation of financial statements in accordance with ~~GAAP and actual~~these principles. Actual results could differ from these estimates. Refer to Note 2. 2. Summary of Significant Accounting Policies in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2021 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 5. 6. Other Assets for further information regarding our variable interest entities. For affiliates we do not control but over which we have significant influence on financial and operating policies, usually evidenced by a direct ownership interest from 20% to 50%, the investment is accounted for using the equity method.

Effective March 19, 2021, we sold our wholly-owned brand, Azamara Cruises ("Azamara"), including its three-ship fleet and associated intellectual property, to Sycamore Partners for $201 million, before closing adjustments. The March 2021 sale of Azamara did not represent a strategic shift that will have a major effect on our operations and financial results, as we continue to provide similar itineraries to and source passengers from the markets served by the Azamara business. Therefore, the sale of Azamara did not meet the criteria for discontinued operations reporting. Effective March 19, 2021, we no longer consolidate Azamara's balance sheet nor recognize its results of operations in our consolidated financial statements. We recognized an immaterial gain on the sale during the quarter ended March 31, 2021 and have agreed to provide certain transition services to Azamara for a period of time for a fee.

Prior to ~~January~~October 1, ~~2016,~~2021, we consolidated the operating results of ~~Pullmantur Holdings~~Silversea Cruises on a ~~two-month~~three-month reporting lag to allow for more timely preparation of our consolidated financial statements. Effective ~~January~~October 1, ~~2016,~~2021, we eliminated the ~~two-month~~three- month reporting lag to reflect ~~Pullmantur Holding's~~Silversea Cruises' financial position, results of operations and cash flows concurrently and consistently with the fiscal calendar of the Company ~~(the "elimination~~("elimination of the ~~Pullmantur~~Silversea reporting lag"). The elimination of the ~~Pullmantur~~Silversea reporting lag ~~represented~~represents a change in accounting principle, which we ~~believed~~believe to be preferable, because it ~~provided~~provides more current

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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 ~~Pullmantur~~ reporting lag was immaterial to prior periods and was immaterial for our fiscal year ended December 31, ~~2016.~~2021. As a result, we have accounted for this change in accounting principle in our consolidated results for the ~~first~~ quarter ~~of 2016.~~and year ended December 31, 2021. Accordingly, the results of ~~Pullmantur Holdings for November~~Silversea Cruises from July 1, 2022, through September 30, 2022 and ~~December 2015~~from January 1, 2022 through September 30, 2022 are included in our consolidated statement of comprehensive ~~income (loss)~~loss for the quarter ended and nine months ended September 30, ~~2016.~~2022, respectively. The ~~effect~~results of ~~this change was a decrease to net income of $21.7 million, which has been reported within~~ ~~Other expense~~Silversea Cruises from April 1, 2021 through June 30, 2021 and from October 1, 2020 through June 30, 2021 are included in our consolidated ~~statements~~statement of comprehensive ~~income (loss)~~loss for the quarter ended and nine months ended September 30, ~~2016.~~2021, respectively.

Note 2.2. Summary of Significant Accounting Policies

Adoption of Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU") No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) ("ASU 2020-06"), which simplifies the accounting for convertible instruments. The guidance removes certain accounting models which separate the embedded conversion features from the host contract for convertible instruments, requiring bifurcation only if the convertible debt feature qualifies as a derivative under Accounting Standards Codification ("ASC") 815, Derivatives and Hedging ("ASC 815")or for convertible debt issued at a substantial

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. In addition, the guidance eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. The guidance also decreases interest expense due to the reversal of the remaining non-cash convertible debt discount. On January 1, 2022, we adopted this pronouncement using the modified retrospective approach to recognize our convertible notes as single liability instruments given they do not qualify as derivatives under ASC 815, nor were they issued at a substantial premium. Accordingly, as of January 1, 2022, we recorded a $161.4 million increase to debt, primarily as a result of the reversal of the remaining non-cash convertible debt discount, as well as a reduction of $307.6 million to additional paid in capital, which resulted in a cumulative effect on adoption of approximately $146.2 million to increase retained earnings.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848), which provides optional expedients and exceptions to the current guidance on contract modifications and hedging relationships to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates. Subsequently, in January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848), which presents amendments to clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The guidance in both ASUs was effective upon issuance and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. We adopted the new guidance during the quarter ended September 30, 2022. The impact to our consolidated financial statements, if any, will be dependent on the timing and terms of any future contract modifications related to a change in reference rate.

Recent Accounting Pronouncements

~~Revenue from Contracts with Customers~~

In ~~May 2014, amended GAAP guidance was~~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 clarify the principles used to recognize revenue for all entities. The guidance also requires more detailed disclosures and provides additional guidance for transactions that were not comprehensively addressed in the prior accounting guidance. This guidance must be applied using oneallow a user of ~~two retrospective application methods and will be effective for our annual reporting period beginning after December 15, 2017, including interim periods therein.~~

We have made significant progress toward completing our evaluation of potential changes to our core revenues using the five-step model supported by the new revenue standard. Currently, we are in the process of finalizing our analysis and quantifying the effects of adoption, if any, on how we account for our customer loyalty programs and promotional offerings, as the new standard has changed the method of accounting for loyalty points from a cost-based model to a revenue deferral model using a relative stand-alone selling price method. We expect to complete this analysis and conclude our evaluation on the impact of adopting this new standard on our consolidated financial statements to understand the program’s nature, activity during the ~~fourth quarter of fiscal 2017. Based on our assessment~~period, changes from period to ~~date, we do not expect~~period, and potential magnitude. This ASU is expected to improve financial reporting by requiring new disclosures about the ~~adoption~~programs, thereby allowing financial statement users to better consider the effect of the new standard to materially change the timing of recognition of our core revenues, but we do anticipate enhancing our disclosures with respect to our revenue recognition policies in compliance with the new standard.

~~Upon adoption, we intend to elect the modified retrospective method.~~programs on an entity’s working capital, liquidity, and cash flows. This will involve applying the guidance retrospectively only to the most current period presented in the consolidated financial statements and recognizing the cumulative effect of initially applying the guidance as an adjustment to the January 1, 2018 opening balance of retained earnings.

~~Leases~~

In February 2016, amended GAAP guidance was issued to increase the transparency and comparability of lease accounting among organizations. For leases with a term greater than 12 months, the amendments require the lease rights and obligations arising from the leasing arrangements, including operating leases, to be recognized as assets and liabilities on the balance sheet. The amendments also expand the required disclosures surrounding leasing arrangements. The guidance must be applied using a retrospective application method and will beASU is effective ~~for financial statements issued~~ for fiscal years beginning after December 15, ~~2018 and interim periods within those years. Early adoption~~2022, except for the amendment on roll forward information which is ~~permitted.~~effective for fiscal years beginning after December 15, 2023. We are currently evaluating the impact of the ~~adoption of this newly issued~~new guidance on the disclosures to our consolidated financial statements.

~~Classification~~

Note 3. Revenues

Revenue Recognition

Revenues are measured based on consideration specified in our contracts with customers and are recognized as the related performance obligations are satisfied.

The majority of ~~Certain Cash Receipts~~our revenues are derived from passenger cruise contracts which are reported within Passenger ticket revenues in our consolidated statements of comprehensive 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 ~~Cash Payments~~recognize revenue over the duration of each cruise, which generally ranges from two to 24 nights.

In August 2016, amended GAAP guidance was issued to clarify how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments are aimed at reducing the existing diversity in practice. The guidance should be applied using a retrospective transition method to each period presented and will be effective for annual periods beginning after December 15, 2017 and interim periods within those annual periods. Early adoption is permitted, including adoption in an interim period. We intend to adopt the guidance on the date of initial application, January 1, 2018. The adoption of this newly issued guidance is not expected to have a material impactPassenger ticket revenues include charges to our ~~consolidated financial statements.~~

~~Intra-Entity Transfers of Assets Other Than Inventory~~

In October 2016, amended GAAP guidance was issued that requires the income tax consequences of an intra-entity transfer of an asset, other than inventory, to be recognized at the time that the transfer occurs, rather than when the asset is sold to an outside party. The new guidance is effectiveguests for annual and interim reporting periods beginning after December 15, 2017. Early adoption is permitted as of the beginning of an annual period for which financial statements have not been issued. The guidance is required to be adopted retrospectively by recording a cumulative-effect adjustment to retained earnings as of the beginning of

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~~the adoption period. The adoption of this newly issued guidance is not expected to have a material impact to our consolidated financial statements.~~

~~Service Concession Arrangements~~

In May 2017, amended GAAP guidance was issued to clarify who should be viewed as the customer under service concession arrangements. A service concession arrangement is an arrangement under which a public sector entity (“grantor”), such as a Port Authority, grants a private entity (“operator”), such as the Company, the right to operate the grantor's infrastructure for a specified period of time. The amended guidance will require the Company to evaluate the relationship with the grantor and identify the multiple performance obligations that may exist under these concession arrangements, including consideration of construction services that may be performed, operational services, and any other maintenance or ancillary services performed under the service concession. In addition, the amended guidance will require that all revenue streams identified under such arrangements be evaluated with the grantor as the customer, irrespective of whether some of the revenues are paid by third-party users of the infrastructure under concession. The clarification will enable a more consistent application of the new Revenue from Contracts with Customers guidance, which along with this clarification guidance, will be effective for our annual reporting period beginning after December 15, 2017, including interim periods therein. This guidance must be applied using one of two retrospective application methods. We are currently evaluating the impact of the adoption of this newly issued guidance to our consolidated financial statements.

~~Derivatives and Hedging~~

In August 2017, amended GAAP guidance was issued to simplify and improve the financial reporting of hedging relationships to better portray the economic results of an entity's risk management activities in its financial statements. In addition to changes in designation and measurement for qualifying hedge relationships, the guidance requires an entity to report the earnings effect of the hedging instrument in the same income statement line item in which the earnings effect of the hedged item is reported. As a result, hedge ineffectiveness will no longer be separately measured or reported. This guidance will be effective for our annual reporting period beginning after December 15, 2018, including interim periods therein. Early adoption is permitted in any interim period after issuance of this guidance. All transition requirements and elections should be applied to hedging relationships existing on the date of adoption. The effect of the adoption should be reflected as of the beginning of the fiscal year of adoption. We are currently evaluating the impact of the adoption of this newly issued guidance to our consolidated financial statements.

~~Other~~

~~Revenues and expenses include~~ port costs that vary with ~~guest~~passenger head counts. These type of port costs, along with port costs that do not vary by passenger head counts, are included in our cruise operating expenses. The amounts of ~~such~~ port costs charged to our guests and included in within Passenger ticket revenues on a gross basis were ~~$135.9~~$210.2 million and ~~$158.7~~$29.3 million for the ~~third~~ quarters ~~of 2017~~ended September 30, 2022 and ~~2016,~~2021, respectively, and ~~$413.7~~$446.3 million and ~~$443.1~~$33.9 million for the nine months ended September 30, ~~2017~~2022 and ~~2016,~~2021, 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 and recognize revenue over the duration of the related cruise.

~~Reclassifications~~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.

Disaggregated Revenues

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


	Quarter Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Revenues by itinerary
North America (1)	$	1,638,226	$	279,339	$	3,871,356	$	290,971
Asia/Pacific	46,137		22,651		125,986		71,854
Europe	1,002,936		111,054		1,531,495		114,819
Other regions(2)	169,200		8,561		408,222		11,270
Total revenues by itinerary	2,856,499		421,605		5,937,059		488,914
Other revenues(3)	136,576		35,353		299,489		60,972
Total revenues	$	2,993,075	$	456,958	$	6,236,548	$	549,886

(1)Includes the United States, Canada, Mexico and the Caribbean.

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

(3) Includes revenues primarily related to cancellation fees, vacation protection insurance, pre- and post-cruise tours and fees for operating certain port facilities. Amounts also include revenues related to procurement and management related services we perform on behalf of our unconsolidated affiliates. Refer to Note 6. 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 ~~third quarter~~quarters and nine months ended September 30, ~~2016, restructuring charges of $1.9 million~~2022 and ~~$6.6 million, respectively, have been reclassified into~~ ~~Marketing, selling~~2021, our guests were sourced from the following areas:


	Quarter Ended September 30,
	2022		2021
Passenger ticket revenues:
United States	71	%	74	%
United Kingdom	11	%	14	%
All other countries (1)	18	%	12	%



	Nine Months Ended September 30,
	2022		2021
Passenger ticket revenues:
United States	75	%	67	%
United Kingdom	9	%	13	%
Singapore	2	%	13	%
All other countries (1)	14	%	7	%

(1)No other individual country's revenue exceeded 10% for the quarters and ~~administrative expenses~~ ~~in the consolidated statements of comprehensive income (loss) in order to conform to the current year presentation.~~

~~For the~~ nine months ended September 30, ~~2016, share-based compensation expense~~2022 and 2021.

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 ~~$22.0 million, equity investment income~~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 ~~$94.8~~the cruise. 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. Customer deposits presented in our consolidated balance sheets include contract liabilities of $1.6 billion and $0.8 billion as of September 30, 2022 and December 31, 2021, respectively.

We have provided flexibility to guests with bookings on sailings cancelled due to COVID-19 by allowing guests to receive future cruise credits (“FCC”). As of September 30, 2022, our customer deposit balance includes approximately $0.5 billion of unredeemed FCCs. Given the uncertainty of travel demand caused by COVID-19 and lack of comparable historical experience of FCC redemptions, we are unable to estimate the number of FCCs that will not be used in future periods and get recognized as breakage. 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 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.

We have contract assets that are conditional rights to consideration for satisfying the construction services performance obligations under a service concession arrangement. As of September 30, 2022 and December 31, 2021, our contract assets were $139.6 million and ~~amortization~~$52.9 million, respectively, and were included within Other assets in our consolidated balance sheets. Given the short duration of ~~debt issuance costs~~our cruises and our collection terms, we do not have any other significant contract assets.

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

Prepaid travel advisor commissions are an incremental cost of ~~$22.9~~obtaining contracts with customers that we recognize as an asset and include within Prepaid expenses and other assets in our consolidated balance sheets. Prepaid travel advisor commissions were $78.6 million ~~have been reclassified~~ as of September 30, 2022 and $75.4 million as of December 31, 2021. Substantially all of our prepaid travel advisor commissions at December 31, 2021 were expensed and reported primarily within Commissions, transportation and other in ~~the~~our consolidated statements of ~~cash flows from~~ ~~Other, net~~ to ~~Share-based compensation expense~~, ~~Equity investment income~~ ~~and~~ ~~Amortization of debt issuance costs, respectively, within~~ ~~Net cash provided by operating activities~~ ~~in order to conform to the current year presentation.~~

~~Additionally,~~comprehensive loss for the nine months ended September 30, ~~2016, amortization of debt issuance costs of $11.3 million and $5.3 million, have been reclassified from~~ ~~Decrease(increase) in prepaid expenses and other assets~~ ~~and from~~ ~~Increase in accrued expenses and other liabilities, respectively, in the consolidated statements of cash flows to~~ ~~Amortization of debt issuance costs, within~~ ~~Net cash provided by operating activities~~ ~~in order to conform to the current year presentation.~~2022.

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Note 3. 4. Earnings (Loss) Per Share

~~A reconciliation between basic~~Basic and diluted earnings (loss) per share is as follows (in thousands, except per share data):


	Quarter Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net Income (Loss) for basic and diluted loss per share	$	32,968	$	(1,424,554)	$	(1,655,756)	$	(3,903,531)
Weighted-average common shares outstanding	255,071		254,713		254,953		250,808
Dilutive effect of stock-based awards	307		—		—		—
Diluted weighted-average shares outstanding	255,378		254,713		254,953		250,808
Basic earnings (loss) per share	$	0.13	$	(5.59)	$	(6.49)	$	(15.56)
Diluted earnings (loss) per share	$	0.13	$	(5.59)	$	(6.49)	$	(15.56)

Quarter Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Net income for basic and diluted earnings per share $ 752,842
$ 693,257
$ 1,337,094
$ 1,022,302
Weighted-average common shares outstanding 214,694
214,819
214,882
215,663
Dilutive effect of stock options, performance share awards and restricted stock awards 1,130
848
1,023
912
Diluted weighted-average shares outstanding 215,824
215,667
215,905
216,575
Basic earnings per share $ 3.51
$ 3.23
$ 6.22
$ 4.74
Diluted earnings per share $ 3.49
$ 3.21
$ 6.19
$ 4.72

~~There~~Basic earnings (loss) per share is computed by dividing Net Income (Loss) by the weighted-average number of common stock outstanding during each period. Diluted earnings (loss) per share incorporates the incremental shares issuable upon the assumed exercise of stock options and conversion of potentially dilutive securities. If we have a net loss for the period, all potential common shares will be considered antidilutive, resulting in the same basic and diluted net loss per share amounts for those periods. There were noapproximately 30,532,145 and 31,085,736 antidilutive shares for the~~quarters~~quarter and nine ~~month periods~~months ended September 30, ~~2017~~2022, respectively, compared to 339,835 and 433,705 for the quarter and nine months ended September 30, ~~2016.~~2021, respectively.

Effective January 1, 2022, ASU 2020-06 eliminated the treasury stock method and instead required the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share when the instruments may be settled in cash or shares. Under the if-converted method, shares related to our convertible notes, to the extent dilutive, are assumed to be converted into common stock at the beginning of the reporting period. The required use of the if-converted method for our convertible notes did not impact our diluted net earnings (loss) per share for the quarter and nine months ended September 30, 2022 as the if-converted calculation was antidilutive for these periods. For further information regarding the adoption of ASU 2020-06, refer to Note 2. Summary of Significant Accounting Policies.

Note 4.5. Property and Equipment

In ~~March 2017,~~January 2022 and April 2022, we ~~sold~~ ~~Legend~~took delivery of Wonder of the Seasand Celebrity Beyond, respectively. Refer to ~~an affiliate of TUI AG, our joint venture partner in TUI Cruises. The sale resulted in a gain of $30.9 million and is reported within~~ ~~Other operating~~ ~~within~~ ~~Cruise operating expenses~~ ~~in our consolidated statements of comprehensive income (loss)~~Note 7. Debt for further information on the ~~nine months ended September 30, 2017.~~

~~In April 2016, we sold~~ ~~Splendour~~financing for Wonder of the Seasand Celebrity Beyond.

In July 2022, we purchased a ship for our Silversea Cruises brand for $275.0 million, plus transaction fees. The ship is expected to ~~TUI Cruises. Concurrent with~~enter service during the ~~acquisition, TUI Cruises leased~~fourth quarter of 2022. For information regarding the financing of the ship, refer to ~~the same TUI AG affiliate mentioned above, which now operates the ship. The gain recognized did not have a material effect to our consolidated financial statements and was also reported in~~ ~~Other operating~~ ~~within~~ ~~Cruise operating expenses~~ ~~in our consolidated statements of comprehensive income (loss) for the nine months ended September 30, 2016.~~Note 7. Debt.

Note 5.6. 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 have determined that TUI Cruises GmbH ("TUIC"), our 50%-owned joint venture, which operates the ~~brand~~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 is shared between ourselves and TUI AG, our joint venture partner. All the significant operating and financial decisions of TUIC require the consent of both parties, which we believe creates shared power over TUIC. Accordingly, we do not consolidate this entity and account for this investment under the equity method of accounting.

As of September 30, ~~2017,~~2022, the net book value of our investment in ~~TUI Cruises~~TUIC was ~~approximately $582.5~~$412.9 million, primarily consisting of ~~$379.3~~$315.6 million in equity and a loan of ~~€170.4~~€91.2 million, or approximately ~~$201.5~~$89.3 million based on the exchange rate at September 30, ~~2017.~~2022. As of December 31, ~~2016,~~2021, the net book value of our investment in ~~TUI Cruises~~TUIC was ~~approximately $517.0~~$444.4 million, primarily consisting of ~~$323.5~~$322.4 million in equity and a loan of ~~€182.3~~€103.0 million, or approximately ~~$192.4~~$117.2 million based on the exchange rate at December 31, ~~2016.~~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 ~~our joint venture partner in TUI Cruises,~~ and is secured by a first priority mortgage on the ship. ~~Refer to Note 4.~~ ~~Property and Equipment~~ ~~for further information.~~ The majority of these amounts were included within Other assets in our consolidated balance sheets.

~~In addition,~~ During the quarter ended March 31, 2021, we and TUI AG ~~have~~ each ~~guaranteed the repayment by TUI Cruises of 50% of a bank loan. As of September 30, 2017, the outstanding principal amount of the loan was €100.4~~contributed €59.5 million, or approximately ~~$118.7~~$69.9 million based on the exchange rate at ~~September 30, 2017. While this loan matures in May 2022, the lenders have agreed to release each shareholder's guarantee if certain conditions are met by April 2018. The loan amortizes quarterly~~March 31, 2021, of additional equity through a combination of cash contributions and ~~is secured by first mortgages on the~~ ~~Mein Schiff 1~~ ~~and~~ ~~Mein Schiff 2~~ ~~vessels. Based on current facts and circumstances, we do not believe potential obligations under our guarantee~~conversion of ~~this bank loan are probable.~~existing receivables.

Our investment amount, outstanding term loan and the potential obligations under the bank loan guarantee are substantially our maximum exposure to loss in connection with our investment in TUI Cruises. We have determined that we are not the primary beneficiary of TUI Cruises. We believe that the power to direct the activities that most significantly impact TUI Cruises’ economic performance are shared between ourselves and TUI AG. All the significant operating and financial decisions of TUI Cruises require

~~Table of Contents~~

the consent of both parties, which we believe creates shared power over TUI Cruises. Accordingly, we do not consolidate this entity and account for this investment under the equity method of accounting.

~~TUI Cruises~~TUIC has two newbuild ships on order scheduled to be delivered in each of 2018 and 2019. TUI Cruises has in place agreements for the secured financing of each of the ships on order for up to 80% of the contract price. The remaining portion of the contract price of the ships is expected to be funded through an existing €150.0 million bank facility and TUI Cruises’ cash flows from operations. The various ship construction and financing agreements which include certain restrictions on each of our and TUI AG’s ability to reduce our current ownership interest in TUI Cruises below 37.55% through ~~2021.~~

~~We have determined that Pullmantur Holdings, in which we have a 49% noncontrolling interest, is a VIE for which we~~ May 2033. Our investment amount and outstanding term loan 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. Accordingly, following the sale of our 51% interest in Pullmantur Holdings to Springwater Capital LLC ("Springwater"), we do not consolidate this entity and we account for this investment under the equity method of accounting. As of September 30, 2017,substantially our maximum exposure to loss in ~~Pullmantur Holdings was approximately $50.9 million consisting of loans and other receivables. As of December 31, 2016,~~connection with our ~~maximum exposure to loss~~investment in ~~Pullmantur Holdings was approximately $40.3 million consisting of loans and other receivables. These amounts were included within~~ ~~Trade and other receivables, net~~ ~~and~~ ~~Other assets~~ ~~in our consolidated balance sheets.~~TUIC.

In conjunction with the sale of our 51% interest in Pullmantur Holdings, we agreed to provide a non-revolving working capital facility to a Pullmantur Holdings subsidiary in the amount of up to €15.0 million or approximately $17.7 million based on the exchange rate at September 30, 2017. Proceeds of the facility, which may be drawn through July 2018, will bear interest at the rate of 6.5% per annum and are payable through 2022. Springwater has guaranteed repayment of 51% of the outstanding amounts under the facility. As of September 30, 2017, no amounts had been drawn on this facility.

We have determined that Grand Bahama Shipyard Ltd. (“("Grand ~~Bahama”~~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 and certain emergency repairs as may be required. During the ~~quarter and~~ nine months ended September 30, ~~2017,~~2022, we made payments of ~~$1.9~~$7.8 million ~~and $7.5 million, respectively,~~ to Grand Bahama for ship repair and maintenance ~~services.~~services compared to payments of $3.6 million for the nine months ended September 30, 2021, respectively. We have determined that we are not the primary beneficiary of this facility as we do not have the power to direct the activities that most significantly impact the facility’s economic performance. Accordingly, we do not consolidate this ~~entity and we account for this investment under the equity method of accounting.~~ entity.

As of September 30, ~~2017, the net book value of our investment~~2022, we had exposure to credit loss in Grand Bahama ~~was approximately $50.4~~of $8.8 million ~~consisting of $30.8 million in equity and~~related to a loan. The loan ~~of $19.6 million. As of December 31, 2016, the net book value of our investment in~~to Grand Bahama ~~was approximately $47.0 million, consisting of $23.2 million in equity~~matures March 2026 and ~~a loan of $23.8 million. These amounts represent our maximum exposure~~bears interest at LIBOR plus 3.5% to loss related to our investment in Grand Bahama. Our debt agreement with Grand Bahama was amended during the quarter ended March 31, 2016 to extend the maturity by 10 years and increase the applicable interest rate to the lower of (i) LIBOR plus 3.50% and (ii) 5.5%3.75%, capped at 5.75%. Interest payable on the loan is due on a semi-annual basis. During the nine months ended September 30, 2021, we received principal and interest payments of $8.9 million related to a term loan that had fully matured. We ~~continue to classify~~did not receive principal and interest payments during the ~~loan, as modified, as non-accrual status.~~nine months ended September 30, 2022. The outstanding loan balance is in non-accrual status and is included within Other assets in our consolidated balance sheets. In addition, we are currently recognizing our share of net accumulated equity method losses against the carrying value of our loan receivable from Grand Bahama. We monitor credit risk associated with the loan through our participation on Grand Bahama’s board of directors along with our review of Grand Bahama’s financial statements and projected cash flows. ~~Based on this review, we believe the risk of loss associated with the outstanding loan is not probable as of September 30, 2017.~~

We have determined that Skysea Holding International Ltd. ("Skysea Holding"), in which we have a 36% noncontrolling interest, is a VIE. During the second quarter of 2017, we made an equity contribution of $7.1 million which increased our equity interest from 35% to 36%. The contribution was made pursuant to a funding arrangement in which the entity's three largest investors agreed to contribute a total of $30.0 million in proportion to their equity interest in a series of installments. We have determined that we are not the primary beneficiary of Skysea Holding as we do not have the power to direct the activities that most significantly impact the entity's economic performance. Accordingly, we do not consolidate this entity and we account for this investment under the equity method of accounting. In December 2014, we and Ctrip.com International Ltd, which also owns 36% of Skysea Holding, each provided a debt facility to a wholly owned subsidiary of Skysea Holding in the amount of $80.0 million. Interest under these facilities, which mature in January 2030, currently accrues at a rate of 6.5% per annum. The facilities, which are pari passu to each other, are each 100% guaranteed by Skysea Holding and are secured by first priority mortgages on the ship, ~~Golden Era.~~ As of September 30, 2017, the net book value of our investment in Skysea Holding and its subsidiaries was approximately $97.3 million, consisting of $6.5 million in equity and loans and other receivables of $90.8 million. As of December 31, 2016, the net book value of our investment in Skysea Holding and its subsidiaries was approximately $98.0 million, consisting of $9.2 million in equity and loans and other receivables of $88.8 million. The majority of these amounts were included within ~~Other assets~~ ~~in our consolidated balance sheets and represent our maximum exposure to loss related to our investment in Skysea Holding.~~

~~Table of Contents~~

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


	Quarter Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Share of equity income (loss) from investments	$	73,997	$	(29,085)	$	29,759	$	(137,044)
Dividends received (1)	$	—	$	—	$	986	$	—

Quarter Ended September 30, 2017 Quarter Ended September 30, 2016 Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016
Share of equity income from investments $ 85,120
$ 46,539
$ 120,359
$ 94,832
Dividends received $ 49,865
$ 47,491
$ 107,267
$ 71,370
(1) Represents dividends received from our investments accounted for under the equity method of accounting for the quarters and nine months ended September 30, 2022 and September 30, 2021.


	As of September 30, 2022		As of December 31, 2021
Total notes receivable due from equity investments	$	99,845	$	130,587
Less-current portion (1)	18,151		21,508
Long-term portion (2)	$	81,694	$	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, Pullmantur Holdings~~TUIC and Skysea Holding. Additionally, we bareboat charter to Pullmantur Holdings the vessels currently operated by its brands, which were retained by us following the sale of our 51% interest in Pullmantur Holdings. We recorded the following as it relates to these services in our operating results within our consolidated statements of comprehensive income (loss) (in thousands):


	Quarter Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Revenues	$	3,678	$	7,835	$	13,988	$	18,979
Expenses	$	1,672	$	1,749	$	5,189	$	4,738

Credit Losses

We reviewed our notes receivable for credit losses in connection with the preparation of our financial statements for the quarter ended September 30, 2022. In evaluating the allowance, management considered factors such as historical loss experience, the types of loans and the amount of loans in the loan portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, peer group information and prevailing economic conditions. Our credit loss allowance beginning and ending balances as of January 1, 2022 and September 30, 2022 primarily relate to credit losses recognized on notes receivable for the previous sale of our property and equipment of $81.6 million and other receivable balances primarily related to loans due from travel advisors of $12.6 million.

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


	Credit Loss Allowance
Beginning balance January 1, 2022	$	100,192
Credit loss recovery, net	(8,466)
Write-offs	(9,024)
Ending balance September 30, 2022	$	82,702

Quarter Ended September 30, 2017 Quarter Ended September 30, 2016 Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016
Revenues $ 14,054
$ 9,300
$ 39,987
$ 17,888
Expenses $ 3,770
$ 2,410
$ 11,503
$ 8,930

Note 7. Debt

Debt consists of the following (in thousands):

~~Note 6. Long-Term Debt~~


	Interest Rate (1)	Maturities Through	As of September 30, 2022		As of December 31, 2021
Fixed rate debt:
Unsecured senior notes	3.70% to 11.63%	2023 - 2028	$	7,199,316	$	5,604,498
Secured senior notes	10.88% to 11.50%	2023 - 2025	2,364,360		2,354,037
Unsecured term loans	1.28% to 5.89%	2026 - 2034	4,598,946		2,860,567
Convertible notes	2.88% to 6.00%	2023 - 2025	1,725,000		1,558,780
Total fixed rate debt			15,887,622		12,377,882
Variable rate debt:
Unsecured revolving credit facilities (2)	4.44% to 4.84%	2022 - 2024	2,329,342		2,899,342
USD unsecured term loan	4.63% to 8.25%	2022 - 2037	4,608,777		5,018,740
Euro unsecured term loan	2.26% to 6.01%	2022 - 2028	540,885		685,633
Total variable rate debt			7,479,004		8,603,715
Finance lease liabilities			402,227		472,275
Total debt (3)			23,768,853		21,453,872
Less: unamortized debt issuance costs			(439,482)		(363,532)
Total debt, net of unamortized debt issuance costs			23,329,371		21,090,340
Less—current portion			(3,945,145)		(2,243,131)
Long-term portion			$	19,384,226	$	18,847,209

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

(2) Includes $1.9 billion facility and $1.3 billion facility, the vast majority of which is due in 2024. Our $1.9 billion facility accrues interest at LIBOR plus a maximum interest rate margin of 1.30% which interest was 4.44% as of September 30, 2022 and is subject to a facility fee of a maximum of 0.20%. Our $1.3 billion facility accrues interest at LIBOR plus a maximum interest rate margin of 1.70%, which interest was 4.84% as of September 30, 2022 and is subject to a facility fee of a maximum of 0.30%.

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

In January 2022, we took delivery of Wonder of the Seas. To finance the delivery, we borrowed a total of $1.3 billion under a credit agreement novated to us upon delivery of the ship in January 2022, resulting in an unsecured term loan which is 100% guaranteed by Bpifrance Assurance Export ("BpiFAE"), the official export credit agency ("ECA") of France. The unsecured loan amortizes semi-annually over 12 years and bears interest at a fixed rate of 3.18% per annum.

In January 2022, we issued $1.0 billion of senior notes (the "January 2022 Unsecured Notes") due in 2027 for net proceeds of approximately $990.0 million. Interest accrues on the January 2022 Unsecured Notes at a fixed rate of 5.375% per annum and is payable semi-annually in arrears. The proceeds from the January 2022 Unsecured Notes are being used to repay principal payments on debt maturing in 2022 (including to pay fees and expenses in connection with such repayments).

In February 2022 we entered into certain agreements with Morgan Stanley & Co., LLC (“MS”) where MS agreed to provide backstop committed financing to refinance, repurchase and/or repay in whole or in part our existing and outstanding 10.875% Senior Secured Notes due 2023, 9.125% Senior Priority Guaranteed Notes due 2023 (the "Priority Guaranteed Notes"), and 4.25% Convertible Notes due June 2023. Pursuant to the agreements, we are able, at our sole option, to issue and sell to MS (subject to the satisfaction of certain conditions) five-year senior unsecured notes with gross proceeds of up to $3.15 billion at any time between April 1, 2023 and June 29, 2023. As of September 30, 2022, the $3.15 billion was reduced to $2.35 billion after the repurchase of an aggregate principal amount of $800 million of the June 2023 Convertible Notes with the proceeds of the 2025 Convertible Notes, as described below. Additionally, in October ~~2017,~~2022, we ~~amended~~completed the offering of the

8.25% senior secured notes due 2029 and ~~restated~~9.25% senior guaranteed notes due 2029, as a result of which the amount available under the MS backstop facility was reduced to $350 million. The MS backstop facility will continue to be available to refinance the remaining $350 million due under the 4.25% Convertible Notes due June 2023.

In April 2022, we took delivery of Celebrity Beyond. To finance the delivery, we borrowed a total of €0.7 billion under a credit agreement novated to us upon delivery of the ship in April 2022, resulting in an unsecured term loan which is 100% guaranteed by BpiFAE. The unsecured loan amortizes semi-annually over 12 years and bears interest at a fixed rate of 1.28% per annum.

In July 2022, we purchased a ship for our ~~$1.2~~Silversea Cruises brand. To finance the purchase, we assumed $277 million of debt, which is 95% guaranteed by Euler Hermes Aktiengesellschaft (“Hermes”), the official export credit agency of Germany. The loan amortizes semi-annually over 13 years starting in July 2024 and bears interest at a floating rate equal to SOFR plus a margin of 1.25%. The loan will mature in July 2037.

In August 2022, we issued $1.15 billion of convertible senior notes which accrue interest at 6.00% and mature in August 2025. Upon conversion election, we may deliver shares of our common stock, cash, or a combination of common stock and cash, at our election. The initial conversion rate per $1,000 principal amount of the convertible notes is 19.9577 shares of our common stock, which is equivalent to an initial conversion price of approximately $50.11 per share, subject to adjustment in certain circumstances. Prior to May 15, 2025, the convertible notes will be convertible at the option of holders during certain periods, and only under the following circumstances:

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

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

•if we call the notes for a tax redemption; or

•upon the occurrence of specified corporate events.

On or after May 15, 2025 the convertible notes will be convertible at any time until the close of business on the second scheduled trading day immediately preceding their maturity date. We received gross proceeds from the offering of $1.15 billion, which we used to repurchase $800 million aggregate principal amount of our 4.25% convertible senior notes due June 15, 2023 and $350 million aggregate principal amount of our 2.875% convertible senior notes due November 15, 2023 (the "Existing Convertible Notes") in privately negotiated transactions. The $1.15 billion repayment resulted in a total loss on the extinguishment of debt of $12.8 million, which was recognized within Interest expense, net of interest capitalized within our consolidated statements of comprehensive loss for the quarter and nine months ended September 30,2022.

In August 2022, we issued $1.25 billion of senior unsecured notes which accrue interest at 11.625% and mature in August 2027. The net proceeds of the offering of $1.23 billion were first used to temporarily repay borrowings under our revolving credit facilities. The proceeds were subsequently used to repay other debt scheduled to mature in 2022, including the $650 million 5.25% unsecured senior notes due November 2022, which resulted in a loss on extinguishment of debt of $3.62 million that was recognized within Interest expense, net of interest capitalized within our consolidated statements of comprehensive loss for the quarter and nine months ended September 30, 2022.

In August 2022, we extended our binding commitment for a $700.0 million term loan facility ~~due~~by one year. As amended, we may draw on the facility at any time prior to August ~~2018. The amendment reduced~~11, 2023. Once drawn, the ~~applicable~~loan will bear interest at SOFR plus a margin of 5.75% and ~~extended~~will mature 364 days from funding. In addition, the ~~termination date to October 2022. The applicable margin and~~ facility ~~fee vary with~~(if drawn) will be guaranteed by RCI Holdings LLC, our ~~debt rating and are currently 1.175% and 0.20%, respectively.~~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 ~~amended~~ facility by an additional ~~$500~~$300.0 million from time to time subject to the receipt of additional or increased ~~lender~~ commitments and the issuance of guarantees from additional subsidiaries.

In September 2022, we amended our $0.6 billion unsecured term loan due October 2023. The amendments, among other things, extend the maturity date of advances under the facilities held by consenting lenders by 12 months to October 2024. Consenting lenders received a prepayment equal to 10% of their respective outstanding advances. Following this amendment, the aggregate outstanding principal balance of advances under the unsecured term loan is $501.6 million, with $30.0 million maturing in October 2023 and $471.6 million maturing in October 2024.

In October 2022, we issued $1.0 billion aggregate principal amount of 9.250% senior guaranteed notes due 2029 and $1.0 billion aggregate principal amount of 8.250% senior secured notes due 2029, both callable in April 2025. We used the combined net proceeds, of the respective offerings, together with cash on hand, to fund the redemption, including call premiums, fees and expenses, of our outstanding 9.125% senior guaranteed notes due 2023 and 10.875% senior secured notes due 2023.

Our export credit facilities and our non-export credit facilities have an outstanding principal amount of approximately $12.0 billion as of September 30, 2022. These facilities contain covenants that require us, among other things, to maintain a fixed charge coverage ratio of at least 1.25x and limit our net debt-to-capital ratio, and under certain facilities, to maintain a minimum shareholders' equity. In 2021, we amended our non-export credit facilities and export credit facilities, and certain credit card processing agreements, to extend the waiver of our financial covenants through and including at least the third quarter of 2022, and subsequently in the third quarter of 2021, we entered into a letter agreement to extend the waiver period for our export credit facilities to the end of the fourth quarter of 2022. Further, in July 2022, we amended our non-export-credit facilities and export credit facilities, and certain credit card processing agreements. Among other things, the amendments modified the levels at which our net debt to capitalization covenant will be tested during the period commencing immediately following the end of the waiver period and continuing through the end of 2025 and the amount of minimum shareholders' equity required to be maintained through 2025. The amendments impose a monthly-tested minimum liquidity covenant of $350.0 million, which in the case of the non-export credit facilities terminates at the end of the waiver period and in the case of the export credit facilities terminates either in July 2025, or when we pay off all deferred amounts, whichever is earlier. In addition, the amendments to the non-export credit facilities place restrictions on paying cash dividends and effectuating share repurchases through the end of the third quarter of 2022, while the export credit facility amendments require us to prepay any deferred amounts if we elect to issue dividends or complete share repurchases.

As of September 30, 2022, our aggregate revolving borrowing capacity was $3.2 billion and was utilized through a combination of amounts drawn and letters of credits issued under the facilities. As of September 30, 2022, $0.8 billion remained undrawn. Certain of our surety agreements with third party providers for the benefit of certain agencies and associations that provide travel related bonds, allow the sureties to request collateral. We also have agreements with our credit card processors relating to customer deposits received by us for future voyages. These agreements allow the credit card processors to require us, under certain circumstances, to maintain a reserve that can be satisfied by posting collateral. As of September 30, 2022, we have posted letters of credit as collateral with our sureties under our revolving credit facilities in the amount of $14.2 million.

Executed amendments are in place for the majority of our credit card processors, waiving reserve requirements tied to the breach of our financial covenants through at least September 30, 2022, with modified covenants thereafter, and as such, we do not anticipate any incremental collateral requirements for the processors covered by these waivers in the next 12 months. We have a reserve with a processor where the agreement was amended in the first quarter of 2021, such that proceeds are withheld in reserve, until the sailing takes place or the funds are refunded to the customer. The agreement with this processor was further amended in the third quarter of 2021 such that a portion of the proceeds are withheld in reserve. The maximum projected exposure with the processor, including amounts currently withheld and reported in Trade and other receivables, is approximately $244.5 million. The amount and timing are dependent on future factors that are uncertain, such as the value of future deposits and any decisions about transferring business to other processors. If we require additional waivers on the credit card processing agreements and are not able to obtain them, this could lead to the termination ~~date~~of these agreements or the trigger of reserve requirements.

Except for the term loans we incurred to acquire Celebrity Flora and Silver Moon, all of our unsecured ship financing term loans are guaranteed by upthe export credit agency in the respective country in which the ship is constructed. For the majority of the loans as of September 30, 2022, we pay to the applicable export credit agency, depending on the financing agreement, an upfront fee of 2.35% to 5.48% of the maximum loan amount in consideration for these guarantees. We amortize the fees that are paid upfront over the life of the loan. We classify these fees within Amortization of debt issuance costs in our consolidated statements of cash flows. Prior to the loan being drawn, we present these fees within Other assets in our consolidated balance sheets. Once the loan is drawn, such fees are classified as a discount to the related loan, or contra-liability account, within Current portion of long-term debt or long-term debt.

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


Year			As of September 30, 2022 (1)
Remainder of 2022			589,222
2023 (2)			4,062,005
2024			4,063,513
2025			3,617,022
2026			2,706,650
Thereafter			8,290,959
			23,329,371

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

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

Note 8. 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, and Long-term operating lease liabilities with the current portion of the liability included within Current portion of operating lease liabilities in our consolidated balance sheets as of September 30, 2022 and December 31, 2021. Leases with an initial term of 12 months or less are not recorded on our consolidated balance sheet. We recognize lease expense for these leases on a straight-line basis over the lease term. Our operating leases include SilverExplorer, operated by Silversea Cruises. The operating lease for Silver Explorer will expire in 2023.

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 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.

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.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.

Finance Leases

Our finance leases primarily relate to buildings and surrounding land located at our Miami headquarters, our Silver Dawn, and Silver Whisper ships. Finance leases are included within Property, and Equipment, net, and Long-term debt with the current portion of the liability included within Current portion of long-term debt in our consolidated balance sheets as of September 30, 2022 and December 31, 2021.

In June 2019, the Company entered into a new master lease agreement (“Master Lease”) with Miami-Dade County related to the buildings and surrounding land located at our Miami headquarters, which has been classified as a finance lease in accordance with ASC 842, Leases. In January of 2022, we executed a modification to the Master Lease to extend the expiration of the lease from 2072 to 2074, which continues to include the two ~~years,~~five-year options to extend the lease. We continue to consider the probability of exercising the two five-year options as reasonably certain. The modification of the Master Lease did not change the classification of the lease. The total aggregate amount of the finance lease liabilities recorded for this Master Lease was $101.6 million and $127.0 million as of September 30, 2022 and December 31, 2021, respectively.

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 $269.5 million and $283.7 million as of September 30, 2022 and December 31, 2021, respectively. The lease payments on the Silver Dawn are subject to ~~lender consent. These amendments did not result~~adjustments based on the LIBOR rate.

Silversea Cruises operates the Silver Whisper under a finance lease. The finance lease for Silver Whisper will expire in 2023, subject to an option to purchase the ~~extinguishment~~ship. Additionally, certain scheduled payments have been deferred and are reflected in Long-term debt in our Consolidated Balance Sheet as of ~~debt.~~September 30, 2022 and December 31, 2021. The total aggregate amount of the finance lease liabilities recorded for this ship was $8.9 million and $24.1 million at September 30, 2022 and December 31, 2021, respectively. The lease payments on the Silver Whisper are subject to adjustments based on the LIBOR rate.

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


	Consolidated Statement of Comprehensive Loss Classification	Quarter Ended September 30, 2022		Nine Months Ended September 30, 2022
Lease costs:
Operating lease costs	Commission, transportation and other	$	26,924	$	77,646
Operating lease costs	Other operating expenses	5,545		16,540
Operating lease costs	Marketing, selling and administrative expenses	4,545		14,191
Financial lease costs:
Amortization of right-of-use-assets	Depreciation and amortization expenses	6,115		18,311
Interest on lease liabilities	Interest expense, net of interest capitalized	5,942		15,196
Total lease costs		$	49,071	$	141,884


	Consolidated Statement of Comprehensive Loss Classification	Quarter Ended September 30, 2021		Nine Months Ended September 30, 2021
Lease costs:
Operating lease costs	Commission, transportation and other	$	1,626	$	1,626
Operating lease costs	Other operating expenses	5,424		15,365
Operating lease costs	Marketing, selling and administrative expenses	5,957		14,468
Financial lease costs:
Amortization of right-of-use-assets	Depreciation and amortization expenses	3,790		11,517
Interest on lease liabilities	Interest expense, net of interest capitalized	1,095		1,769
Total lease costs		$	17,892	$	44,745

In addition, certain of our berthing agreements include variable lease costs based on the number of passengers berthed. During the quarter and nine months ended September 30, 2022, we had $12.6 million and $32.0 million variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive loss, respectively. During the quarter and nine months ended September 30, 2021, we had no variable lease costs.

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


	As of September 30, 2022		As of December 31, 2021
Weighted average of the remaining lease term in years
Operating leases	17.52		18.18
Finance leases	22.83		23.96
Weighted average discount rate
Operating leases	6.90	%	6.52	%
Finance leases	5.78	%	5.54	%

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


	Nine Months Ended September 30, 2022		Nine Months Ended September 30, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	92,859	$	20,682
Operating cash flows from finance leases	$	15,196	$	1,769
Financing cash flows from finance leases	$	42,791	$	15,058

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


Year	Operating Leases		Finance Leases
Remainder of 2022	$	27,170	$	11,543
2023	113,427		53,069
2024	101,668		44,348
2025	96,207		43,986
2026	90,152		38,843
Thereafter	859,333		705,811
Total lease payments	1,287,957		897,600
Less: Interest	(670,202)		(495,373)
Present value of lease liabilities	$	617,755	$	402,227

Note 7.9. Commitments and Contingencies

Ship Purchase Obligations

Our future capital commitments consist primarily of new ship orders. As of September 30, ~~2017, we had two Quantum-class~~2022, the dates that the ships ~~two Oasis-class ships and two ships of a new generation of ships, known as "Project Icon,"~~ on order ~~for~~by our ~~Royal Caribbean International brand with an aggregate capacity~~Global and Partner Brands are expected to be delivered, subject to change in the event of ~~approximately 30,500 berths. Additionally,~~construction delays, and their approximate berths are as follows:

Ship

Shipyard

Expected to be delivered

Approximate
Berths

Royal Caribbean International —

Oasis-class:

Utopia of the Seas

Chantiers de l'Atlantique

2nd Quarter 2024

5,700

Icon-class:

Icon of the Seas

Meyer Turku Oy

4th Quarter 2023

5,600

Unnamed

Meyer Turku Oy

2nd Quarter 2025

5,600

Unnamed

Meyer Turku Oy

2nd Quarter 2026

5,600

Celebrity Cruises —

Edge-class:

Celebrity Ascent

Chantiers de l'Atlantique

4th Quarter 2023

3,250

Silversea Cruises —

Evolution Class:

Silver Nova

Meyer Werft

2nd Quarter 2023

730

Unnamed

Meyer Werft

2nd Quarter 2024

730

TUI Cruises (50% joint venture) —

Mein Schiff 7

Meyer Turku Oy

2nd Quarter 2024

2,900

Unnamed

Fincantieri

4th Quarter 2024

4,100

Unnamed

Fincantieri

2nd Quarter 2026

4,100

Total Berths

38,310

In addition, as of September 30, ~~2017,~~2022, we have ~~four Edge-class ships on order for our Celebrity Cruises brand~~an agreement in place with ~~an aggregate capacity of approximately 11,600 berths. The following provides further information on recent developments with respect to our ship orders.~~

~~During the second quarter of 2017, we entered into agreements with Meyer Turku~~Chantiers de l'Atlantique to build two "Project Icon" ships. Subsequently, in October 2017, we entered into credit agreements for the unsecured financing of these 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 to the lenders a 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. The maximum loan amount under each facility is not to exceed €1.4 billion, or approximately $1.7 billion, based on the exchange rate at September 30, 2017. 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 5,650 berths and are expected to enter service in the second quarters of 2022 and 2024, respectively.

~~In July 2017, we entered into credit agreements for the unsecured financing of the third and fourth~~an additional Edge-class ~~ships and the fifth Oasis-class~~ ship for ~~up to 80%~~delivery in 2025, which is contingent upon completion of each ship’s contract price through facilities to be guaranteed 100% by Bpifrance Assurance Export, the official export credit agency of France. Under these financing arrangements, we have the right, but not the obligation, to satisfy the obligations to be incurred upon deliveryconditions precedent and acceptance of each ship under the shipbuilding contract by assuming, at delivery and acceptance, the debt indirectly incurred by the shipbuilder during the construction of each ship. The maximum loan amount under each 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 $844.7 million and $1.3 billion, respectively, based on the exchange rate at September 30, 2017. 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 the fifth Oasis-class ship. The thirdfinancing.

~~Table of Contents~~

and fourth Edge-class ships, each of which will have a capacity of approximately 2,900 berths, are expected to enter service in the fourth quarters of 2021 and 2022, respectively. The fifth Oasis-class ship will have a capacity of approximately 5,450 berths and is expected to enter service in the second quarter of 2021.

~~In September 2017, we entered into an agreement to purchase a ship for our Azamara Club Cruises brand. The sale is expected to be completed with the delivery of the ship scheduled for March 2018.~~

As of September 30, ~~2017,~~2022, the aggregate cost of our ships on order ~~not including~~presented in the table above, excluding any ships on order by our Partner Brands, was approximately ~~$13.0~~$9.1 billion, of which we had deposited ~~$323.2 million~~$0.7 billion as of such date. Approximately ~~53.8%~~54.4% of the aggregate cost was exposed to fluctuations in the Euro exchange rate at September 30, ~~2017.~~2022. Refer to Note ~~10.~~ 12. Fair Value Measurements and Derivative Instruments for further information.

Litigation

As previously reported, two lawsuits were filed against us in August 2019 in the U.S. District Court for the Southern District of Florida (the "Court") under Title III of the Cuban Liberty and Democratic Solidarity Act, also known as the Helms-Burton Act. The complaint filed by Havana Docks Corporation ("Havana Docks Action") alleges it holds an interest in the Havana Cruise Port Terminal, and the complaint filed by Javier Garcia-Bengochea (the "Port of Santiago Action") alleges that he holds an interest in the Port of Santiago, Cuba, both of which were expropriated by the Cuban government. The complaints further allege that we trafficked in those properties by embarking and disembarking passengers at these facilities. The plaintiffs seek all available statutory remedies, including the value of the expropriated property, plus interest, treble damages, attorneys’ fees and costs.

briefing to the Court scheduled to be completed by December 2022. We believe we have meritorious defenses to the claims alleged in both the Havana Docks Action and the Port of Santiago Action, and we intend to vigorously defend ourselves against them, including, in the Havana Docks Action, by appealing the Court’s final judgment. At this time, we have concluded that the likelihood of loss is reasonably possible, and therefore, no liability has been recorded. The outcome of the litigation is inherently unpredictable and subject to significant uncertainties, and there can be no assurances that the final outcome of either case will not be material.

In addition, we are routinely involved in claims typical within the cruise vacation industry. The majority of these claims are covered by insurance. 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.

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 ~~the Board~~our board of directors is no longer comprised of individuals who were members of ~~the Board~~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.

Note ~~8. Shareholders’~~10. Shareholders' Equity

On January 1, 2022, we adopted ASU 2020-06 using the modified retrospective approach to recognize our convertible notes as single liability instruments. As a result of the adoption of this pronouncement, the cumulative effect to Shareholders' equity was a reduction of $161.4 million. For further information regarding the entry recorded and the adoption of ASU 2020-06, refer to Note 2. Summary of Significant Accounting Policies.

~~In September 2017,~~Common Stock Issued

During March 2021, we ~~declared~~issued 16.9 million shares of common stock, par value $0.01 per share, at a ~~cash dividend on~~price of $91.00 per share. We received net proceeds of $1.5 billion from the sale of our common stock, ~~of $0.60 per share which was paid in October 2017.~~ after deducting the estimated offering expenses payable by us.

Dividends

During the ~~first and~~ second ~~quarters~~quarter of ~~2017,~~2020, we ~~declared a cash dividend on~~agreed with certain of our lenders not to pay dividends or engage in common stock ~~of $0.48 per~~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 ~~which was paid in April 2017~~repurchases, we will need to repay the amounts deferred under our export credit facilities. Accordingly, during the nine months ended September 30, 2022 and ~~July 2017, respectively. During~~2021, we did not declare dividends. Pursuant to amendments made to these agreements during the first quarter of ~~2017, we also paid a~~2021, the restrictions on paying cash ~~dividend on our common stock of $0.48 per~~dividends and effectuating share ~~which was declared during the fourth quarter of 2016.~~

~~During~~repurchases were extended through and including the third quarter of 2016, we declared a cash dividend on our common stock of $0.48 per share which was paid in October 2016. During the first and second quarters of 2016, we declared and paid a cash dividend on our common stock of $0.375 per share. During the first quarter of 2016, we also paid a cash dividend on our common stock of $0.375 per share which was declared during the fourth quarter of 2015.2022.

In April 2017, our board of directors authorized a 12-month common stock repurchase program for up to $500 million. The timing and number of shares to be repurchased will depend on a variety of factors including price and market conditions. Repurchases under the program may be made at management's discretion from time to time on the open market or through privately negotiated transactions. During the third quarter of 2017, we repurchased 1.0 million shares of our common stock for a total of $125.0 million in open market transactions that were recorded within ~~Treasury stock~~ ~~in our consolidated balance sheets. With these repurchases, we have $375.0 million that remain available for future stock repurchase transactions under our Board approved program.~~

Note 9.11. Changes in Accumulated Other Comprehensive ~~Income (Loss)~~

Loss

The following table presents the changes in accumulated other comprehensive ~~income (loss)~~loss by component for the nine months ended September 30, ~~2017~~2022 and ~~2016~~2021 (in thousands):


	Accumulated Other Comprehensive Income (Loss) for the Nine Months Ended September 30, 2017												Accumulated Other Comprehensive Income (Loss) for the Nine Months Ended September 30, 2016													Accumulated Other Comprehensive Loss for the Nine Months Ended September 30, 2022								Accumulated Other Comprehensive Loss for the Nine Months Ended September 30, 2021
	Changes related to cash flow derivative hedges			Changes in defined benefit plans			Foreign currency translation adjustments			Accumulated other comprehensive loss			Changes related to cash flow derivative hedges			Changes in defined benefit plans			Foreign currency translation adjustments			Accumulated other comprehensive loss				Changes related to cash flow derivative hedges		Changes in defined benefit plans		Foreign currency translation adjustments		Accumulated other comprehensive loss		Changes related to cash flow derivative hedges		Changes in defined benefit plans		Foreign currency translation adjustments		Accumulated other comprehensive loss
Accumulated comprehensive loss at beginning of the year	$	(820,850	)	$	(28,083	)	$	(67,551	)	$	(916,484	)	$	(1,232,073	)	$	(26,447	)	$	(69,913	)	$	(1,328,433	)	Accumulated comprehensive loss at beginning of the year	$	(646,473)	$	(56,835)	$	(7,577)	$	(710,885)	$	(650,519)	$	(65,542)	$	(23,280)	$	(739,341)
Other comprehensive income (loss) before reclassifications	230,341			(7,130		)	14,210			237,421			(9,150		)	(13,521		)	8,423			(14,248		)	Other comprehensive income (loss) before reclassifications	(18,061)		32,504		31,958		46,401		23,752		313		11,255		35,320
Amounts reclassified from accumulated other comprehensive loss	151,319			850			—			152,169			263,774			1,373			—			265,147			Amounts reclassified from accumulated other comprehensive loss	(130,480)		2,487		—		(127,993)		24,762		3,435		—		28,197
Net current-period other comprehensive income (loss)	381,660			(6,280		)	14,210			389,590			254,624			(12,148		)	8,423			250,899			Net current-period other comprehensive income (loss)	(148,541)		34,991		31,958		(81,592)		48,514		3,748		11,255		63,517
Ending balance	$	(439,190	)	$	(34,363	)	$	(53,341	)	$	(526,894	)	$	(977,449	)	$	(38,595	)	$	(61,490	)	$	(1,077,534	)	Ending balance	$	(795,014)	$	(21,844)	$	24,381	$	(792,477)	$	(602,005)	$	(61,794)	$	(12,025)	$	(675,824)

The following table presents reclassifications out of accumulated other comprehensive ~~income (loss)~~loss for the quarters and nine months ended September 30, ~~2017~~2022 and ~~2016~~2021 (in thousands):


	Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income
Details About Accumulated Other Comprehensive Loss Components	Quarter Ended September 30, 2022		Quarter Ended September 30, 2021		Nine Months Ended September 30, 2022		Nine Months Ended September 30, 2021		Affected Line Item in Statements of Comprehensive Loss
Gain (loss) on cash flow derivative hedges:
Interest rate swaps	$	(4,197)	$	(11,418)	$	(19,782)	$	(32,376)	Interest expense, net of interest capitalized
Foreign currency forward contracts	(4,363)		(3,905)		(12,722)		(11,541)		Depreciation and amortization expenses
Foreign currency forward contracts	(466)		(505)		(2,155)		(2,311)		Other income (expense)


Fuel swaps	18		(2)		(336)		(416)		Other income (expense)
Fuel swaps	43,490		10,600		165,475		21,882		Fuel
	34,482		(5,230)		130,480		(24,762)
Amortization of defined benefit plans:
Actuarial loss	(829)		(1,145)		(2,487)		(3,435)		Payroll and related

	(829)		(1,145)		(2,487)		(3,435)

Total reclassifications for the period	$	33,653	$	(6,375)	$	127,993	$	(28,197)

Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income
Details About Accumulated Other Comprehensive Income (Loss) Components Quarter Ended September 30, 2017 Quarter Ended September 30, 2016 Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016 Affected Line Item in Statements of
Comprehensive Income (Loss)
Loss on cash flow derivative hedges:

Interest rate swaps $ (7,860 ) $ (11,953 ) $ (24,580 ) $ (32,019 ) Interest expense, net of interest capitalized
Foreign currency forward contracts (2,710 ) (2,710 ) (8,130 ) (5,408 ) Depreciation and amortization expenses
Foreign currency forward contracts (1,512 ) (3,465 ) (9,187 ) (10,206 ) Other expense
Foreign currency forward contracts —
—
—
(207 ) Other operating
Foreign currency collar options (602 ) (601 ) (1,806 ) (1,806 ) Depreciation and amortization expenses
Fuel swaps 1,758
2,760
6,533
9,356
Other expense
Fuel swaps (32,386 ) (64,654 ) (114,149 ) (223,484 ) Fuel
(43,312 ) (80,623 ) (151,319 ) (263,774 )
Amortization of defined benefit plans:

Actuarial loss (293 ) (285 ) (850 ) (1,373 ) Payroll and related
(293 ) (285 ) (850 ) (1,373 )
Total reclassifications for the period $ (43,605 ) $ (80,908 ) $ (152,169 ) $ (265,147 )

~~Table of Contents~~

Note ~~10.~~12. 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 September 30, 2022										Fair Value Measurements at December 31, 2021
Description	Total Carrying Amount		Total Fair Value		Level 1(1)		Level 2(2)		Level 3(3)		Total Carrying Amount		Total Fair Value		Level 1(1)		Level 2(2)		Level 3(3)
Assets:
Cash and cash equivalents(4)	$	1,566,213	$	1,566,213	$	1,566,213	$	—	$	—	$	2,701,770	$	2,701,770	$	2,701,770	$	—	$	—
Total Assets	$	1,566,213	$	1,566,213	$	1,566,213	$	—	$	—	$	2,701,770	$	2,701,770	$	2,701,770	$	—	$	—
Liabilities:
Long-term debt (including current portion of debt)(5)	$	22,927,144	$	21,948,811	$	—	$	21,948,811	$	—	$	20,618,065	$	22,376,480	$	—	$	22,376,480	$	—
Total Liabilities	$	22,927,144	$	21,948,811	$	—	$	21,948,811	$	—	$	20,618,065	$	22,376,480	$	—	$	22,376,480	$	—

Fair Value Measurements at September 30, 2017 Using Fair Value Measurements at December 31, 2016 Using
Description Total Carrying Amount Total Fair Value
Level 1⁽¹⁾

Level 2⁽²⁾

Level 3⁽³⁾
Total Carrying Amount Total Fair Value
Level 1⁽¹⁾

Level 2⁽²⁾

Level 3⁽³⁾
Assets:
Cash and cash equivalents⁽⁴⁾
$ 139,950
$ 139,950
$ 139,950
$ —
$ —
$ 132,603
$ 132,603
$ 132,603
$ —
$ —
Total Assets $ 139,950
$ 139,950
$ 139,950
$ —
$ —
$ 132,603
$ 132,603
$ 132,603
$ —
$ —
Liabilities:
Long-term debt (including current portion of long-term debt)⁽⁵⁾
$ 7,557,801
$ 8,111,168
$ —
$ 8,111,168
$ —
$ 9,347,051
$ 9,859,266
$ —
$ 9,859,266
$ —
Total Liabilities $ 7,557,801
$ 8,111,168
$ —
$ 8,111,168
$ —
$ 9,347,051
$ 9,859,266
$ —
$ 9,859,266
$ —
(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.


~~(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)~~

(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 September 30, 2017 and December 31, 2016.~~


~~(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 and term loans. This does not include our capital lease obligations.~~

~~Table~~ of ~~Contents~~

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 September 30, 2022 and December 31, 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, term loans and convertible notes. These amounts do not include our finance lease obligations or commercial paper.

Other Financial Instruments

The carrying amounts of accounts receivable, accounts payable, accrued interest and accrued expenses approximate fair value at September 30, ~~2017~~2022 and December 31, ~~2016.~~

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 September 30, 2022								Fair Value Measurements at December 31, 2021
Description	Total		Level 1(1)		Level 2(2)		Level 3(3)		Total		Level 1(1)		Level 2(2)		Level 3(3)
Assets:
Derivative financial instruments(4)	$	189,150	$	—	$	189,150	$	—	$	69,808	$	—	$	69,808	$	—
Total Assets	$	189,150	$	—	$	189,150	$	—	$	69,808	$	—	$	69,808	$	—
Liabilities:
Derivative financial instruments(5)	$	312,358	$	—	$	312,358	$	—	$	200,541	$	—	$	200,541	$	—
Total Liabilities	$	312,358	$	—	$	312,358	$	—	$	200,541	$	—	$	200,541	$	—

Fair Value Measurements at September 30, 2017 Using Fair Value Measurements at December 31, 2016 Using
Description Total
Level 1⁽¹⁾

Level 2⁽²⁾

Level 3⁽³⁾
Total
Level 1⁽¹⁾

Level 2⁽²⁾

Level 3⁽³⁾
Assets:

Derivative financial instruments⁽⁴⁾
$ 221,258
$ —
$ 221,258
$ —
$ 19,397
$ —
$ 19,397
$ —
Investments⁽⁵⁾
$ 3,237
3,237
—
—
$ 3,576
3,576
—
—
Total Assets $ 224,495
$ 3,237
$ 221,258
$ —
$ 22,973
$ 3,576
$ 19,397
$ —
Liabilities:

Derivative financial instruments⁽⁶⁾
$ 189,163
$ —
$ 189,163
$ —
$ 373,497
$ —
$ 373,497
$ —
Total Liabilities $ 189,163
$ —
$ 189,163
$ —
$ 373,497
$ —
$ 373,497
$ —
(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 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.


~~(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 asset or liability, either directly or indirectly. For foreign currency forward contracts, interest rate swaps, cross currency 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. Fair value for foreign currency collar options is determined by using standard option pricing models with inputs based on the options’ contract terms, such as exercise price and maturity, and readily available public market data, such as foreign exchange curves, foreign exchange volatility levels and discount rates. All derivative instrument fair values take into account the creditworthiness of the counterparty and the Company.


~~(3)~~	~~Inputs that are unobservable. The Company did not use any Level 3 inputs as of September 30, 2017 and December 31, 2016.~~

~~(4)~~

~~Consists of foreign currency forward contracts, interest rate swaps and fuel swaps. Please refer to the “Fair Value of Derivative Instruments”~~

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

(4)Consists of interest rate swaps and fuel swaps. Refer to the "Fair Value of Derivative Instruments" table for breakdown by instrument type.

(5) Consists of foreign currency forward contracts and fuel swaps. Refer to the "Fair Value of Derivative Instruments" table for breakdown by instrument type.


~~(5)~~	~~Consists of exchange-traded equity securities and mutual funds reported within~~ ~~Other assets~~ ~~in our consolidated balance sheets.~~


~~(6)~~	~~Consists of foreign currency forward contracts, interest rate swaps and fuel swaps. Please refer to the “Fair Value of Derivative Instruments” table for breakdown by instrument type.~~

The reported fair values are based on a variety of factors and assumptions. Accordingly, the fair values may not represent actual values of the financial instruments that could have been realized as of September 30, ~~2017~~2022 or December 31, ~~2016,~~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 Measurements at September 30, 2022
Description	Total Carrying Amount	Total Fair Value	Level 3	Total Impairment for the Nine Months ended September 30, 2022 (1)
Long-lived assets	—	—	—	10,186
Total	—	—	—	10,186

(1) Amount is primarily composed of construction in progress assets that were impaired during the three months ended September 30, 2022 due to a reduction in scope or the decision to not complete the projects. The impairments were calculated based on orderly liquidation values. The fair value of these assets was estimated as of the date the assets were last impaired.


	Fair Value Measurements at December 31, 2021
Description	Total Carrying Amount	Total Fair Value	Level 3	Total Impairment for the Year Ended December 31, 2021 (1)
Long-lived assets	—	—	—	55,213
Total	—	—	—	55,213

(1) Amount is primarily composed of construction in progress assets that were impaired during the year ended 2021 due to a reduction in scope or the decision to not complete the projects. The impairments were calculated based on orderly liquidation values. The fair value of these assets was estimated as of the date the assets were last impaired.

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.

~~Table of Contents~~

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:~~counterparties (in thousands):


	Gross Amounts not Offset in the Consolidated Balance Sheet that are Subject to Master Netting Agreements
	As of September 30, 2022								As of December 31, 2021
	Gross Amount of Derivative Assets Presented in the Consolidated Balance Sheet		Gross 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 Sheet		Gross Amount of Eligible Offsetting Recognized Derivative Liabilities		Cash Collateral Received		Net Amount of Derivative Assets
Derivatives subject to master netting agreements	$	189,150	$	(145,297)	$	—	$	43,853	$	69,808	$	(67,995)	$	—	$	1,813
Total	$	189,150	$	(145,297)	$	—	$	43,853	$	69,808	$	(67,995)	$	—	$	1,813

Gross Amounts not Offset in the Consolidated Balance Sheet that are Subject to Master Netting Agreements
As of September 30, 2017 As of December 31, 2016
Gross Amount of Derivative Assets Presented in the Consolidated Balance Sheet Gross 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 Sheet Gross Amount of Eligible Offsetting
Recognized
Derivative Assets Cash Collateral
Received Net Amount of
Derivative Assets
(In thousands)
Derivatives subject to master netting agreements $ 221,258
$ (117,065 ) $ —
$ 104,193
$ 19,397
$ (19,397 ) $ —
$ —
Total $ 221,258
$ (117,065 ) $ —
$ 104,193
$ 19,397
$ (19,397 ) $ —
$ —

The following table presents information about the Company’s offsetting of financial liabilities under master netting agreements with derivative ~~counterparties:~~counterparties (in thousands):


																						Gross Amounts not Offset in the Consolidated Balance Sheet that are Subject to Master Netting Agreements
	Gross Amounts not Offset in the Consolidated Balance Sheet that are Subject to Master Netting Agreements																					As of September 30, 2022								As of December 31, 2021
	As of September 30, 2017										As of December 31, 2016											Gross Amount of Derivative Liabilities Presented in the Consolidated Balance Sheet		Gross 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 Sheet		Gross 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 Sheet			Gross 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 Sheet			Gross Amount of Eligible Offsetting Recognized Derivative Liabilities		Cash Collateral Pledged		Net Amount of Derivative Liabilities
(In thousands)
Derivatives subject to master netting agreements	$	(189,163	)	$	117,065	$	—	$	(72,098	)	$	(373,497	)	$	19,397	$	7,213	$	(346,887	)	Derivatives subject to master netting agreements	$	(312,358)	$	145,297	$	—	$	(167,061)	$	(200,541)	$	67,995	$	44,411	$	(88,135)
Total	$	(189,163	)	$	117,065	$	—	$	(72,098	)	$	(373,497	)	$	19,397	$	7,213	$	(346,887	)	Total	$	(312,358)	$	145,297	$	—	$	(167,061)	$	(200,541)	$	67,995	$	44,411	$	(88,135)

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 September 30, ~~2017,~~2022, we had counterparty credit risk exposure under our derivative instruments of ~~approximately $101.6~~$38.2 million, which was limited to the cost of replacing the contracts in the event of non-performance by the counterparties to the contracts, the majority of which are currently our lending banks. ~~As of December 31, 2016, we did not have any 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.

~~Table of Contents~~

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 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”~~"highly effective" in offsetting changes in the fair value or cash flow of hedged items. WeFor 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 under our interest rate, foreign currency and fuel hedging programs. We apply the same~~relationship. The methodology for assessing hedge effectiveness is applied on a consistent basis for ~~assessing hedge effectiveness to all hedges within~~ each one of our hedging ~~program~~programs (i.e., interest rate, foreign currency ship construction, foreign currency net investment and fuel). ~~We perform~~For our regression analyses, ~~over~~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. The determination of ineffectiveness is based on the amount of dollar offset between the change in fair value of the derivative instrument and the change in fair value of the hedged item at the end of the reporting period. 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. ~~In addition, the ineffective portion of our highly effective hedges is immediately recognized in earnings and reported in~~ ~~Other expense~~ ~~in our consolidated statements of comprehensive income (loss).~~

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.

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 and derivative instrument cash flows from hedges of foreign currency risk on debt payments as financing~~ activities.

Interest Rate Risk

Our exposure to market risk for changes in interest rates primarily relates to our ~~long-term~~ debt obligations, including future interest payments. At September 30, ~~2017~~2022 and December 31, ~~2016,~~2021, approximately ~~48.8%~~75.3% and ~~40.5%~~65.7%, respectively, of our ~~long-term~~ 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.

~~Table of Contents~~

Market risk associated with our ~~long-term fixed rate~~fixed-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 ~~September 30, 2017 and~~ December 31, ~~2016,~~2021, we maintained interest rate swap agreements on the following fixed-rate debt instruments:


Debt Instrument	Swap Notional as of December 31, 2021 (in thousands)		Maturity	Debt Fixed Rate	Swap Floating Rate: LIBOR plus	All-in Swap Floating Rate as of December 31, 2021
Unsecured senior notes	650,000		November 2022	5.25%	3.63%	3.79%
	$	650,000

Debt Instrument
Swap Notional as of September 30, 2017 (In thousands)
Maturity Debt Fixed Rate Swap Floating Rate: LIBOR plus All-in Swap Floating Rate as of September 30, 2017
Oasis of the Seas term loan
$ 157,500
October 2021 5.41% 3.87% 5.29%
Unsecured senior notes 650,000
November 2022 5.25% 3.63% 4.95%
$ 807,500

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

~~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 market risk of increasing interest rates. At September 30, ~~2017~~2022 and December 31, ~~2016,~~2021, we maintained interest rate swap agreements on the following floating-rate debt instruments:


Debt Instrument	Swap Notional as of September 30, 2022 (in thousands)		Maturity	Debt Floating Rate		All-in Swap Fixed Rate as of September 30, 2022
Celebrity Reflection term loan	$	136,354	October 2024	LIBOR plus	0.40%	2.85%
Quantum of the Seas term loan	275,625		October 2026	LIBOR plus	1.30%	3.74%
Anthem of the Seas term loan	302,083		April 2027	LIBOR plus	1.30%	3.86%
Ovation of the Seas term loan	415,000		April 2028	LIBOR plus	1.00%	3.16%
Harmony of the Seas term loan (1)	339,697		May 2028	EURIBOR plus	1.15%	2.26%
Odyssey of the Seas term loan (2)	402,500		October 2032	LIBOR plus	0.96%	3.21%
Odyssey of the Seas term loan (2)	191,667		October 2032	LIBOR plus	0.96%	2.84%
	$	2,062,926

Debt Instrument
Swap Notional as of September 30, 2017 (In thousands)
Maturity Debt Floating Rate All-in Swap Fixed Rate
Celebrity Reflection term loan
$ 409,063
October 2024 LIBOR plus 0.40% 2.85%
Quantum of the Seas term loan
581,875
October 2026 LIBOR plus 1.30% 3.74%
Anthem of the Seas term loan
604,167
April 2027 LIBOR plus 1.30% 3.86%
Ovation of the Seas term loan
760,833
April 2028 LIBOR plus 1.00% 3.16%
Harmony of the Seas term loan ⁽¹⁾
751,362
May 2028 EURIBOR plus 1.15% 2.26%
$ 3,107,300

(1)Interest rate swap agreements hedging the Euro-denominated term loan for Harmony of the Seas include EURIBOR ~~zero-floors~~zero-floor matching the hedged debt EURIBOR zero-floor. Amount presented is based on the exchange rate as of September 30, ~~2017.~~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 $402.5 million and $191.7 million interest rate swap agreements are October 2020 and October 2022, respectively. The unsecured term loan for the financing of Odyssey of the Seas was drawn on March 2021.

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

The notional amount of interest rate swap agreements related to outstanding debt as of September 30, ~~2017~~2022 and December 31, ~~2016~~2021 was ~~$3.9~~$2.1 billion and ~~$4.0~~$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 ~~collar options and cross currency swap agreements~~ to manage portions of the exposure to movements in foreign currency exchange rates. As of September 30, ~~2017,~~2022, the aggregate cost of our ships on order ~~not including the TUI Cruises' ships on order and those subject to conditions to effectiveness,~~ was ~~approximately $13.0~~$9.1 billion, of which we had deposited ~~$323.2 million~~$0.7 billion as of such date. These amounts do not include any ships placed on order that are contingent upon completion of conditions precedent and/or financing and any ships on order by our Partner Brands. Refer to Note 9. Commitments and Contingencies, for further information on our ships on order. At September 30, ~~2017~~2022 and December 31, ~~2016,~~2021, approximately ~~53.8%~~54.4% and ~~66.7%~~59.0%, respectively, of the aggregate cost of the ships under construction was exposed to fluctuations in the Euro exchange rate. ~~The majority of our~~Our foreign currency forward ~~contracts, collar options and cross currency swap~~contract agreements are accounted for as cash flow ~~fair value~~ or net investment hedges depending on the designation of the related hedge.

On a regular basis, we enter into foreign currency forward contracts and, from time to time, we utilize cross-currency swap agreements and collar options to minimize the volatility resulting from the remeasurement of net monetary assets and liabilities denominated in a currency other than our functional currency or the functional currencies of our foreign subsidiaries. During the third quarter of ~~2017,~~2022, we maintained an average of approximately ~~$823.0 million~~$1.2 billion of these foreign currency forward contracts. These instruments are not designated as hedging instruments. ~~Changes~~For the quarters ended September 30, 2022 and 2021, changes in the fair value of the foreign

currency forward contracts resulted in losses of $88.4 million and $12.9 million, respectively, which offset gains arising from the remeasurement of monetary assets and liabilities denominated in foreign currencies in those same periods of $84.0 million and $13.2 million, respectively. For the nine months ended September 30, 2022 and 2021, changes in the fair value of the foreign currency forward contracts resulted in ~~a gain (loss),~~losses of ~~approximately $22.0~~$176.3 million and ~~$(2.5)~~$25.9 million, ~~during~~respectively, which offset gains arising from the ~~quarters ended September 30, 2017~~remeasurement of monetary assets and ~~September 30, 2016, respectively, and approximately $57.1~~liabilities denominated in foreign currencies in those same periods of $169.7 million and ~~$(11.8)~~$17.9 million, ~~during the nine months ended September 30, 2017 and September 30, 2016, respectively, that~~respectively. These amounts were recognized in earnings within Other ~~expense~~ income (expense) in our consolidated statements of comprehensive ~~income (loss).~~

~~Table of Contents~~

We consider our investments in our foreign operations to be denominated in relatively stable currencies and of a long-term nature. As of September 30, 2017, we maintained foreign currency forward contracts and designated them as hedges of a portion of our net investment in TUI cruises of €101.0 million, or approximately $119.4 million based on the exchange rate at September 30, 2017. These forward currency contracts mature in October 2021.

loss.

The notional amount of outstanding foreign exchange contracts, ~~including our~~excluding the forward contracts entered into to minimize remeasurement volatility, as of September 30, ~~2017~~2022 and December 31, ~~2016~~2021 was ~~$4.1~~$2.4 billion and ~~$1.3~~$3.4 billion, respectively.

Non-Derivative Instruments

We ~~also~~consider our investment in our foreign operations to be denominated in relative stable currencies and to be of a long-term nature. We address the exposure of our investments in foreign operations by denominating a portion of our debt in our subsidiaries’ and investments’ functional currencies and designating it as a hedge of these subsidiaries and investments. We had designated debt as a hedge of our net investments primarily in TUI Cruises of ~~approximately €241.0~~€367.0 million, or approximately ~~$284.9~~$359.6 million, as of September 30, ~~2017.~~2022. As of December 31, 2021, we had designated debt as a hedge of our net investments primarily in TUI Cruises of €97.0 million, or approximately $110.3 million.

Fuel Price Risk

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 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 remain in accumulated other comprehensive gain or loss until the underlying hedged transactions are recognized in earnings or the related hedged forecasted fuel consumption is deemed probable of not occurring.

Prior suspension of our cruise operations due to the COVID-19 pandemic and our gradual resumption of cruise operations has resulted in reductions to our forecasted fuel purchases. During the quarter and nine months ended September 30, 2021, we discontinued cash flow hedge accounting on 48.1 thousand and 95.8 thousand metric tons of our fuel swap agreements, respectively, maturing in 2021 and 2022, which resulted in the reclassification of a net $2.4 million gain and $1.9 million loss from Accumulated other comprehensive loss to Other income (expense), respectively. For the nine months ended September 30, 2022, we did not discontinue cash flow hedge accounting on any of our fuel swap agreements. Changes in the fair value of fuel swaps for which cash flow hedge accounting was discontinued are currently recognized in Other income (expense) each reporting period through the maturity dates of the fuel swaps.

Future 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 II, Item 1A. for further discussion on risks related to COVID-19.

At September 30, ~~2017,~~2022, we have hedged the variability in future cash flows for certain forecasted fuel transactions occurring through ~~2021.~~2023. As of September 30, ~~2017~~2022 and December 31, ~~2016,~~2021, we had the following outstanding fuel swap agreements:


	Fuel Swap Agreements
	As of September 30, 2022	As of December 31, 2021
Designated as hedges:	(metric tons)
2022	257,950	821,850
2023	743,601	249,050

Fuel Swap Agreements
As of September 30, 2017 As of December 31, 2016
(metric tons)
2017 218,600
799,065
2018 756,700
616,300
2019 668,500
521,000
2020 531,200
306,500
2021 224,900
—


	Fuel Swap Agreements
	As of September 30, 2022		As of December 31, 2021
	(% hedged)
Designated hedges as a % of projected fuel purchases:
2022	64	%	54	%
2023	45	%	15	%


	Fuel Swap Agreements
	As of September 30, 2022	As of December 31, 2021
Not designated as hedges:	(metric tons)
2022(1)	94,382	231,900
2023	—	—

Fuel Swap Agreements
As of September 30, 2017 As of December 31, 2016
(% hedged)
Projected fuel purchases:

2017 65 % 60 %
2018 56 % 44 %
2019 47 % 35 %
2020 36 % 20 %
2021 14 % —

~~Table~~(1)As of ~~Contents~~

At September 30, ~~2017~~2022, 47,191 metric tons relate to fuel swap agreements with discontinued hedge accounting, in which we effectively pay fixed prices and ~~December 31, 2016, $81.7~~receive floating prices from the counterparty. The remaining 47,191 metric tons relate to fuel swap agreements that were not designated as hedges since inception, in which we effectively pay floating prices and receive fixed prices from the counterparty.

As of September 30, 2022, there was $9.8 million ~~and $138.5 million, respectively,~~ of estimated unrealized ~~net loss~~gain associated with our cash flow hedges pertaining to fuel swap agreements ~~were~~is expected to be reclassified to earnings from Accumulated other comprehensive loss within the next twelve ~~months.~~months when compared to $23.8 million of estimated unrealized net gain at December 31, 2021. Reclassification is expected to occur as the result of fuel consumption associated with our hedged forecasted fuel purchases.

The fair value and line item caption of derivative instruments recorded within our consolidated balance sheets were as ~~follows:~~follows (in thousands):


	Fair Value of Derivative Instruments
	Asset Derivatives					Liability Derivatives
	Balance Sheet Location	As of September 30, 2022		As of December 31, 2021		Balance Sheet Location	As of September 30, 2022		As of December 31, 2021
		Fair Value		Fair Value			Fair Value		Fair Value
Derivatives designated as hedging instruments under ASC 815-20(1)
Interest rate swaps	Other assets	$	115,495	$	—	Other long-term liabilities	$	—	$	62,080
Interest rate-swaps	Derivative financial instruments			6,478		Derivative financial instruments	—		—
Foreign currency forward contracts	Derivative financial instruments	—		7,357		Derivative financial instruments	189,396		116,027
Foreign currency forward contracts	Other assets	—		2,070		Other long-term liabilities	53,307		8,813
Fuel swaps	Derivative financial instruments	53,903		31,919		Derivative financial instruments	41,793		7,944
Fuel swaps	Other assets	10,131		13,452		Other long-term liabilities	16,403		1,202
Total derivatives designated as hedging instruments under 815-20		$	179,529	$	61,276		$	300,899	$	196,066
Derivatives not designated as hedging instruments under ASC 815-20
Foreign currency forward contracts	Derivative financial instruments	$	—	$	—	Derivative financial instruments	$	—	$	—
Foreign currency forward contracts	Other assets	—		—		Other long-term liabilities	—		—
Fuel swaps	Derivative financial instruments	9,621		8,430		Derivative financial instruments	11,459		3,264
Fuel swaps	Other Assets	—		102		Other long-term liabilities	—		1,211
Total derivatives not designated as hedging instruments under 815-20		9,621		8,532			11,459		4,475
Total derivatives		$	189,150	$	69,808		$	312,358	$	200,541

Fair Value of Derivative Instruments
Asset Derivatives Liability Derivatives
Balance Sheet Location As of September 30, 2017 As of December 31, 2016 Balance Sheet Location As of September 30, 2017 As of December 31, 2016
Fair Value Fair Value Fair Value Fair Value
(In thousands)
Derivatives designated as hedging instruments under ASC 815-20⁽¹⁾

Interest rate swaps Other assets $ 1,760
$ 5,246
Other long-term liabilities $ 52,611
$ 57,679
Foreign currency forward contracts Derivative financial instruments 45,583
—
Derivative financial instruments —
5,574
Foreign currency forward contracts Other assets 136,534
—
Other long-term liabilities 4,479
68,165
Fuel swaps Derivative financial instruments 7,213
—
Derivative financial instruments 81,981
129,486
Fuel swaps Other assets 29,721
13,608
Other long-term liabilities 40,517
95,125
Total derivatives designated as hedging instruments under 815-20 220,811
18,854
179,588
356,029
Derivatives not designated as hedging instruments under ASC 815-20
Fuel swaps Derivative financial instruments —
—
Derivative financial instruments 7,352
11,532
Fuel swaps Other Assets 447
543
Other long-term liabilities 2,223
5,936
Total derivatives not designated as hedging instruments under 815-20 447
543
9,575
17,468
Total derivatives $ 221,258
$ 19,397
$ 189,163
$ 373,497

(1)~~Accounting Standard Codification~~Subtopic 815-20 “~~Derivatives and Hedging.~~Hedging-General”

under ASC 815.

The carrying value and line item caption of non-derivative instruments designated as hedging instruments recorded within our consolidated

balance sheets were as ~~follows:~~follows (in thousands):

Carrying Value
Non-derivative instrument designated as
hedging instrument under ASC 815-20 Balance Sheet Location As of September 30, 2017 As of December 31, 2016
(In thousands)
Foreign currency debt Current portion of long-term debt $ 69,023
$ 61,601
Foreign currency debt Long-term debt 215,863
249,624
$ 284,886
$ 311,225

~~Table of Contents~~


		Carrying Value
Non-derivative instrument designated as hedging instrument under ASC 815-20	Balance Sheet Location	As of September 30, 2022		As of December 31, 2021
Foreign currency debt	Current portion of debt	$	57,211	$	75,518
Foreign currency debt	Long-term debt	302,376		34,795
		$	359,587	$	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)~~loss was as ~~follows:~~follows (in thousands):


Derivatives and Related Hedged Items under ASC 815-20 Fair Value Hedging Relationships	Location of Gain (Loss) Recognized in Income on Derivative and Hedged Item	Amount of Gain (Loss) Recognized in Income on Derivative								Amount of Gain (Loss) Recognized in Income on Hedged Item
		Quarter Ended September 30, 2022		Quarter Ended September 30, 2021		Nine Months Ended September 30, 2022		Nine Months Ended September 30, 2021		Quarter Ended September 30, 2022		Quarter Ended September 30, 2021		Nine Months Ended September 30, 2022		Nine Months Ended September 30, 2021
Interest rate swaps	Interest expense (income), net of interest capitalized	$	966	$	383	$	(3,569)	$	148	$	(4,417)	$	2,100	$	4,534	$	7,098
		$	966	$	383	$	(3,569)	$	148	$	(4,417)	$	2,100	$	4,534	$	7,098

Derivatives and Related Hedged Items under ASC 815-20 Fair Value Hedging Relationships Location of Gain (Loss) Recognized in Income on Derivative and Hedged Item Amount of Gain (Loss)
Recognized in
Income on Derivative Amount of Gain (Loss)
Recognized in
Income on Hedged Item
Quarter Ended September 30, 2017 Quarter Ended September 30, 2016 Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016 Quarter Ended September 30, 2017 Quarter Ended September 30, 2016 Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016
(In thousands)
Interest rate swaps Interest expense, net of interest capitalized $ 600
$ 1,737
$ 2,642
$ 6,075
$ —
$ —
$ —
$ 7,203
Interest rate swaps Other expense (545 ) (7,662 ) 3,275
28,592
1,013
7,423
(841 ) (24,878 )
$ 55
$ (5,925 ) $ 5,917
$ 34,667
$ 1,013
$ 7,423
$ (841 ) $ (17,675 )
The fair value and line item caption of derivative instruments recorded within our consolidated balance sheets for the cumulative basis adjustment for fair value hedges were as follows (in thousands):


Line Item in the Statement of Financial Position Where the Hedged Item is Included	Carrying Amount of the Hedged Liabilities				Cumulative amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Liabilities
	As of September 30, 2022		As of December 31, 2021		As of September 30, 2022		As of December 31, 2021
Current portion of debt and Long-term debt	$	—	$	655,502	$	—	$	6,428
	$	—	$	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:~~follows (in thousands):


Derivatives under ASC 815-20 Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Loss on Derivatives
	Quarter Ended September 30, 2022		Quarter Ended September 30, 2021		Nine Months Ended September 30, 2022		Nine Months Ended September 30, 2021
Interest rate swaps	$	55,016	$	1,534	$	159,132	$	29,228
Foreign currency forward contracts	(148,275)		(48,221)		(311,252)		(150,376)


Fuel swaps	(132,208)		28,193		134,059		144,900
	$	(225,467)	$	(18,494)	$	(18,061)	$	23,752

Derivatives
under ASC 815-20 Cash Flow Hedging Relationships
Amount of Gain (Loss) Recognized in
Accumulated Other
Comprehensive Income (Loss) on Derivative
(Effective Portion)
Location of
Gain (Loss)
Reclassified
from
Accumulated
Other Comprehensive
Loss into Income
(Effective
Portion) Amount of Gain (Loss) Reclassified from
Accumulated Other Comprehensive Income (Loss) into Income (Effective Portion)
Quarter Ended September 30, 2017 Quarter Ended September 30, 2016 Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016 Quarter Ended September 30, 2017 Quarter Ended September 30, 2016 Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016
(In thousands)

Interest rate swaps $ (3,154 ) $ 6,598
$ (24,703 ) $ (126,505 ) Interest expense, net of interest capitalized $ (7,860 ) $ (11,953 ) $ (24,580 ) $ (32,019 )
Foreign currency forward contracts 122,211
11,405
221,861
22,715
Depreciation and amortization expenses (2,710 ) (2,710 ) (8,130 ) (5,408 )
Foreign currency forward contracts —
—
—
—
Other expense (1,512 ) (3,465 ) (9,187 ) (10,206 )
Foreign currency forward contracts —
—
—
—
Other operating —
—
—
(207 )
Foreign currency collar options —
—
—
—
Depreciation and amortization expenses (602 ) (601 ) (1,806 ) (1,806 )
Fuel swaps —
—
—
—
Other expense 1,758
2,760
6,533
9,356
Fuel swaps 67,878
(3,090 ) 33,183
94,640
Fuel (32,386 ) (64,654 ) (114,149 ) (223,484 )
$ 186,935
$ 14,913
$ 230,341
$ (9,150 ) $ (43,312 ) $ (80,623 ) $ (151,319 ) $ (263,774 )
The table below represents amounts excluded from the assessment of effectiveness for our net investment hedging instruments for which the difference between changes in fair value and periodic amortization is recorded in accumulated other comprehensive income (loss) (in thousands):


Gain (Loss) Recognized in Income (Net Investment Excluded Components)	Nine Months Ended September 30, 2022
Net inception fair value at January 1, 2022	$	(554)
Amount of gain recognized in income on derivatives for the period ended September 30, 2022	554

Fair value at September 30, 2022	$	—

~~Table of Contents~~

Derivatives under ASC 815-20
Cash Flow Hedging Relationships
Location of Gain (Loss)
Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing) Amount of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
Quarter Ended September 30, 2017 Quarter Ended September 30, 2016 Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016
(In thousands)

Interest rate swaps Other expense —
90
—
(1,152 )
Foreign currency forward contracts Other expense 75
—
100
(57 )
Fuel swaps Other expense 3,351
(8 ) 1,014
(3,949 )
$ 3,426
$ 82
$ 1,114
$ (5,158 )

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


	Amount of Gain (Loss) Recognized in Other Comprehensive Loss
Non-derivative instruments under ASC 815-20 Net Investment Hedging Relationships	Quarter Ended September 30, 2022		Quarter Ended September 30, 2021		Nine Months Ended September 30, 2022		Nine Months Ended September 30, 2021
Foreign Currency Debt	$	22,464	$	2,585	$	42,023	$	5,593
	$	22,464	$	2,585	$	42,023	$	5,593

Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) (Effective Portion)
Non-derivative instruments under ASC 815-20 Net
Investment Hedging Relationships Quarter Ended September 30, 2017 Quarter Ended September 30, 2016 Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016
(In thousands)

Foreign Currency Debt $ 7,949
$ (3,382 ) $ 34,206
$ 1,313
$ 7,949
$ (3,382 ) $ 34,206
$ 1,313

There was no amount recognized in income (ineffective portion and amount excluded from effectiveness testing) for thequarters and nine months ended September 30, ~~2017~~2022 and September 30, ~~2016, respectively.~~

2021.

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


		Amount of Gain (Loss) Recognized in Income on Derivatives														Amount of Gain (Loss) Recognized in Income on Derivatives
Derivatives Not Designated as Hedging Instruments under ASC 815-20	Location of Gain (Loss) Recognized in Income on Derivatives	Quarter Ended September 30, 2017			Quarter Ended September 30, 2016			Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016			Derivatives Not Designated as Hedging Instruments under ASC 815-20	Location of Gain (Loss) Recognized in Income on Derivatives	Quarter Ended September 30, 2022		Quarter Ended September 30, 2021		Nine Months Ended September 30, 2022		Nine Months Ended September 30, 2021
(In thousands)
Foreign currency forward contracts	Other expense	$	21,951		$	(2,464	)	$	57,019		$	(11,712	)	Foreign currency forward contracts	Other income (expense)	$	(88,440)	$	(12,880)	$	(176,322)	$	(25,854)
Fuel swaps	Other expense	(175		)	(1,172		)	(255		)	(1,224		)	Fuel swaps	Other income (expense)	(230)		8,222		36		35,858
		$	21,776		$	(3,636	)	$	56,764		$	(12,936	)			$	(88,670)	$	(4,658)	$	(176,286)	$	10,004

Credit Related Contingent Features

Our current interest rate derivative instruments ~~may~~ require us to post collateral if our Standard & Poor’s and Moody’s credit ratings ~~are~~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 ~~were to be~~is rated below BBB- by Standard & Poor’s and Baa3 by Moody’s, then the counterparty ~~may~~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 ~~following such event~~ 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. At

As of September 30, ~~2017, four of our interest rate derivative instruments had reached their fifth anniversary; however,~~2022, our senior unsecured debt credit rating was ~~BBB-~~B by Standard & ~~Poor’s~~Poor's and ~~Baa3~~B3 by ~~Moody’s and,~~Moody's. As of September 30, 2022, five of our interest rate derivative hedges had reached their fifth-year anniversary; however, the net market value for these derivative hedges were in a net asset position, accordingly, we were not required to post any collateral as of such date. As of December 31, 2016, two of our interest rate derivative instruments had reached their fifth anniversary. As our unsecured debt credit rating at December 31, 2016 was below BBB-/Baa3, we had posted $7.2 million in collateral as of such date. Consistent with the provisions of our interest rate derivatives instruments, all collateral that was posted with our counterparties was returned upon reaching investment grade.

~~Table of Contents~~

Item 2. 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 Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this ~~document~~Quarterly Report on Form 10-Q includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including statements regarding ~~guidance (including~~ our expectations for ~~the fourth quarter and full year of 2017 and our earnings and yield estimates for 2017 set forth under the heading "Outlook" below),~~future periods, business and industry prospects or future results of operations or financial position, made in this Quarterly Report on Form 10-Q are forward-looking. Words such as "anticipate," "believe," "considering," "could," "driving," "estimate," "expect," "goal," "intend," "may," "plan," "project," "seek," "should," "will," ~~"driving"~~"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 Quarterly Report on Form 10-Q and, in particular, the risks discussed under the caption "Risk Factors" in Part II, Item 1A herein.

All forward-looking statements made in this Quarterly Report on Form 10-Q 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 ~~has been~~is organized to present the following:

•a review 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 quarter and nine months ended September 30, ~~2017~~2022, compared to the same ~~periods~~period in ~~2016;~~2021; and

~~a discussion of our business outlook, including our expectations for selected financial items for the fourth quarter and full year of 2017; and~~

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

~~Table of Contents~~25

Critical Accounting Policies and Estimates

For a discussion of our critical accounting policies and estimates, refer to Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operationswithin our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2021.

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 airtransportation to and from our ships; and

•Onboard and other revenues, which consist primarily of revenues from the sale of goods and/or services onboard ourships not included in passenger ticket prices, cancellation fees, sales of vacation protection insurance, ~~and~~ pre- and post-cruise ~~tours.~~ tours and fees for operating certain port facilities. Onboard and other revenues also ~~includes~~include revenues we receive from independent ~~third party~~third-party concessionaires that pay us apercentage of their revenues in exchange for the right to provide selected goods and/or services onboard our ships, as well as revenues received for ~~our bareboat charter,~~ procurement and management related services we perform on behalf of our unconsolidated affiliates.

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 ticketrevenues, including travel agent 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, includingthe 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 swapagreements; 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.~~

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.

~~Table of Contents~~

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 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 2022 and 2021 periods presented, these items included (i) other income; (ii) impairment and credit losses (recoveries); (iii) restructuring charges and other initiative expenses; (iv) equity investment asset impairments; (v) net insurance recoveries related to the collapse of the drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas; (vi) Pullmantur reorganization settlement; and (vii) the net gain recognized in 2021 in relation to the sale of the Azamara brand. A reconciliation of Net Income (Loss) to Adjusted EBITDA is provided below under Results of Operations.

Adjusted Earnings (Loss) per Share ("Adjusted EPS") is a non-GAAP measure thatrepresents Adjusted Net Income (Loss) (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 Earnings (Loss) per Share to Adjusted Earnings (Loss) per share is provided below under Results of Operations.

Adjusted Net Income (Loss) is a non-GAAP measure that represents net income (loss) excluding certain items that we believe adjusting for is meaningful when assessing our performance on a comparative basis. For the 2022 and 2021 periods presented, these items included ~~the net loss related to the elimination of the Pullmantur reporting lag, the net gain related to the 51% sale of the Pullmantur~~(i) impairment and ~~CDF Croisières de France~~ ("~~CDF") brands,~~credit losses (recoveries); (ii) restructuring charges and other initiative ~~costs~~expenses; (iii) the amortization of the Silversea Cruises intangible assets resulting from the Silversea Cruises acquisition in 2018; (iv) gain or loss on the extinguishment of debt; (v) the amortization of non-cash debt discount on our convertible notes; (vi) the estimated cash refunds expected to be paid to Pullmantur guests as part of the Pullmantur S.A. reorganization in 2020; (vii) equity investment asset impairments; (viii) net insurance recoveries related to ~~our Pullmantur right-sizing strategy~~the collapse of the drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas; and ~~other restructuring initiatives.~~(ix) the net gain recognized in 2021 in relation to the sale of the Azamara brand. A reconciliation of Net Income (Loss) to Adjusted Net Income (Loss) is provided below under Results of Operations.

Available Passenger Cruise Days (“~~APCD~~” (“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 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 net income (loss) 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) to EBITDA is provided below under Results of Operations.

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

~~Gross Yields~~ ~~represent total revenues per APCD.~~

~~Net Cruise Costs~~ ~~and~~ 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 ~~historical~~ Gross Cruise Costs to Net Cruise Costs and Net Cruise Costs Excluding Fuel is provided below under Results of ~~Operations~~.Operations. For the ~~periods~~2022 period presented, Net Cruise Costs and Net Cruise Costs Excluding Fuel excludes ~~the net gain related to the 51% sale of the Pullmantur and CDF brands,~~ restructuring ~~charges~~ and other initiative ~~costs related to our Pullmantur right-sizing strategy and other restructuring initiatives.~~expenses.

~~Net Revenues~~ ~~represent total revenues less commissions, transportation and other expenses and onboard and other expenses (each of which is described above under the~~ ~~Description of Certain Line Items~~ ~~heading).~~

~~Net Yields~~ represent Net Revenues per APCD. We utilize Net Revenues and Net Yields to manage our business on a day-to-day basis as we believe that they are the most relevant measures of our pricing performance because they reflect the cruise revenues earned by us net of our most significant variable costs, which are commissions, transportation and other expenses and onboard and other expenses. A reconciliation of historical Gross Yields to Net Yields is provided below under ~~Results of Operations. Net Yields excludes initiative costs related to the sale of the Pullmantur and CDF brands.~~

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.

~~We believe~~Although discussed in prior periods, we did not disclose or reconcile in this report our Gross Yields and Net Yields, ~~Net Cruise Costs~~as defined in our Annual Report on Form 10-K for the year ended December 31, 2019. Historically, we have utilized these financial metrics to measure relevant rate comparisons to other periods. However, our 2022 and ~~Net Cruise Costs Excluding Fuel are our most relevant non-GAAP financial measures. However, a significant portion of our revenue~~2021 reduction in capacity and ~~expenses are denominated in currencies other than the United States dollar. Because our reporting currency is the United States dollar, the value of these~~ revenues, and expenses can be affected by changes in currency exchange rates. Although such changes in local currency prices is just one of many elements impacting our revenues and expenses, it can be an important element. For this reason, we also monitor Net Yields, Net Cruise Costs and Net Cruise Costs Excluding Fuel as if the current periods’ currency exchange rates had remained constant with the comparable prior periods’ rates, or on a “Constant Currency” basis.

~~Table of Contents~~

It should be emphasized that Constant Currency is primarily used for comparing short-term changes and/or projections. Changes in guest sourcing and shifting the amount of purchases between currencies can changedue to the impact of the ~~purely currency-based fluctuations.~~

~~The use~~COVID-19 pandemic on our operations, do not allow for a meaningful analysis and comparison of certain significant non-GAAP measures, such as Net Yields, Net Cruise Costs and Net Cruise Costs Excluding Fuel, allows us to perform capacity and rate analysis to separate the impact of known capacity changes from other less predictable changes which affect our business. We believe these non-GAAP measures provide expanded insight to measure revenue and cost performance in addition to the GAAP based financial measures. There are no specific rules or regulations for determining non-GAAP and Constant Currency measures,metrics and as such ~~there exists the possibility that they may not be comparable to other companies within the industry.~~these metrics have been excluded from this report.

We have not provided a quantitative reconciliation of ~~(i)~~ projected ~~Total revenues~~non-GAAP financial measures to projected Net Revenues, (ii) projected Gross Yields to projected Net Yields, (iii) projected Gross Cruise Costs to projected Net Cruise Costs and projected Net Cruise Costs Excluding Fuel and (iv) projected Net Income and Earnings per Share to projected Adjusted Net Income and Adjusted Earnings per Sharethe most comparable GAAP financial measures because preparation of meaningful ~~GAAP~~U.S.GAAP projections of ~~Total revenues, Gross Yields, Gross Cruise Costs, Net Income and Earnings per Share~~ would require unreasonable effort. Due to significant uncertainty, we are unable to predict, without unreasonable effort, the future movement of foreign exchange rates, fuel prices and interest rates inclusive of our related hedging programs. In addition, we are unable to determine the future impact of ~~restructuring expenses or other~~ non-core business related gains and losses which may result from strategic initiatives. These items are uncertain and could be material to our results of operations in accordance with U.S GAAP. Due to this uncertainty, we do not believe that reconciling information for such projected figures would be meaningful.

Recent Developments

Continued Fleet Ramp-up

During 2021, we restarted our global cruise operations in a phased manner, following our voluntary suspension of global cruise operations that commenced in March of 2020 in response to the COVID-19 pandemic. Since then, we have steadily increased the number of ships that have returned to service, with our full fleet in service as of June 30, 2022.

Wonder of the Seas and Celebrity Beyond were delivered and commenced operations in the first quarter and second quarter of 2022, respectively.

We are currently offering cruise itineraries in all of our key destinations with the exception of China. China remains closed to cruising, resulting in the redeployment of ships planned for China to other markets.

Operating Costs

Operating costs for the third quarter of 2022 included costs related to our health and safety protocols and lagging costs related to our fleet ramp-up. As we approach full occupancy and crew staffing levels, as well as modify our health and safety protocols, we expect these costs to normalize. The improvement in operating costs is expected to be partially offset by inflationary and supply chain challenges, mainly related to fuel and food costs. We expect these challenges to continue to have an adverse impact on our 2022 operating costs.

Update on Bookings

Booking volumes in the third quarter of 2022 were significantly higher than the corresponding 2019 period. Guests continue to book their cruises closer to sailing compared to prior years, resulting in approximately 50% more bookings in the third quarter of 2022 for current year sailings when compared to bookings in the third quarter of 2019 for 2019 sailings. Additionally, booking volumes for 2023 sailings doubled during the third quarter of 2022, when compared to the second quarter of 2022, and were considerably higher than the booking volumes for 2020 sailings during the comparable period in 2019.

As of September 30, 2022 we had $3.8 billion in customer deposits, reflecting typical seasonality as peak summer sailing deposits have been recognized in the revenue. In the third quarter, approximately 95% of total bookings were new versus FCC redemptions.

Update on Recent Liquidity Actions and Ongoing Uses of Cash

Refer to Funding Needs and Sources for discussion regarding our recent liquidity actions and ongoing uses of cash.

Capital Expenditures

Refer to Future Capital Commitments for discussion on capital expenditures.

Debt Maturities, New Financings and Other Liquidity Actions

During the nine months ended September 30, 2022, we continued to take actions to further improve our liquidity position and manage cash flow. We refinanced $6.9 billion of 2022 and 2023 maturities during the nine months ended September 30, 2022. Refer to Note 7. Debt to our consolidated financial statements under Part I. Item 1, Financial Statements for further information regarding these transactions.

Expected debt maturities for the remainder of 2022 are $0.6 billion and $4.0 billion for 2023. In October 2022 we addressed $2.0 billion of the 2023 debt maturities as described in Note 7. Debt. 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, refinancing opportunities and additional financings.

Results of Operations

Summary

~~Both our net income~~ Net Incomeand Adjusted Net Income for the third quarter of ~~2017~~2022 were ~~$752.8~~$33.0 million and $65.8 million, or ~~$3.49~~$0.13 and $0.26 per share on a diluted basis, respectively, reflecting our return to full operations, compared to ~~net income~~Net (Loss) and Adjusted Net ~~Income~~(Loss) of ~~$693.3 million~~$(1.4) billion and ~~$690.9 million,~~$(1.2) billion, or ~~$3.21~~$(5.59) and ~~$3.20~~$(4.91) per share on a diluted basis, respectively, for the third quarter of ~~2016.~~2021.

~~Both our net income~~Net (Loss) and Adjusted Net ~~Income~~(Loss) for the nine months ended September 30, ~~2017~~2022 were ~~$1.3~~$(1.7) billion and $(1.6) billion, or ~~$6.19~~$(6.49) and $(6.39) per share on a diluted basis, asrespectively, compared to ~~net income~~Net (Loss) and Adjusted Net ~~Income~~(Loss) of ~~$1.0~~$(3.9) billion and ~~$1.1~~$(3.6) billion, or ~~$4.72~~$(15.56) and ~~$4.85,~~$(14.41) per share on a diluted basis, respectively, for the nine months ended September 30, ~~2016.~~

2021.

Significant items for the quarter and nine months ended September 30, ~~2017~~2022 include:

~~The estimated negative impact resulting from third quarter 2017 hurricane-related disruptions was approximately $0.20 per share on a diluted basis to our net income~~•Total revenues, excluding the effect of changes in foreign currency exchange rates, increased $2.6 billion and ~~Adjusted Net Income~~$5.8 billion, respectively, for the quarter and nine months ended September 30, ~~2017.~~2022 as compared to the same period in 2021. The increase reflects our full return to operations by June 2022 compared to 2021 when the suspension of our global cruise operations was in effect for a substantial portion of our fleet. APCDs for the third quarter and nine months ended September 30, 2022 were 11,564,662 and 29,553,564, respectively, compared to 4,112,256 and 4,967,078, respectively, 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 ~~an increase~~a decrease in total revenues of ~~$14.8~~$74.4 million and $107.2 million, respectively for the quarter and ~~a decrease of $16.6 million for the~~ nine months ended September 30, ~~2017,~~2022, respectively, as compared to the same periods in ~~2016.~~2021.

•Total ~~revenues,~~cruise operating expenses, excluding the effect of changes in foreign currency exchange rates, ~~decreased $9.0 million~~increased $1.2 billion and ~~increased $203.2 million~~$3.4 billion, respectively, for the quarter and nine months ended September 30, ~~2017, respectively,~~2022 as compared to the same ~~periods~~period in ~~2016.~~2021. The ~~decrease during~~increase reflects our return to operations in 2022 compared to 2021 when the ~~quarter~~suspension of our global cruise operations was ~~due to the decrease~~ in capacity, including the hurricane-related disruptions during the third quarter of 2017, and the increase during the nine months was primarily due to an increase in ticket prices and onboard spending on a per passenger basis, which are further discussed below.

~~Total cruise operating expenses decreased $21.9 million and $141.4 million~~effect for the quarter and nine months ended September 30, 2017, respectively, as compared to the same periods in 2016. The decreases were primarily due to the decrease in capacity, which is further discussed below. Additionally, we recognized a $30.9 million gain on the salesubstantial portion of ~~Legend of the Seas~~ ~~in March 2017.~~

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 ~~was immaterial~~resulted, in a decrease in total operating expenses of $34.9 million and $59.2 million for the quarter and nine months ended September 30, 2022, respectively, compared to the same periods in 2021.

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

•During the first quarter of 2022, we issued the January 2022 Unsecured Notes.

•In February 2022, we entered into certain agreements with MS where MS has agreed to provide backstop committed financing.

•In July 2022, we purchased a ship for our Silversea Cruises brand. To finance the purchase, we assumed $277 million of debt, which is 95% guaranteed by Hermes.

•In August 2022, we issued $1.15 billion aggregate principal amount of 6.00% senior convertible notes due 2025, the proceeds of which we used to repurchase $800 million of our 4.25% senior convertible notes due June 2023 and $350 million of our 2.875% senior convertible notes due November 2023.

•In August 2022, we issued $1.25 billion of aggregate principal amount of 11.625% senior unsecured notes due 2027, the proceeds of which were or will be used to repay debt scheduled to mature in 2022, including the $650 million 5.25% unsecured senior notes due November 2022.

•In September 2022, we amended our $0.6 billion unsecured term loan due October 2023, to among other things, extend the maturity date of advances held by consenting lenders by 12 months, and we prepaid consenting lenders 10% of their respective outstanding advances.

For further information regarding the debt transactions discussed above, refer to Note 7. Debt to our consolidated financial statements ~~of comprehensive income (loss)~~under Part I. Item 1. Financial Statements.

Operating results for the ~~quarter~~quarters and nine months ended September 30, ~~2017.~~

~~Table of Contents~~

~~Other Items~~

~~In May 2017, TUI Cruises, our 50% joint venture, took delivery of~~ ~~Mein Schiff 6~~.

During the second quarter of 2017, we entered into agreements with Meyer Turku to build two "Project Icon" ships. In October 2017, we entered into credit agreements for the unsecured financing of these ships for up to 80% of each ship's contract price. Refer to Note 7. ~~Commitments and Contingencies~~ ~~to our consolidated financial statements for further information.~~

During the third quarter of 2017, we entered into an agreement to purchase a ship for our Azamara Club Cruises brand. The sale is expected to be completed with the delivery of the ship scheduled for March 2018.

~~Table of Contents~~

~~Operating results for the quarter and nine months ended September 30, 2017~~2022 compared to the same period in ~~2016~~2021 are shown in the following table (in thousands, except per share data):


	Quarter Ended September 30,
	2022				2021
			% of Total Revenues				% of Total Revenues
Passenger ticket revenues	$	2,020,974	67.5	%	$	280,153	61.3	%
Onboard and other revenues	972,101		32.5	%	176,805		38.7	%
Total revenues	2,993,075		100.0	%	456,958		100.0	%
Cruise operating expenses:
Commissions, transportation and other	484,054		16.2	%	64,780		14.2	%
Onboard and other	220,216		7.4	%	42,703		9.3	%
Payroll and related	304,369		10.2	%	265,974		58.2	%
Food	194,966		6.5	%	48,950		10.7	%
Fuel	316,214		10.6	%	118,127		25.9	%
Other operating	436,444		14.6	%	273,157		59.8	%
Total cruise operating expenses	1,956,263		65.4	%	813,691		178.1	%
Marketing, selling and administrative expenses	373,116		12.5	%	323,422		70.8	%
Depreciation and amortization expenses	355,085		11.9	%	325,907		71.3	%
Impairment and credit losses (recoveries)	10,186		0.3	%	(238)		(0.1)	%
Operating Income (Loss)	298,425		10.0	%	(1,005,824)		(220.1)	%
Other income (expense):
Interest income	11,953		0.4	%	3,786		0.8	%
Interest expense, net of interest capitalized	(352,187)		(11.8)	%	(430,661)		(94.2)	%
Equity investment income (loss)	73,997		2.5	%	(29,085)		(6.4)	%
Other income	780		—	%	37,230		8.1	%
	(265,457)		(8.9)	%	(418,730)		(91.6)	%
Net Income (Loss)	$	32,968	1.1	%	$	(1,424,554)	(311.7)	%
Diluted Earnings (Loss) per Share	$	0.13			$	(5.59)


	Quarter Ended September 30,										Nine months ended September 30,											Nine Months Ended September 30,
	2017					2016					2017					2016						2022				2021
				% of Total Revenues					% of Total Revenues					% of Total Revenues					% of Total Revenues					% of Total Revenues				% of Total Revenues
Passenger ticket revenues	$	1,893,152		73.7	%	$	1,899,956		74.1	%	$	4,892,760		72.2	%	$	4,794,653		72.8	%	Passenger ticket revenues	$	4,091,035	65.6	%	$	323,782	58.9	%
Onboard and other revenues	676,392			26.3	%	663,785			25.9	%	1,880,618			27.8	%	1,792,145			27.2	%	Onboard and other revenues	2,145,513		34.4	%	226,104		41.1	%
Total revenues	2,569,544			100.0	%	2,563,741			100.0	%	6,773,378			100.0	%	6,586,798			100.0	%	Total revenues	6,236,548		100.0	%	549,886		100.0	%
Cruise operating expenses:																					Cruise operating expenses:
Commissions, transportation and other	409,597			15.9	%	400,933			15.6	%	1,060,176			15.7	%	1,060,391			16.1	%	Commissions, transportation and other	964,256		15.5	%	72,917		13.3	%
Onboard and other	157,041			6.1	%	159,887			6.2	%	395,472			5.8	%	399,739			6.1	%	Onboard and other	450,225		7.2	%	55,782		10.1	%
Payroll and related	210,764			8.2	%	214,081			8.4	%	636,861			9.4	%	671,955			10.2	%	Payroll and related	981,128		15.7	%	530,250		96.4	%
Food	126,223			4.9	%	125,732			4.9	%	369,198			5.5	%	371,759			5.6	%	Food	450,376		7.2	%	74,618		13.6	%
Fuel	160,752			6.3	%	178,772			7.0	%	508,914			7.5	%	531,283			8.1	%	Fuel	779,873		12.5	%	219,058		39.8	%
Other operating	253,892			9.9	%	260,718			10.2	%	780,257			11.5	%	857,161			13.0	%	Other operating	1,206,036		19.3	%	569,383		103.5	%
Total cruise operating expenses	1,318,269			51.3	%	1,340,123			52.3	%	3,750,878			55.4	%	3,892,288			59.1	%	Total cruise operating expenses	4,831,894		77.5	%	1,522,008		276.8	%
Marketing, selling and administrative expenses	273,637			10.6	%	259,327			10.1	%	874,957			12.9	%	852,435			12.9	%	Marketing, selling and administrative expenses	1,138,571		18.3	%	867,021		157.7	%
Depreciation and amortization expenses	240,150			9.3	%	229,328			8.9	%	710,836			10.5	%	661,712			10.0	%	Depreciation and amortization expenses	1,046,094		16.8	%	959,512		174.5	%
Operating Income	737,488			28.7	%	734,963			28.7	%	1,436,707			21.2	%	1,180,363			17.9	%
Impairment and credit losses (recoveries)																					Impairment and credit losses (recoveries)	(584)		—	%	39,934		7.3	%
Operating Loss																					Operating Loss	(779,427)		(12.5)	%	(2,838,589)		(516.2)	%
Other income (expense):																					Other income (expense):
Interest income	4,693			0.2	%	6,472			0.3	%	16,756			0.2	%	14,875			0.2	%	Interest income	21,765		0.3	%	13,317		2.4	%
Interest expense, net of interest capitalized	(73,233		)	(2.9	)%	(82,610		)	(3.2	)%	(230,182		)	(3.4	)%	(226,803		)	(3.4	)%	Interest expense, net of interest capitalized	(932,552)		(15.0)	%	(1,007,986)		(183.3)	%
Equity investment income	85,120			3.3	%	46,539			1.8	%	120,359			1.8		94,832			1.4	%
Other expense	(1,226		)	—	%	(12,107		)	(0.5	)%	(6,546		)	(0.1	)%	(40,965		)	(0.6	)%
Equity investment income (loss)																					Equity investment income (loss)	29,759		0.5	%	(137,044)		(24.9)	%
Other income																					Other income	4,699		0.1	%	66,771		12.1	%
	15,354			0.6	%	(41,706		)	(1.6	)%	(99,613		)	(1.5	)%	(158,061		)	(2.4	)%		(876,329)		(14.1)	%	(1,064,942)		(193.7)	%
Net Income	$	752,842		29.3	%	$	693,257		27.0	%	$	1,337,094		19.7	%	$	1,022,302		15.5	%
Diluted Earnings per Share	$	3.49				$	3.21				$	6.19				$	4.72
Net Loss																					Net Loss	$	(1,655,756)	(26.5)	%	$	(3,903,531)	(709.9)	%
Diluted Loss per Share																					Diluted Loss per Share	$	(6.49)			$	(15.56)

~~Table of Contents~~

Adjusted Net Income (Loss) and Adjusted Earnings (Loss) per Share were calculated as follows (in thousands, except per share data):


	Quarter Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net Income (Loss)	$	32,968	$	(1,424,554)	$	(1,655,756)	$	(3,903,531)
Impairment and credit losses (recoveries) (1)	10,186		(237)		(584)		39,934
Restructuring charges and other initiatives expense	4,573		74		6,448		1,721
Amortization of Silversea Cruises intangible assets related to Silversea Cruises acquisition	1,623		1,623		4,870		4,869
Loss on extinguishment of debt (2)	16,449		141,915		16,449		138,759
Convertible debt amortization of debt discount (3)	—		26,073		—		78,219
Pullmantur reorganization settlement (4)	—		5,242		—		10,242
Equity investment impairment (5)	—		—		—		26,042
Oasis of the Seas incident (6)	—		—		—		(6,584)
Net gain related to the sale of the Azamara brand	—		163		—		(4,773)
Adjusted Net Income (Loss)	$	65,799	$	(1,249,701)	$	(1,628,573)	$	(3,615,102)

Basic:
Earnings (Loss) per Share	$	0.13	$	(5.59)	$	(6.49)	$	(15.56)
Adjusted Earnings (Loss) per Share	$	0.26	$	(4.91)	$	(6.39)	$	(14.41)

Diluted:
Earnings (Loss) per Share	$	0.13	$	(5.59)	$	(6.49)	$	(15.56)
Adjusted Earnings (Loss) per Share	$	0.26	$	(4.91)	$	(6.39)	$	(14.41)

Weighted-Average Shares Outstanding:
Basic	255,071		254,713		254,953		250,808
Diluted	255,378		254,713		254,953		250,808

(1)Primarily represents asset impairments and a credit loss recovery for a note receivable in which credit losses were previously recorded in 2022.

(2)Represents net losses related to the early repayment of debt. For further information regarding the repayment transactions, refer to Note 7. Debt to our consolidated financial statements.

(3)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.

(4)Represents estimated cash refunds expected to be paid to Pullmantur guests as part of the Pullmantur S.A. reorganization.

(5)Represents equity investment asset impairments for TUI Cruises GmbH in 2021 as a result of the impact of COVID-19.

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

Quarter Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Net Income $ 752,842
$ 693,257
$ 1,337,094
$ 1,022,302
Adjusted Net income 752,842
690,911
1,337,094
1,050,031
Net Adjustments to Net Income- (Decrease) Increase $ —
$ (2,346 ) $ —
$ 27,729
Adjustments to Net Income:
Net loss related to the elimination of the Pullmantur reporting lag $ —
$ —
—
21,656
Net gain related to the sale of the Pullmantur and CDF Croisières de France brands —
(3,834 ) —
(3,834 )
Restructuring charges —
1,897
—
6,627
Other initiative costs —
(409 ) —
3,280
Net Adjustments to Net Income- (Decrease) Increase $ —
$ (2,346 ) $ —
$ 27,729

Basic:

   Earnings per Share $ 3.51
$ 3.23
$ 6.22
$ 4.74
   Adjusted Earnings per Share $ 3.51
$ 3.22
$ 6.22
$ 4.87

Diluted:
   Earnings per Share $ 3.49
$ 3.21
$ 6.19
$ 4.72
   Adjusted Earnings per Share $ 3.49
$ 3.20
$ 6.19
$ 4.85

Weighted-Average Shares Outstanding:
Basic 214,694
214,819
214,882
215,663
Diluted 215,824
215,667
215,905
216,575

Selected statistical information is shown in the following table:


	Quarter Ended September 30,				Nine Months Ended September 30,
	2022 (1)		2021 (2)		2022 (1)		2021 (2)
Passengers Carried	1,714,774		251,744		3,790,205		327,226
Passenger Cruise Days	11,136,331		1,496,609		23,998,975		1,771,087
APCD	11,564,662		4,112,256		29,553,564		4,967,078
Occupancy	96.3	%	36.4	%	81.2	%	35.7	%

Quarter Ended September 30, Nine Months Ended September 30,
2017 2016 2017
2016⁽¹⁾
Passengers Carried 1,512,363
1,558,224
4,371,235
4,365,144
Passenger Cruise Days 10,189,900
10,727,918
30,100,035
30,367,048
APCD 9,214,470
9,766,482
27,646,779
28,503,681
Occupancy 110.6 % 109.8 % 108.9 % 106.5 %
(1)Due to the elimination of the Silversea Cruises three-month reporting lag in October 2021, we included Silversea Cruises' metrics from July 1, 2022 through September 30, 2022 in the quarter ended September 30, 2022 and from January 1, 2022 through September 30, 2022 in the nine months ended September 30, 2022.

(2)Due to the three-month reporting lag, we included Silversea Cruises' metrics from April 1, 2021 through June 30, 2021 in the quarter ended September 30, 2021 and from October 1, 2020 through June 30, 2021 in the nine months ended September 30, 2021.

⁽¹⁾ ~~Does not include November~~

EBITDA and ~~December 2015 amounts for Pullmantur~~Adjusted EBITDA were calculated as ~~the net Pullmantur result for those months was included~~follows (in thousands):


	Quarter Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net Income (Loss)	$	32,968	$	(1,424,554)	$	(1,655,756)	$	(3,903,531)
Interest income	(11,953)		(3,786)		(21,765)		(13,317)
Interest expense, net of interest capitalized	352,187		430,661		932,552		1,007,986
Depreciation and amortization expenses	355,085		325,907		1,046,094		959,512
Income tax (benefit) expense (1)	(38)		(26,252)		4,515		(36,257)
EBITDA	728,249		(698,024)		305,640		(1,985,607)

Other income (2)	(742)		(10,978)		(9,214)		(30,514)
Impairment and credit losses (recoveries) (3)	10,186		(237)		(584)		39,934
Restructuring charges and other initiatives expense	4,573		74		6,448		1,721
Equity investment impairment (4)	—		—		—		26,042
Oasis of the Seas incident (5)	—		—		—		(6,584)
Pullmantur reorganization settlement	—		5,242		—		5,242
Net gain related to the sale of the Azamara brand	—		163		—		(4,773)
Adjusted EBITDA	$	742,266	$	(703,760)	$	302,290	$	(1,954,539)

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

(2) Represents net non-operating income ~~(loss)~~or expense. For the periods reported, primarily relates to gains or losses arising from the remeasurement of monetary assets and liabilities denominated in foreign currencies and changes in the fair value of fuel swaps for which cash flow hedge accounting was discontinued. The amount excludes income tax (benefit) expense, included in the ~~nine months ended September 30, 2016,~~EBITDA calculation above.

(3) Primarily represents asset impairments and a credit loss recovery for a note receivable in which credit losses were previously recorded in 2022.

(4) Represents equity investment asset impairments for TUI Cruises GmbH in 2021 as a result of the ~~elimination~~impact of COVID-19.

(5) Represents net insurance recoveries related to the collapse of the ~~Pullmantur reporting lag, and did not affect Gross Yields, Net Yields, Gross Cruise Costs, Net Cruise Costs and Net Cruise Costs Excluding Fuel.~~drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas.

~~Table of Contents~~

~~Gross Yields and Net Yields were calculated as follows (in thousands, except APCD and Yields):~~

Quarter Ended September 30, Nine Months Ended September 30,
2017 2017 On a Constant Currency Basis 2016 2017 2017 On a Constant Currency Basis 2016
Passenger ticket revenues $ 1,893,152
$ 1,880,360
$ 1,899,956
$ 4,892,760
$ 4,907,927
$ 4,794,653
Onboard and other revenues 676,392
674,382
663,785
1,880,618
1,882,049
1,792,145
Total revenues 2,569,544
2,554,742
2,563,741
6,773,378
6,789,976
6,586,798
Less:

Commissions, transportation and other 409,597
406,500
400,933
1,060,176
1,062,632
1,060,391
Onboard and other 157,041
155,818
159,887
395,472
394,316
399,739
Net Revenues including other initiative costs 2,002,906
1,992,424
2,002,921
5,317,730
5,333,028
5,126,668
Less:
Other initiative costs included within Net Revenues —
—
(1,843 ) —
—
(1,843 )
Net Revenues $ 2,002,906
$ 1,992,424
$ 2,004,764
$ 5,317,730
$ 5,333,028
$ 5,128,511

APCD 9,214,470
9,214,470
9,766,482
27,646,779
27,646,779
28,503,681
Gross Yields $ 278.86
$ 277.25
$ 262.50
$ 245.00
$ 245.60
$ 231.09
Net Yields $ 217.37
$ 216.23
$ 205.27
$ 192.35
$ 192.90
$ 179.92

~~Table of Contents~~

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


	Quarter Ended September 30,		Nine Months Ended September 30,
	2022		2022
Total cruise operating expenses	$	1,956,263	$	4,831,894
Marketing, selling and administrative expenses	373,116		1,138,571
Gross Cruise Costs	2,329,379		5,970,465
Less:
Commissions, transportation and other	484,054		964,256
Onboard and other	220,216		450,225
Net Cruise Costs Including Other Costs	1,625,109		4,555,984
Less:
Restructuring charges and other initiatives expense (1)	4,573		6,448
Net Cruise Costs	$	1,620,536	$	4,549,536
Less:
Fuel	316,214		779,873
Net Cruise Costs Excluding Fuel	$	1,304,322	$	3,769,663

APCD	11,564,662		29,553,564
Gross Cruise Costs per APCD	$	201.42	$	202.02
Net Cruise Costs per APCD	$	140.13	$	153.94
Net Cruise Costs Excluding Fuel per APCD	$	112.79	$	127.55

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

Quarter Ended September 30, Nine Months Ended September 30,
2017 2017 On a Constant Currency Basis 2016 2017 2017 On a Constant Currency Basis 2016
Total cruise operating expenses $ 1,318,269
$ 1,311,964
$ 1,340,123
$ 3,750,878
$ 3,753,441
$ 3,892,288
Marketing, selling and administrative expenses⁽¹⁾
273,637
273,121
257,430
874,957
881,067
845,808
Gross Cruise Costs 1,591,906
1,585,085
1,597,553
4,625,835
4,634,508
4,738,096
Less:

Commissions, transportation and other 409,597
406,500
400,933
1,060,176
1,062,632
1,060,391
Onboard and other 157,041
155,818
159,887
395,472
394,316
399,739
Net Cruise Costs including other initiative costs 1,025,268
1,022,767
1,036,733
3,170,187
3,177,560
3,277,966
Less:

Net gain related to the sale of Pullmantur and CDF Croisières de France brands included within other operating expenses —
—
(3,834 ) —
—
(3,834 )
Other initiative costs included within cruise operating expenses and marketing, selling and administrative expenses —
—
(2,252 ) —
—
1,073
Net Cruise Costs 1,025,268
1,022,767
1,042,819
3,170,187
3,177,560
3,280,727
Less:
Fuel⁽²⁾
160,752
160,751
178,772
508,914
508,911
530,859
Net Cruise Costs Excluding Fuel $ 864,516
$ 862,016
$ 864,047
$ 2,661,273
$ 2,668,649
$ 2,749,868

APCD 9,214,470
9,214,470
9,766,482
27,646,779
27,646,779
28,503,681
Gross Cruise Costs per APCD $ 172.76
$ 172.02
$ 163.58
$ 167.32
$ 167.63
$ 166.23
Net Cruise Costs per APCD $ 111.27
$ 111.00
$ 106.78
$ 114.67
$ 114.93
$ 115.10
Net Cruise Costs Excluding Fuel per APCD $ 93.82
$ 93.55
$ 88.47
$ 96.26
$ 96.53
$ 96.47

⁽¹⁾ ~~For the quarter and nine months ended September 30, 2016, amounts do not include restructuring charges of $1.9 million and $6.6 million, respectively.~~

⁽²⁾ ~~For the nine months ended September 30, 2016, amount does not include fuel expense of $0.4 million included within other initiative costs associated with the redeployment of Pullmantur’s~~ ~~Empress~~ ~~to the Royal Caribbean International brand.~~

~~Table of Contents~~

~~2017 Outlook~~

The Company does not make predictions about fuel pricing, interest rates or currency exchange rates but does provide guidance about its future business activities. On November 7, 2017, we announced the following full year and fourth quarter 2017 guidance based on the then current fuel pricing, interest rates and currency exchange rates:

~~Full Year 2017~~



	~~As Reported~~	~~Constant Currency~~
~~Net Yields~~	~~Approx. 6.0%~~	~~Approx. 6.0%~~
~~Net Cruise Costs per APCD~~	~~1.0% to 1.5%~~	~~Approx. 1.5%~~
~~Net Cruise Costs per APCD, Excluding Fuel~~	~~Approx. 2.0%~~	~~Approx. 2.0%~~
~~Capacity Decrease~~	~~(2.4%)~~
~~Depreciation and Amortization~~	~~Approx. $950 million~~
~~Interest Expense, net~~	~~Approx. $280 million~~
~~Fuel Consumption (metric tons)~~	~~1,315,800~~
~~Fuel Expenses~~	~~$686 million~~
~~Percent Hedged (fwd consumption)~~	~~65%~~
~~Impact of 10% change in fuel prices~~	~~$7 million~~
~~1% Change in Currency~~	~~$4 million~~
~~1% Change in Net Yield~~	~~$16 million~~
~~1% Change in NCC ex Fuel~~	~~$9 million~~
~~1% Change in LIBOR~~	~~$6 million~~
~~Adjusted Earnings per Share-Diluted~~	~~$7.35 to $7.40~~

~~Fourth Quarter 2017~~



	~~As Reported~~	~~Constant Currency~~
~~Net Yields~~	~~Approx. 3.5%~~	~~2.0% to 2.5%~~
~~Net Cruise Costs per APCD~~	~~Approx. 7.0%~~	~~Approx. 6.5%~~
~~Net Cruise Costs per APCD, Excluding Fuel~~	~~Approx. 9.0%~~	~~Approx. 8.5%~~
~~Capacity Decrease~~	~~(0.6%)~~
~~Depreciation and Amortization~~	~~Approx. $240 million~~
~~Interest Expense, net~~	~~Approx. $65 million~~
~~Fuel Consumption (metric tons)~~	~~334,800~~
~~Fuel Expenses~~	~~$177 million~~
~~Percent Hedged (fwd consumption)~~	~~65%~~
~~Impact of 10% change in fuel prices~~	~~$7 million~~
~~1% Change in Currency~~	~~$4 million~~
~~1% Change in Net Yield~~	~~$16 million~~
~~1% Change in NCC ex Fuel~~	~~$9 million~~
~~1% Change in LIBOR~~	~~$6 million~~
~~Adjusted Earnings per Share-Diluted~~	~~$1.15 to $1.20~~

~~Table of Contents~~

Volatility in foreign currency exchange rates affects the US dollar value of our earnings. Based on our highest net exposure for each quarter and the full year 2017, the top five foreign currencies are ranked below. For example, the Australian Dollar is the most impactful currency in the first and fourth quarters of 2017. The first, second and third quarters of 2017 rankings are based on actual results. Rankings for the fourth quarter and full year are based on estimated net exposures.



~~Ranking~~	Q1	Q2	Q3	Q4	~~FY 2017~~
1	~~AUD~~	~~GBP~~	~~GBP~~	~~AUD~~	~~GBP~~
2	~~CAD~~	~~CNH~~	~~CNH~~	~~GBP~~	~~AUD~~
3	~~GBP~~	~~AUD~~	~~EUR~~	~~CAD~~	~~CAD~~
4	~~CNH~~	~~CAD~~	~~CAD~~	~~EUR~~	~~CNH~~
5	~~BRL~~	~~MXN~~	~~MXN~~	~~CNH~~	~~EUR~~

~~The currency abbreviations above are defined as follows:~~



~~Currency Abbreviation~~		~~Currency~~
~~AUD~~		~~Australian Dollar~~
~~BRL~~		~~Brazilian Real~~
~~CAD~~		~~Canadian Dollar~~
~~CNH~~		~~Chinese Yuan~~
~~EUR~~		~~Euro~~
~~GBP~~		~~British Pound~~
~~MXN~~		~~Mexican Peso~~

Quarter Ended September 30, ~~2017~~2022 Compared to Quarter Ended September 30, ~~2016~~

2021

In this section, references to ~~2017~~2022 refer to the quarter ended September 30, ~~2017~~2022 and references to ~~2016~~2021 refer to the quarter ended September 30, ~~2016.~~

2021.

Revenues

Total revenues for ~~2017~~2022 increased ~~$5.8~~$2.5 billion to $3.0 billion from $457.0 million ~~or 0.2%, from 2016.~~in 2021.

Passenger ticket revenues comprised ~~73.7%~~67.5% of our ~~2017~~2022 total ~~revenues and decreased by $6.8 million, or 0.4%, from 2016. The decrease was primarily driven by a 5.7% decrease in capacity, which decreased~~ ~~passenger~~revenues. Passenger ticket revenues for 2022 increased by ~~$107.4~~$1.7 billion from $280.2 million ~~primarily due to the sale of our majority interest~~ in ~~Pullmantur Holdings during the third quarter of 2016,~~2021, and ~~to a lesser extent, the sale of~~ ~~Legend of the Seas~~ ~~in the first quarter of 2017, as well as the impact of canceled sailings resulting from hurricane-related disruptions during the third quarter of 2017.~~

~~The decrease was partially offset by:~~

~~an $88.0 million increase in ticket prices driven by the improvement in our ticket price on a per passenger basis due to the exit of the Pullmantur ships~~, ~~as well as higher pricing on North America and Europe sailings. The increase in ticket prices~~ was partially offset by ~~lower pricing on Asia/Pacific sailings; and~~

~~a favorable effect of changes~~unfavorable movements in foreign currency exchange rates related to our revenue transactions denominated in currencies other than the United States dollar of ~~approximately $12.8 million.~~$65.5 million

The remaining ~~26.3%~~32.5% of ~~2017~~2022 total revenues was comprised of ~~onboard~~Onboard and other revenues, which increased ~~$12.6 million, or 1.9%,~~$0.8 billion to ~~$676.4~~$1.0 billion in 2022 from $176.8 million in ~~2017 from $663.8 million in 2016. The increase in~~ ~~onboard~~ 2021, and ~~other revenues~~ ~~was primarily due to:~~

a $30.7 million increase in onboard revenue attributable to higher spending on a per passenger basis due to our revenue enhancing initiatives, including beverage package sales and promotions, new strategies and promotion on specialty restaurants and the increased revenue associated with internet and other telecommunication services. The increase is also attributable to port activities mainly due to itinerary changes; and

~~Table of Contents~~

~~a $13.8 million increase in other revenue primarily due to charter revenue and management fees earned from Pullmantur Holdings.~~

~~The increase~~ was partially offset by ~~a $36.8 million decrease attributable~~unfavorable movements in foreign currency exchange rates related to our revenue transactions denominated in currencies other than the United States dollar of $8.9 million.

The increase in revenues was due to the ~~5.7% decrease~~return of operations in ~~capacity noted above, including~~2022, in which our full fleet was in service, compared to 2021, when the ~~impact~~suspension of ~~canceled sailings resulting from hurricane-related disruptions during the third quarter~~our global cruise operations was in effect for a substantial portion of ~~2017.~~our fleet. Occupancy in 2022 was 96.3% compared to 36.4% in 2021.

Onboard and other revenues included concession revenues of ~~$87.3~~$104.4 million in ~~2017~~2022 and ~~$86.6~~$22.9 million in ~~2016.~~

2021.

Cruise Operating Expenses

Total ~~cruise~~Cruise operating expenses for ~~2017 decreased $21.9 million, or 1.6%,~~2022 increased $1.1 billion to $2.0 billion from ~~2016.~~$0.8 billion in 2021. The ~~decrease~~increase was primarily due to to:

•a ~~$75.5 million decrease attributable to the 5.7% decrease in capacity noted above.~~

~~The decrease was partially offset by:~~

~~a $14.6~~$419.3 million increase in ~~commissions~~ Commissions, transportation and other expenses;

•a $198.1 million increase in Fuel expense;

•a $177.5 million increase in Onboard and other expenses;

•a $163.3 million increase in Other operating expenses;

•a $146.0 million increase in Food expense; and

•a $38.4 million increase in Payroll and related.

The increase in operating expenses noted above was driven by the return to operations in 2022, with our full fleet in service compared to 2021, when the suspension of our global cruise operations was in effect for a substantial portion of our fleet. Additionally, as discussed above in Recent Developments, high inflation has 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 56% per metric ton compared to 2021 mainly due to the increase in ~~ticket prices discussed above and changes in commission incentives;~~fuel price.

~~a $10.2 million increase in head taxes due to itinerary changes;~~

a ~~$9.6 million~~ ~~increase in other operating expenses primarily due to an immaterial gain recognized in 2016 as a result of the sale of our majority interest in Pullmantur Holdings; and~~

~~an $8.7 million increase in payroll and related expenses due to an increase in crew benefits.~~

Marketing, ~~Selling~~Selling and Administrative Expenses

Marketing, selling and administrative expenses for ~~2017~~2022 increased ~~$14.3~~$49.7 million, or ~~5.5%~~15.4%, to ~~$273.6~~$373.1 million from ~~$259.3~~$323.4 million in ~~2016.~~2021. The increase was primarily due to an increase in payroll and benefits ~~driven by higher stock prices year over year related to our performance share awards, partially offset by a decrease in expenses~~primarily due to ~~the sale of~~an increase in headcount associated with our ~~majority interest~~return to operations. Additionally, having our full fleet in ~~Pullmantur Holdings.~~service in 2022 increased overall expenses compared to 2021.

Depreciation and Amortization Expenses

Depreciation and amortization expenses for ~~2017~~2022 increased ~~$10.8~~$29.2 million, or ~~4.7%~~9.0%, to ~~$240.2~~$355.1 million from ~~$229.3~~$325.9 million in ~~2016.~~2021. The increase was primarily due to ~~new shipboard additions associated with our ship upgrade projects and to a lesser extent, additions related to shoreside projects, partially offset by~~ the ~~decrease in depreciation associated with the sale~~addition of ~~Legend~~Wonder of the Seas to our fleet in ~~the first quarter of 2017.~~January 2022, Celebrity Beyond in April 2022 and Silver Dawn inNovember 2021.

Other Income (Expense)

Interest expense, net of interest capitalized for ~~2017~~2022decreased ~~$9.4~~$78.5 million, or ~~11.4%~~18.2%, to ~~$73.2~~$352.2 million from ~~$82.6~~$430.7 million in ~~2016.~~2021. The decrease was primarily due to a ~~lower average~~ debt extinguishment loss of $141.9 million recognized in ~~2017~~the third quarter of 2021 associated with the partial redemption of the 11.50% senior secured notes due 2025, compared to ~~2016,~~a debt extinguishment loss of $16.4 million in 2022, and the elimination of the non-cash debt discount amortization on our convertible notes under the adoption of ASU 2020-06. The decrease was partially offset by a higher ~~interest rates~~average cost of debt in ~~2017~~2022 compared to ~~2016.~~2021. Refer to Note 2. Summary of Significant Accounting Policies to our consolidated financial statements for further information on ASU 2020-06.

Equity investment income ~~increased $38.6~~for 2022 was $74.0 million ~~or 82.9%,~~compared to ~~$85.1~~Equity investment (loss) of$(29.1) million in ~~2017 from $46.5 million~~2021. The increase in ~~2016~~income was primarily due to ~~an increase in~~ income from TUI ~~Cruises.~~

~~Other expense~~ ~~decreased $10.9 million, or 89.9%, to $1.2 million~~Cruises, one of our equity investments, in ~~2017 from $12.1 million in 2016 primarily due to fuel hedge ineffectiveness gains in 2017~~2022 compared to losses in ~~2016 and a decrease in foreign exchange losses in 2017, net of hedges.~~2021.

~~Gross and Net Yields~~

~~Gross Yields and Net Yields increased 6.2% and 5.9% in 2017, respectively, compared~~ Other income decreased $36.5 million, or 97.9%,to 2016 primarily due to the increase in passenger ticket and onboard and other revenues discussed above. Gross Yields and Net Yields, on a Constant Currency basis, increased 5.6% and 5.3% in 2017, respectively, compared to 2016.

~~Gross and Net Cruise Costs~~

~~Table of Contents~~

Gross Cruise Costs in 2017 was consistent with 2016 and Net Cruise Costs decreased 1.7% in 2017 compared to 2016 primarily due to the decrease in capacity discussed above. Gross Cruise Costs per APCD and Net Cruise Costs per APCD increased 5.6% and 4.2% in 2017, respectively, compared to 2016. Net Cruise Costs Excluding Fuel per APCD increased 6.0% in 2017 compared to 2016. The increases in 2017 were primarily due to the increase in cruise operating expenses discussed above. Additionally, the hurricane-related disruptions during the third quarter of 2017 reduced our capacity; however, certain operating expenses were still incurred, negatively impacting our metrics per APCD.

~~Other Comprehensive Income~~

~~Other comprehensive income~~ ~~in 2017 was $234.1~~$0.8 million ~~compared to $94.5~~from $37.2 million in ~~2016.~~2021. The ~~increase of $139.6 million, or 147.7%,~~decrease was primarily due to the ~~Gain~~2021 recognition of $8.2 million in net gains related to the change in fair value of our fuel swap derivative instruments with no hedge accounting, which did not recur in 2022, and a decrease in tax benefit of $26.2 million in 2022 compared to 2021.

Other Comprehensive (Loss)

Other comprehensive (loss) increased $229.4 million to $241.2 million from $11.9 million in 2021 due to an increase in the Loss on cash flow derivative hedges of $246.7 million in ~~2017~~2022, which was mostly due to a decrease in the fair value of ~~$230.2 million~~our fuel swaps in 2022 compared to ~~$95.5 million~~an increase in ~~2016. The increase~~2021, and a greater decrease in the fair value of ~~$134.7 million in 2017 was primarily due to higher~~our foreign currency ~~forward contract and fuel swap instrument values~~forwards in ~~2017~~2022 compared to ~~2016, partially offset by lower amounts of fuel swap losses reclassified to income in 2017~~ 2021.

Nine Months Ended September 30, ~~2017~~2022 Compared to Nine Months Ended September 30, ~~2016~~

2021

In this section, references to ~~2017~~2022 refer to the nine months ended September 30, ~~2017~~2022 and references to ~~2016~~2021 refer to the nine months ended September 30, ~~2016.~~

2021

Revenues

Total revenues for ~~2017~~2022 increased ~~$186.6 million, or 2.8%,~~$5.7 billion to $6.2 billion from ~~2016.~~$0.5 billion in 2021.

Passenger ticket revenues comprised ~~72.2%~~65.6% of our ~~2017~~2022 total revenues. Passenger ticket revenues for ~~2017~~2022 increased by ~~$98.1 million, or 2.0%,~~$3.8 billion to $4.1 billion from ~~2016, despite the impact of canceled sailings resulting from hurricane-related disruptions during the third quarter of 2017. The increase was primarily due to an increase of $258.1~~$323.8 million in ~~ticket prices primarily driven by the improvement in our ticket price on a per passenger basis due to the exit of the Pullmantur ships~~2021, and ~~the addition of~~ ~~Harmony of the Seas~~ ~~and~~ ~~Ovation of the Seas,~~ ~~as well as higher pricing on North America and Europe sailings. The increase in ticket prices on these itineraries~~ was partially offset by ~~lower pricing on Asia/Pacific sailings.~~

~~The increase was partially offset by:~~

~~a 3.0% decrease in capacity, which decreased~~ ~~passenger ticket revenues~~ by~~$144.2 million primarily due to the sale of our majority interest in Pullmantur Holdings during the third quarter of 2016, the sale of~~ ~~Splendour of the Seas~~ ~~in the second quarter of 2016 and the sale of~~ ~~Legend of the Seas~~ ~~in first quarter of 2017, which was partially offset by an increase in capacity due to the addition of~~ ~~Ovation of the Seas~~ ~~and~~ ~~Harmony of the Seas~~ ~~into our fleet during the second quarter of 2016; and~~

~~an approximate $15.2 million~~ unfavorable ~~effect of changes~~movements in foreign currency exchange rates related to our ~~passenger ticket~~ revenue transactions denominated in currencies other than the United States ~~dollar.~~dollar of $93.8 million.

The ~~remaining 27.8%~~remaining 34.4% of ~~2017~~2022 total revenues was comprised of ~~onboard~~Onboard and other revenues, which increased ~~$88.5~~$1.9 billion to $2.1 billion in 2022 from $226.1 million ~~or 4.9%,~~ in ~~2017 from 2016. The increase in~~ ~~onboard~~2021, and ~~other revenues~~ ~~was primarily due to:~~

a $99.8 million increase in onboard revenue attributable to higher spending on a per passenger basis primarily due to our revenue enhancing initiatives, including beverage package sales and promotions, gaming initiatives, new strategies and promotions on specialty restaurants and the increased revenue associated with internet and other telecommunication services. The increase is also attributable to port activities mainly due to itinerary changes; and

~~a $39.4 million increase in other revenue primarily due to charter revenue and management fees earned from Pullmantur Holdings.~~

~~The increase~~ was partially offset by ~~a $53.1 million decrease attributable~~unfavorable movements in foreign currency exchange rates related to our revenue transactions denominated in currencies other than the ~~3.0% decrease~~United States dollar of $13.4 million.

The increase in ~~capacity noted above, including~~revenues was due to our return of operations, in which the ~~impact~~majority of ~~canceled sailings resulting from hurricane-related disruptions during~~our fleet was in service in 2022, compared to 2021, when the ~~third quarter~~suspension of ~~2017.~~our global cruise operations was in effect. Occupancy in 2022 was 81.2% compared to 35.7% in 2021.

Onboard and other revenues included concession revenues of ~~$244.4~~$233.4 million in ~~2017~~2022 and ~~$240.8~~$25.3 million in ~~2016.~~

2021.

Cruise Operating Expenses

~~Table of Contents~~

Total ~~cruise~~Cruise operating expenses for ~~2017 decreased $141.4 million, or 3.6%,~~2022 increased $3.3 billion to $4.8 billion from ~~2016.~~

$1.5 billion in 2021. The ~~decrease~~increase was primarily due to:

•a $891.3 million increase in Commissions, transportation and other expenses;

•a ~~$116.6~~$636.7 million ~~decrease attributable to the 3.0% decrease~~increase in ~~capacity noted above;~~Other operating expenses;

•a $560.8 million increase in Fuel expense;

•a $450.9 million increase in Payroll and related;

•a $394.4 million increase in Onboard and other expenses; and

•a ~~$30.9~~$375.8 million ~~gain resulting from~~increase in Food expense.

The increase in operating expenses noted above was driven by the ~~sale~~return to operations in 2022, with the majority of ~~Legend~~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, as discussed above in Recent Developments, high inflation has impacted our operating costs, especially in fuel and food expense. Our cost of fuel (net of the ~~Seas~~ ~~in 2017~~financial impact of fuel swap agreements) for 2022 increased 55% per metric ton compared to ~~an immaterial gain from the sale of~~ ~~Splendour of the Seas~~ ~~in 2016;~~

~~a $32.6 million decrease in air expense due to itinerary changes and lower ticket costs; and~~

~~a $23.9 million decrease in vessel maintenance primarily due to the timing of scheduled drydocks.~~

~~The net decrease was partially offset by an increase in commissions expense of $26.0 million~~2021 mainly due to the increase in ~~ticket prices discussed above.~~

fuel price.

Marketing, Selling and Administrative Expenses

Marketing, selling and administrative expenses for ~~2017~~2022 increased ~~$22.5~~$271.6 million, or ~~2.6%~~31.3%, to ~~$875.0 million~~$1.1 billion from ~~$852.4 million~~$0.9 billion in ~~2016.~~2021. The increase was primarily due to ~~an increase in payroll and benefits which was driven by an increase in our stock price year over year related to our performance share awards, partially offset by a decrease in expenses due to~~ the ~~sale~~ramp up of our ~~majority interest~~global sales and marketing efforts starting in ~~Pullmantur Holdings.~~the second half of 2021 as we commenced our resumption of operations. Additionally, having our full fleet in service as of June 30, 2022 increased overall expenses compared to 2021.

Depreciation and Amortization Expenses

Depreciation and amortization expenses for ~~2017~~2022 increased ~~$49.1~~$86.6 million, or ~~7.4%~~9.0%, compared to ~~$710.8 million from $661.7 million in 2016.~~2021. The increase was primarily due to the addition of ~~Ovation~~Wonder of the Seasand ~~Harmony~~Celebrity Beyond to our fleet in January 2022 and April 2022, respectively, and depreciation for Odyssey of the Seas and Silver Dawn, which were delivered in ~~the second quarter~~March 2021 and November 2021, respectively.

Impairment and Credit Losses (Recoveries)

Credit loss recoveries for 2022 was $(0.6) million compared to Impairment and credit losses of ~~2016 into our fleet, and to a lesser extent, new shipboard additions associated with our ship upgrade projects.~~$39.9 million in 2021. The ~~increase was partially offset by the~~ decrease in ~~depreciation associated with the sale~~impairment loss was primarily due to 2021 impairment charges of ~~Splendour~~certain construction in progress projects that were reduced in scope or terminated as a result of ~~the Seas~~COVID-19, which did not recur in ~~the second quarter of 2016 and the sale of~~ ~~Legend of the Seas~~ ~~in first quarter of 2017.~~

2022.

Other Income (Expense)

Interest expense, net of interest capitalized for ~~2017increased $3.4~~2022 decreased $75.4 million, or ~~1.5%~~7.5%, to ~~$230.2~~$932.6 million from ~~$226.8 million~~$1.0 billion in ~~2016.~~2021. The ~~increase~~decrease was primarily due to ~~higher interest rates~~a debt extinguishment loss of $138.8 million recognized in ~~2017~~2021 associated with the partial redemption of the 11.50% senior secured notes due 2025, compared to ~~2016, partially offset by lower average~~a debt ~~in 2017 compared to 2016.~~

~~Equity investment income~~ ~~increased $25.5 million, or 26.9%, to $120.4~~extinguishment loss of $16.4 million in 2017 from $94.8 million in 2016 primarily due to an increase in income from TUI Cruises, partially offset by losses associated with Pullmantur Holdings in 2017. Effective July 31, 2016, as a result of the sale of 51% of our interest in Pullmantur Holdings, we account for our investment in Pullmantur Holdings under the equity method of accounting.

~~Other expense~~ ~~decreased $34.4 million, or 84.0%, to $6.5 million in 2017 from $41.0 million in 2016 primarily due to the 2016 net loss of $21.7 million related to~~2022, and the elimination of the ~~Pullmantur reporting lag that did not recur in 2017.~~

~~Gross and Net Yields~~

~~Gross Yields and Net Yields increased 6.0% and 6.9% in 2017, respectively, compared to 2016 primarily due to~~non-cash debt discount amortization on our convertible notes under the ~~increase in passenger ticket and onboard and other revenues discussed above. Gross Yields and Net Yields, on a Constant Currency basis, increased 6.3% and 7.2% in 2017, respectively, compared to 2016.~~

~~Gross and Net Cruise Costs~~

~~Gross Cruise Costs and Net Cruise Costs decreased 2.4% and 3.4% in 2017, respectively compared to 2016 primarily due to the~~adoption of ASU 2020-06. The decrease in capacity and cruise operating expenses discussed above. In 2017, Gross Cruise Costs per APCD, Net Cruise Costs per APCD and Net Cruise Costs Excluding Fuel were consistent with 2016, as reported and on a Constant Currency basis. The hurricane-related disruptions during the third quarter of 2017 reduced our capacity; however, certain operating expenses were still incurred, negatively impacting our metrics per APCD.

~~Table of Contents~~

~~Other Comprehensive Income (Loss)~~

~~Other comprehensive income~~ ~~in 2017~~ was ~~$389.6 million compared to $250.9 million in 2016. The increase of $138.7 million, or 55.3%, was primarily due to the~~ ~~Gain on cash flow derivative hedges~~ in 2017 of $381.7 million compared to $254.6 million in 2016. The increase of $127.1 million in 2017 was primarily due to higher foreign currency forward contract and interest rate swap instrument values in 2017 compared to 2016, partially offset by ~~lower fuel swap instrument values and lower amounts~~a higher average cost of ~~fuel swap losses reclassified~~debt in 2022 compared to ~~income in 2017.~~

~~Future Application of Accounting Standards~~

2021. Refer to Note 2. 2. Summary of Significant Accounting Policies to our consolidated financial statements for further information on ASU 2020-06.

Equity investment Income for 2022 was $29.8 million compared to Equity investment loss of $(137.0) million in 2021. The increase in income was primarily due to income from TUI Cruises, one of our equity investments, in 2022 compared to losses in 2021.

Other income decreased$62.1 million, or 93.0%, to $4.7 million from $66.8 million in 2021. The decrease in income was primarily due to the 2021 recognition of $35.9 million in net gains related to the change in fair value of our fuel swap derivative instruments with no hedge accounting, which did not recur in 2022, and a decrease in tax benefit $40.7 million in 2022 compared to 2021.

Other Comprehensive (Loss) Income

Other comprehensive (loss) for 2022 was $(81.6) million compared to Other comprehensive income of $63.5 million in 2021. The change was primarily due to a Loss on cash flow derivative hedges in 2022 of $(148.5) million compared to a Gain on cash flow derivative hedges in 2021 of $48.5 million, which was mostly due to the greater decrease in the fair value of our foreign currency forwards in 2022 compared to 2021.

Future Application of Accounting Standards

Refer to Note 2. Summary of Significant Accounting Policies to our consolidated financial statements for further information on Recent Accounting Pronouncements.

Liquidity and Capital Resources

Sources and Uses of Cash

~~Cash flow generated from operations provides us with a significant source of liquidity.~~

Net cash ~~provided~~used by operating activities ~~increased $453.6~~decreased $1.6 billion to cash used of $94.7 million ~~to $2.5 billion~~ for the ~~first~~ nine months ~~in 2017~~ended September 30, 2022 compared to ~~$2.0~~cash used of $1.7 billion for the same period in ~~2016.~~2021. Our full resumption of cruise operations in 2022 has generated an increase in guest ticket and onboard collections.

Net cash used in investing activities increased $1.3 billionto cash used of $2.9 billion for the nine months ended September 30, 2022, compared to cash used of $1.6 billion for the same period in 2021. The increase ~~in cash provided by operating activities~~ was primarily attributable to an increase in ~~proceeds from customer deposits~~capital expenditures of $0.9 billion during the ~~first~~ nine months ~~in 2017~~ended September 30, 2022, compared to the same period in ~~2016. Additionally, dividends received from unconsolidated affiliates increased by $35.9 million.~~

~~Net~~2021, an increase in cash ~~used in investing activities~~ ~~decreased$2.4 billionto $78.0~~paid on derivative financial instruments of $334.5 million~~for the first nine months in 2017 compared to $2.5 billion for the same period in 2016. The decrease was primarily attributable to~~ and a decrease in ~~capital expenditures of $1.9 billion due to ship deliveries in 2016,~~ ~~Ovation of the Seas~~ ~~and~~ ~~Harmony of the Seas, compared to no ship deliveries in 2017. In addition, we received $230.0 million of~~ proceeds from the sale of property and equipment ~~in 2017 which did not occur in 2016. Furthermore,~~and other assets of $175.4 million during ~~2017, we received~~the nine months ended September 30, 2022.

Net cash ~~of $57.0 million on settlements on our foreign currency forward contracts~~provided by financing activities was$1.8 billion for the nine months ended September 30, 2022, compared to cash ~~paid~~provided of ~~$172.9 million during 2016.~~

~~Net cash used in financing activities~~ ~~was $2.4 billion for the first nine months in 2017 compared to~~ ~~Net cash provided in financing activities~~ ~~of $0.6~~$2.8 billion for the same period in ~~2016.~~2021. The ~~change~~decrease of $1.0 billion was primarily attributable to ~~a decrease in debt~~$1.6 billion of proceeds ~~of $2.4 billion, an increase in debt repayments of $0.8 billion and a higher amount of dividends paid~~from common stock issuances during the first nine months of ~~2017~~2021, which did not recur during the same period in 2022, and higher repayments of debt of $2.9 billion during the nine months ended September 30, 2022, compared to the same period in ~~2016,~~2021. These decreases were partially offset by ~~a decrease~~higher debt proceeds of ~~stock repurchases of $175.0 million~~$3.1 billion during the ~~first~~ nine months ~~of 2017~~ended September 30, 2022, compared to the same period in ~~2016. The decrease in debt proceeds was primarily due to~~2021 and repayments of commercial paper notes of $414.6 million during the ~~$841.8 million unsecured term loan borrowed in April 2016 to finance~~ ~~Ovation of the Seas and the €700.7 million and $226.1 million unsecured term loans borrowed in May 2016 to finance~~ ~~Harmony of the Seas~~ ~~that~~nine months ended September 30, 2021, which did not recur in ~~2017and lower drawings on our revolving credit facilities during the first nine months of 2017 compared to the same period in 2016.~~2022.

~~Table of Contents~~

Future Capital Commitments

Capital Expenditures

COVID-19 has impacted shipyard operations which resulted in delays of our previously contracted ship deliveries. As of September 30, ~~2017,~~2022, the dates that the ships on order by our Global ~~Brands~~ and ~~our~~ Partner Brands ~~have 12 ships on order. The~~are expected ~~dates that these ships will enter service~~to be delivered, subject to change in the event of construction delays, and their approximate berths are as follows:

Ship

Shipyard

Expected ~~to Enter~~

~~Service~~

Delivery Date

Approximate

Berths

Royal Caribbean International —

Oasis-class:

~~Symphony~~Utopia of the Seas

Chantiers de l'Atlantique

~~1st~~2nd Quarter ~~2018~~2024

~~5,450~~

5,700

~~Unnamed~~Icon-class:

~~2nd Quarter 2021~~

~~5,450~~

~~Quantum-class:~~

~~Spectrum~~Icon of the Seas

Meyer Turku Oy

4th Quarter 2023

5,600

Unnamed

Meyer Turku Oy

2nd Quarter ~~2019~~2025

~~4,150~~

5,600

Unnamed

Meyer Turku Oy

2nd Quarter 2026

5,600

Celebrity Cruises —

Edge-class:

Celebrity Ascent

Chantiers de l'Atlantique

4th Quarter ~~2020~~2023

~~4,150~~

3,250

~~Project Icon:~~Silversea Cruises

~~Unnamed~~Evolution Class:

Silver Nova

Meyer Werft

2nd Quarter ~~2022~~2023

~~5,650~~

730

Unnamed

Meyer Werft

2nd Quarter 2024

~~5,650~~

730

~~Celebrity Cruises — Edge-class:~~

~~Celebrity Edge~~

~~4th Quarter 2018~~

~~2,900~~

~~Celebrity Beyond~~

~~2nd Quarter 2020~~

~~2,900~~

~~Unnamed~~

~~4th Quarter 2021~~

~~2,900~~

~~Unnamed~~

~~4th Quarter 2022~~

~~2,900~~

TUI Cruises (50% joint venture) ⁽¹⁾—

~~Unnamed~~

~~2nd Quarter 2018~~

~~2,850~~

~~Unnamed~~

~~1st Quarter 2019~~

~~2,850~~

~~Total Berths~~

~~47,800~~

~~(1)~~

~~TUI Cruises plans to offset this additional capacity through the planned transfer of the their first two ships,~~ Mein Schiff 1 ~~and~~ ~~Mein Schiff 2, to an affiliate of TUI AG, our joint venture partner in TUI Cruises, in 2018 and 2019, respectively.~~

Meyer Turku Oy

2nd Quarter 2024

2,900

Unnamed

Fincantieri

4th Quarter 2024

4,100

Unnamed

Fincantieri

2nd Quarter 2026

4,100

Total Berths

38,310

~~During the second quarter~~

In addition, as of ~~2017,~~September 30, 2022, we ~~entered into agreements~~have an agreement in place with ~~Meyer Turku~~Chantiers de l’Atlantique to build ~~two ships~~an additional fifth Edge-class ship with capacity of ~~a new generation~~approximately 3,250 berths, estimated for delivery in 2025, which is contingent upon completion of ships for Royal Caribbean International, known as “Project Icon.” Subsequently, in October 2017, we entered into credit agreements for the unsecured financing of these ships for up to 80% of each ship's contract price. Refer to Note 7. ~~Commitments~~conditions precedent and ~~Contingencies~~ ~~to our consolidated financial statements under Item 1.~~ ~~Financial Statements~~ ~~for further information.~~financing.

Our future capital commitments consist primarily of new ship orders. As of September 30, ~~2017,~~2022, the aggregate expected cost of our ships on order ~~not including~~presented in the ~~TUI Cruises'~~table above, excluding any ships on order by our Partner Brands, was ~~approximately $13.0~~$9.1 billion, of which we had deposited ~~$323.2 million as of such date.~~$0.7 billion. Approximately ~~53.8%~~54.4% of the aggregate cost was exposed to fluctuations in the Euro exchange rate at September 30, ~~2017. Refer to Note 10.~~ ~~Fair Value Measurements~~2022.

We have been, and ~~Derivative Instruments~~ ~~to our consolidated financial statements under Item 1.~~ ~~Financial Statements~~ ~~for further information.~~

~~In September 2017, we entered into an agreement to purchase a ship for our Azamara Club Cruises brand. The sale is expected~~may continue to be, ~~completed with~~negatively impacted on our cash flows, liquidity and financial position by the ~~delivery~~COVID-19 pandemic. In order to preserve liquidity, we deferred a significant portion of ~~the ship, scheduled for March 2018.~~

our planned 2020, 2021 and 2022 capital expenditures. As of September 30, ~~2017,~~2022, we anticipate overall full year capital expenditures, ~~not including the TUI Cruises'~~based on our existing ships on order, will be approximately ~~$0.6 billion for 2017,~~ $3.2 billion for ~~2018, $2.1 billion for 2019, $2.5 billion for 2020 and $2.5 billion for 2021.~~

2022. This amount does not include any ships on order by our Partner Brands.

~~Table of Contents~~

~~Contractual Obligations~~

Material Cash Requirements

As of September 30, ~~2017,~~2022, our ~~contractual obligations~~material cash requirements were as follows (in thousands):


	Remainder of
	2022		2023		2024		2025		2026		Thereafter		Total
Operating Activities:
Interest on debt(1)	211,065		1,270,530		972,974		846,713		594,113		2,517,694		6,413,089
Investing Activities:
Ship purchase obligations(2)	84,118		2,484,227		1,690,302		1,186,366		1,118,894		—		6,563,907
Total	$	295,183	$	3,754,757	$	2,663,276	$	2,033,079	$	1,713,007	$	2,517,694	$	12,976,996

Payments due by period
Less than 1-3 3-5 More than
Total 1 year years years 5 years
Operating Activities:

Operating lease obligations⁽¹⁾
$ 242,989
$ 28,742
$ 42,299
$ 24,910
$ 147,038
Interest on long-term debt⁽²⁾
1,073,803
233,134
352,304
246,912
241,453
Other⁽³⁾
850,768
170,063
297,523
165,395
217,787
Investing Activities: 0

Ship purchase obligations⁽⁴⁾
10,692,368
1,658,774
2,751,170
4,230,704
2,051,720
Financing Activities: 0

Long-term debt obligations⁽⁵⁾
7,557,801
1,511,773
1,991,501
1,209,893
2,844,634
Capital lease obligations⁽⁶⁾
34,406
3,935
7,051
8,272
15,148
Other⁽⁷⁾
33,684
8,525
20,012
5,147
—
Total $ 20,485,819
$ 3,614,946
$ 5,461,860
$ 5,891,233
$ 5,517,780
(1) Long-term debt obligations mature at various dates through fiscal year 2037 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 September 30, 2022. Debt denominated in other currencies is calculated based on the applicable exchange rate at September 30, 2022.


~~(1)~~	~~We are obligated under noncancelable operating leases primarily for offices, warehouses and motor vehicles. Amounts represent contractual obligations with initial terms in excess of one year.~~

~~(2)~~

Long-term debt obligations mature at various dates through fiscal year 2028 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 September 30, 2017. Debt denominated in other currencies is calculated based on the applicable exchange rate at September 30, 2017.


~~(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.~~


~~(4)~~	~~Amounts do not include potential obligations which remain subject to cancellation at our sole discretion.~~


~~(5)~~	~~Amounts represent debt obligations with initial terms in excess of one year.~~


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


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

(2) Amounts are based on contractual installment and delivery dates for our ships on order. Included in these figures are $5.2 billion in final contractual installments, which have committed financing covering 80% of the cost of the ships on order for our Global Brands, almost all of which include sovereign financing guarantees. COVID-19 has impacted shipyard operations which have and may result in delays for our previously contracted ship deliveries. 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.

~~Please refer~~Refer to Note 7. Debt for maturities related to debt.

Refer to Note 8. Leases for maturities related to lease liabilities.

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

material cash requirements.

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

~~We and TUI AG have each guaranteed repayment of 50% of a bank loan provided~~Refer to Note 6. Other Assets for ownership restrictions related to TUI ~~Cruises which is due 2022. Notwithstanding this, the lenders have agreed~~Cruises.

Refer to release each shareholder’s guarantee if certain conditions are met by April 2018. As of September 30, 2017, €100.4 million, or approximately $118.7 million based on the exchange rate at September 30, 2017, remains outstanding. Based on current facts and circumstances, we do not believe potential obligations under this guarantee are probable.

~~TUI Cruises has entered into various ship construction~~Note 7. Debt for surety and credit ~~agreements that include certain restrictions on each of our~~card processor agreements.

Refer to Note 9. Commitments and ~~TUI AG’s ability to reduce our current ownership interest in TUI Cruises below 37.55% through 2021.~~

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 at PortMiami in Miami, Florida. The terminal is expected to be approximately 170,000 square feet and will serve as a homeport. During the construction period, SMBC will fund the costs of the terminal’s construction and land lease. Upon completion of the terminal's construction, we will

~~Table of Contents~~

~~operate and lease the terminal from SMBC~~Contingencies for ~~a five-year term. We determined that the lease arrangement between SMBC and us should be accounted for as an operating lease upon completion of the terminal.~~

agreements.

As of September 30, ~~2017,~~2022, other than the items ~~described~~referenced 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.

Funding Needs and Sources

Historically, we have 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. COVID-19 resulted in our voluntary suspension of global cruise operations from March 2020 up to our full fleet returning to service during the second quarter of 2022. The suspension of operations strained our sources of cash flow and liquidity, causing us to take actions resulting in reductions in our operating expenses, reductions in our capital expenses and new financings and other liquidity actions.

The Company continues to identify and evaluate further actions to improve its liquidity. These include but are not limited to: further reductions in capital expenditures, operating expenses and administrative costs and additional financings. Additionally, we will continue to pursue various opportunities to raise additional capital to fund obligations associated with future debt maturities and/or to extend the maturity dates associated with our existing indebtedness or facilities. Actions to raise capital may include issuances of debt, convertible debt or equity in private or public transactions or entering into new or extended credit facilities.

We have significant contractual obligations of which our debt service obligations and the capital expenditures associated with our ship purchases represent our largest funding needs. As of September 30, ~~2017,~~2022, we had ~~approximately $3.6~~$7.0 billion ~~in contractual~~of committed financing for our ships on order.

As of September 30, 2022, our obligations due through September 30, ~~2018,~~2023 primarily consisted of ~~which approximately $1.5~~$3.9 billion ~~relates~~related to debt maturities, ~~$233.1 million relates~~$1.3 billion related to interest on ~~long-term~~ debt and ~~$1.7~~$0.7 billion ~~relates~~related to progress payments on our ship ~~purchase payments, including~~orders and, based on the expected delivery date, the final installment payable due upon the delivery of~~Symphony~~ Silver Nova. We addressed $2.0 billion of these debt maturities in October 2022 with the closing of the ~~Seas~~9.250% senior notes due 2029 and the 8.250% senior secured notes due 2029 and the concurrent redemption of the 2023 notes as further described in ~~the first quarter~~Note 7. Debt.

As of ~~2018. We have historically relied~~September 30, 2022, we had liquidity of $3.1 billion, including cash and cash equivalents of $1.6 billion, $0.8 billion of undrawn revolving credit facility capacity, and a $0.7 billion commitment for a 364-day term loan facility available to draw on at any time on or prior to August 12, 2023. Our revolving credit facilities were partially utilized through a combination of ~~cash flows provided by operations, drawdowns~~amounts drawn and letters of credit issued under ~~our available credit~~the 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 these obligations.~~

~~We had a working capital deficit of $4.3 billion and $3.7 billion~~ as of September 30, 2017 and December 31, 2016, respectively. Included within our working capital deficit is $1.5 billion and $1.3 billion of current portion of long-term debt, including capital leases, as of September 30, 2017 and December 31, 2016, respectively. Similar to others in our industry, we operate2022. We have agreed with ~~a substantial working capital deficit. This deficit is mainly attributable to the fact that, under our business model, a vast majority~~certain of our ~~passenger ticket receipts are collected~~lenders not to pay dividends or engage in advance of the applicable sailing date. These advance passenger receipts remain a current liability until the sailing date. The cash generated from these advance receipts is used interchangeably with cash on hand from other sources, such as our revolving credit facilities and other cash from operations. The cash received as advanced receipts can be used to fund operating expenses for the applicable future sailing or otherwise, pay down our revolving credit facilities, invest in long term investments or any other use of cash. In addition, we have a relatively low-level of accounts receivable and rapid turnover results in a limited investment in inventories. We generate substantial cash flows from operations and our business model, along with our unsecured revolving credit facilities, has historically allowed us to maintain this working capital deficit and still meet our operating, investing and financing needs. We expect that we will continue to have working capital deficits in the future.

As of September 30, 2017, we had liquidity of $1.9 billion, consisting of approximately $140.0 million in cash and cash equivalents and $1.8 billion available under our unsecured revolving credit facilities. We anticipate that our cash flows from operations and our current financing arrangements, as described above, will be adequate to meet our capital expenditures and debt repayments over the next twelve-month period.

In April 2017, Moody's changed our senior unsecured debt credit rating to Baa3 with a stable outlook. Consistent with the provisions of our interest rate derivatives instruments, all collateral that was posted with our counterparties as of that date was returned in April 2017.

~~We have $375.0 million that remains available for future common~~ stock repurchase transactions under our Board approved program. Future repurchases may be made at management's discretion from time to time on the open market or through privately negotiated transactions. Repurchases under the program are expected to be funded from available cash or borrowings under our revolving credit facilities.repurchases. Refer to Note 8. 10. Shareholders' Equity to our consolidated financial statements for further information.

In February 2022 we entered into certain agreements with Morgan Stanley & Co., LLC (“MS”) where MS agreed to provide backstop committed financing to refinance, repurchase and/or repay in whole or in part our existing and outstanding debt. In October 2022, we addressed $2.0 billion of debt maturities by completing the offer and sale of $2.0 billion aggregate principal amount of 9.250% senior guaranteed notes due 2029 and the 8.250% senior secured notes due 2029. This reduced the amount available under the MS backstop facility to $350 million, which will be available to refinance the remaining $350 million due under the 4.25% Convertible Notes due in June 2023. Refer to Note 7. Debt to our consolidated financial statements for further information.

If any person acquires ownership of more than 50% of our common stock or, subject to certain exceptions, during any 24-month period, a majority of ~~the Board~~our board of directors is no longer comprised of individuals who were members of ~~the Board~~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.

~~Table~~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 ~~Contents~~

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 Part I. Item 1. Financial Statements for further information.

Debt Covenants

~~Certain of~~Both our ~~financing agreements~~export credit facilities and our non-export credit facilities contain covenants that require us, among other things, to maintain ~~minimum net worth of at least $7.9 billion,~~ a fixed charge coverage ratio of at least 1.25x and limit our net debt-to-capital ratio, and under certain facilities, to ~~no more than 62.5%.~~maintain a minimum level of shareholders' equity. The fixed charge coverage ratio is calculated by dividing net cash from operations for the past four quarters by the sum of dividend payments plus scheduled principal debt payments in excess of any new financings for the past four quarters. Our minimum net worth and maximum net debt-to-capital calculations exclude the impact of Accumulated other comprehensive losson Total shareholders’ equity. We were well in excess of all debt covenant requirements as of September 30, 2017. The specific covenants and related definitions can be found in the applicable debt agreements, the majority of which have been previously filed with the Securities and Exchange Commission.

~~Dividends~~

In September 2017, we declared a cash dividend on our common stock of $0.60 per share which was paid in October of 2017. During the first and second quarters of 2017, we declared a cash dividend on our common stock of $0.48 per share which was paid in April 2017 and July 2017, respectively. During the first quarter of ~~2017,~~2021, we ~~also paid~~amended $4.9 billion of our non-export credit facilities and $6.3 billion of our export credit facilities, and certain credit card processing agreements, to extend the waiver of our financial covenants through and including at least the third quarter of 2022, and subsequently in the third quarter of 2021, we entered into a ~~cash dividend on~~letter agreement to extend the waiver period for our ~~common stock~~export credit facilities to the end of ~~$0.48 per share which was declared during~~ the fourth quarter of ~~2016.~~2022. During the fourth quarter of 2021, we amended $7.3 billion of outstanding export-credit facilities plus committed export-credit facilities to modify financial covenant levels for 2023 and 2024, following the waiver period through and including the fourth quarter of 2022.

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

In July 2022, we further amended the financial covenant levels for 2023 and 2024 for our non-export credit facilities and export credit facilities plus committed export credit facilities, and certain credit card processing agreements, following the respective aforementioned waiver periods.

The combined amendments, including the July 2022 amendments, impose a monthly-tested minimum liquidity covenant of $350 million, which in the case of the non-export credit facilities terminates at the end of the waiver period and in the case of the export credit facilities terminates either in July 2025, or when we pay off all deferred amounts, whichever is earlier. In addition, the amendments to the non-export credit facilities place restrictions on paying cash dividends and effectuating share repurchases through the end of the third quarter of 2022, while the export credit facility amendments require us to prepay any deferred amounts if we elect to issue dividends or complete share repurchases. As of September 30, 2022, we were in compliance with our financial covenants and we estimate that we will be in compliance for at least the next twelve months.

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

Dividends

During the second quarter of 2020, we agreed with certain of our lenders not to pay dividends or engage in common stock repurchases for so long as our debt covenant waivers are in effect. In addition, in the event we declare a dividend or engage in share repurchases, we will need to repay the amounts deferred under our export credit facilities. Accordingly, we did not declare a dividend during the ten consecutive quarters ended September 30, 2022. 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. In addition, in the event we thereafter declare a dividend, we will need to repay our amounts deferred under the export credit facilities.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

For a discussion of our market risks, refer to Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk in our Annual Report on Form 10-K for the year ended December 31, ~~2016. There~~2021. There have been no ~~significant developments or~~ material changes to our exposure to market risks since the date of our 2021 Annual Report.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our ~~Chairman 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 Quarterly Report on Form 10-Q. Based upon such evaluation, our ~~Chairman and~~ Chief Executive Officer and Chief Financial Officer concluded that those disclosure 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 ~~Chairman 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 ~~SEC’s~~ rules and ~~forms.~~forms of the Securities and Exchange Commission (the "SEC").

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 and nine months ended September 30, ~~2017~~2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

~~Readers are cautioned~~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.

~~Table of Contents~~43

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Court dismissed the Port of Santiago Action with prejudice on the basis that the plaintiff lacked standing, and the plaintiff’s appeal of the dismissal is awaiting a decision by the appellate court. In the Havana Docks Action, the Court granted summary judgement in favor of the plaintiff as to liability in March 2022 with a decision on damages to be made subsequently. In August 2022, the Court ruled on several determinative issues with respect to the calculation on damages. On the basis of these rulings, in October 2022, the plaintiff filed a motion for entry of judgment in the amount of approximately $110 million plus attorney’s fees. The Court plans to issue a final judgement in the lawsuit, including a final ruling on damages following briefing to the Court scheduled to be completed by December 2022. We believe we have meritorious defenses to the claims alleged in both the Havana Docks Action and the Port of Santiago Action, and we intend to vigorously defend ourselves against them, including, in the Havana Docks Action, by appealing the Court’s final judgment. At this time, we have concluded that the likelihood of loss is reasonably possible, and therefore, no liability has been recorded. The outcome of the litigation is inherently unpredictable and subject to significant uncertainties, and there can be no assurances that the final outcome of either case will not be material.

Item 1A. Risk Factors

The risk factors set forth below and elsewhere in this Quarterly Report on Form 10-Q 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 priority~~a risk's potential likelihood or ~~likelihood.~~magnitude. See Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations for a cautionary note regarding forward-looking statements.

Macroeconomic, Business, Market and Operational Risks

We have been, and may continue to be, negatively impacted by the COVID-19 pandemic. The global spread of COVID-19, the unprecedented responses by governments and other authorities to control and contain the disease, including related variants, and challenges to global vaccination efforts, have caused significant disruptions, created new risks, and exacerbated existing risks to our business.

We have been, and may continue to be, negatively impacted by the COVID-19 pandemic, including impacts that resulted or may result from actions taken in response to the outbreak and the occurrence and spread of related variants. Examples of these include, but are not limited to, cruising advisories and required or voluntary travel restrictions. While we have resumed our global cruise operations, following the March 2020 suspension of our global cruise operations, there is no assurance that our cruise operations will continue uninterrupted. Onboard cases have resulted in illness among our guests and crew, incremental costs, guest refunds and negative publicity and media attention. In addition, we have and may continue to face challenges and increased operating costs related to possible new and evolving operating protocols, including protocols in the countries in which we operate and plan to operate.

Uncertainties remain as to the specifics, timing, duration and costs of administering and implementing our health and safety measures, some of which may be significant. These measures also may negatively impact guest satisfaction. Based on our assessment of these requirements and recommendations, the status of COVID-19 infection, including new variants, and/or vaccination rates in the U.S. or globally or for other reasons, we may determine it necessary to cancel or modify certain of our

Global Brands’ cruise sailings. The impact to our global bookings resulting from COVID-19 may continue to have a negative impact on our results of operations and liquidity, which may be prolonged beyond containment of the disease and its variants.

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 ~~potentially~~ impairing the value of our goodwill, ships, trademarks and other ~~assets.~~assets and potentially affecting other critical accounting estimates where the change may be material to our operating results.

~~The~~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 ~~may~~ 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 hurt by challenging conditions in any of our markets. ~~Any significant deterioration of global, national or local economic conditions could result in a prolonged period of booking slowdowns, depressed cruise prices and reduced onboard revenues.~~

~~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.

Our operating costs could increase due to market forces and economic or ~~geo-political~~geopolitical factors beyond our control.

Our operating costs, including fuel, food, payroll and benefits, airfare, taxes, insurance, and security costs, ~~are all~~can be and have been subject to increases due to market forces and economic or ~~political~~geopolitical conditions or other factors beyond our ~~control.~~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.

Any further impairment of our goodwill, long-lived assets, equity investments and notes receivable could adversely affect our ~~profitability.~~financial condition and operating results.

~~Fluctuations~~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, conditions affecting consumer demand or spending, the deterioration of general macroeconomic conditions, or other factors could result in ~~foreign currency exchange rates, fuel prices and interest rates~~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 impairments, which could adversely affect our financial ~~results.~~

~~We are exposed to market risk attributable to changes in foreign currency exchange rates, fuel prices~~condition 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. The value of our earnings in foreign currencies is adversely impacted by a strong United States dollar. In addition, any significant increase in fuel prices could materially and adversely affect our business as fuel prices not only impact our fuel costs, but also some of our other expenses, such as crew travel, freight and commodity prices. See “Item 2. ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 3.~~ ~~Quantitative and Qualitative Disclosures About Market Risk” for more information.~~

~~Conducting business globally may result in increased costs and other risks.~~

We operate our business globally. Operating internationally 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

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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 or regulations, imposition of trade barriers and restrictions on repatriation of earnings.

Our future growth strategies increasingly depend on the growth and sustained profitability of certain international markets, such as China. Some factors that will be critical to our success in developing these markets may be different than those affecting our more-established North American and European markets. In the Chinese market, in particular, our future success depends on our ability to continue to raise awareness of our products, evolve the available distribution channels and adapt our offerings to best suit the Chinese consumer. China’s economy differs from the economies of other developed countries in many respects and, as the legal and regulatory system in China continues to evolve, there may be greater uncertainty as to the interpretation and enforcement of applicable laws and regulations. In March 2017, China's National Tourism Administration issued a directive to travel agents to halt sales of holiday packages to South Korea. This travel restriction has had a direct impact on our related itineraries impacting the overall performance of our China business. It is uncertain what the ultimate scope and duration of this restriction will be, but to the extent that this or similar sanctions affecting regional travel and/or tourism continues or are put in place, it may impact local demand, available cruise itineraries and the overall financial performance of the China market.

We have operations in and source passengers from the United Kingdom and other member countries of the European Union. In March 2017, the United Kingdom notified the European Council of its intent to withdraw from the European Union. Since the initial referendum in June 2016, the proposed withdrawal has resulted in increased volatility in the global financial markets and, in particular, in global currency exchange rates. The withdrawal could potentially adversely affect tax, legal and regulatory regimes to which our business in the region is subject. The withdrawal could also, among other potential outcomes, disrupt the free movement of goods, services and people between the United Kingdom and the European Union. Further, uncertainty around these issues could lead to adverse effects on the economy of the United Kingdom and the other economies in which we operate, making it more difficult to source passengers from these regions. These risks may be exacerbated if voters of other countries within the European Union similarly elect to exit the European Union in future referendums.

As a global operator, our business may be also impacted by changes in U.S. policy or priorities in areas such as trade, immigration and/or environmental or labor regulations, among others. Depending on the nature and scope of these changes, they could impact our domestic and international business operations. While still unclear, these 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 potentially impairing the value of our ships and other assets.

results.

Price increases for commercial airline ~~service~~services for our guests or major changes or reduction in commercial airline ~~service~~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 ofand/or regulations governing commercial airline services could adversely affect our guests’ ability to obtain ~~airfare,~~air travel, as well as our ability to ~~fly~~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, such as the armed conflict between Russia and Ukraine. 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.

Disease outbreaks and increased concern related to illness when traveling 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. In addition, we may be subject to increased concerns that cruises are more susceptible than other vacation alternatives to the spread of infectious diseases, such as COVID-19. In response to disease outbreaks, 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. For example, local governments may establish their own set of rules for self-quarantines and/or require proof of individuals health status or vaccination prior to or upon visiting. 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 ships, all of which will negatively impact our operations and expose us to reputational and legal risks.

Incidents ~~or adverse publicity concerning our~~on ships, at port facilities, land destinations and/or ~~passengers or~~affecting the cruise vacation industry in general, ~~unusual weather conditions~~ and ~~other natural disasters or disruptions~~the associated negative media coverage and publicity, have affected and could continue to affect our reputation ~~as well as~~and impact our sales and results of operations.

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~~The ownership and/or operation of cruise~~Cruise ships, ~~airplanes,~~ private destinations, port facilities and shore excursions ~~involves~~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 ~~may~~could bring into question safety, health, security and vacation satisfaction ~~which could~~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 ~~in the future~~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 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 ~~media~~ and digital ~~marketing over recent years~~media has compounded the potential scope and reach of any negative publicity. ~~If any such incident or news cycle occurs during a time of high seasonal demand, the effect could disproportionately impact our results of operations for the year.~~ In addition, incidents involving cruise ships may result in additional costs to our business, increasing government or other regulatory oversight and, in ~~the case of incidents involving our ships,~~certain cases, potential litigation.

~~Our cruise ships and port facilities may also be adversely impacted by unusual~~Significant weather, ~~patterns~~ 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 ~~disruptions, such as hurricanes.~~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 ~~or other factors,~~types of events, which could have an adverse effect on our sales, operating costs and ~~profitability. For example, the 2017 hurricane season was particularly impactful to our operations~~profitability in the ~~Caribbean.~~current and future periods. Increases in the frequency, severity or duration of ~~severe weather~~these types of events ~~including those related to climate change,~~ could exacerbate ~~the~~their impact and ~~cause further disruption to~~disrupt our ~~operations. In addition, these~~operations or make certain destinations less desirable or unavailable impacting our revenues and any other events which impact the travel industry more generally may negatively impact our ability to deliver guests or crew to our cruises and/or interrupt our ability to obtain services and goods from key vendors in our supply chain.profitability further. Any of the foregoing 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, has impacted and could continue to impact 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. 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. If materialized, these problems could 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, 2016,~~September 30, 2022, a total of 6270 new ships with approximately ~~173,000~~165,000 berths ~~are~~were on order for delivery through ~~2021~~2028 in the cruise ~~industry.~~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.

Further, cruise prices and yield improvement could face additional pressure due to the pace at which we and other cruise line operators return to service.

In addition, to the extent that we or our competitors deploy ships to a particular ~~itinerary~~itinerary/region and the resulting capacity in that region exceeds the demand, weit may ~~lower~~negatively affect our pricing and profitability may be lower than anticipated. This risk exists in emerging cruise markets, such as China, where capacity has grown rapidly over the past few years and in mature markets where excess capacity is typically redeployed.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.~~assets

Unavailability of ports of call may adversely affect our results of ~~operations~~.

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, ~~environmental and health concerns, adverse weather conditions and natural disasters,~~ financial limitations on port development, exclusivity arrangements that ports may have with our competitors, geopolitical developments, local governmental regulations and ~~local community concerns about port development and other adverse impacts on their communities from additional tourists. In addition,~~governmental response to disease outbreaks. Higher fuel costs also may adversely impact the destinations on certain of our ~~itineraries. Any~~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 ~~our~~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.~~operations and financial results.

Our reliance on shipyards and their subcontractors 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 and their subcontractors 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 our new ships and, accordingly, increased demand for available new construction slots and/or continued consolidation in the cruise shipyard industry (including completion of Italian shipbuilder Fincantieri's bid for STX France) could impact our ability to construct new ships when and as planned, cause us to continue to commit to new ship orders earlier than we have historically done so and/or result in stronger bargaining power

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on the part of the shipyards and the export credit agencies providing financing for the project. Our inability to timely and cost-effectively procure new capacity could have a significant negative impact on our future business plans and results of operations.

Building, repairing, maintaining and/or upgrading a ship is sophisticated work that involves significant risks, and shipyards and/or their subcontractors 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 or mechanical faults may result in cancellation of cruises or, in more severe situations, new ship orders, or necessitate unscheduled drydocks and repairs of ships. These events and any related adverse publicity could result in lost revenue, increased operating expenses, or both, and thus adversely affect our results of operations.

We may lose business to competitors throughout the vacation ~~market~~.

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~~advisor preference and also in terms of the nature of ships, services and ~~services~~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 and Princess Cruises; 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 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 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 are 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 less than the carrying value of the assets.

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 may be unable to execute our attempts to expand our business. 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 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 liquidity. 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, 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 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 insurance 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 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. 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. 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 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 may not be able to achieve our fiscal 2025 financial and climate-related performance goals.

In November 2022, we announced that we 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 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, ~~could~~such as the COVID-19 pandemic, negatively ~~affect~~affects our operating cash flows. ~~See “-Adverse worldwide economic, geopolitical or other conditions…~~”As result of the COVID-19 pandemic and “-~~Incidents or adverse publicity concerning our ships and/or passengers or~~ the ~~cruise vacation industry…”~~ ~~for more information.~~

~~Although we believe we can access sufficient liquidity to fund~~resulting suspension of our operations, ~~investments~~we have experienced credit rating downgrades, which have reduced our ability to incur secured indebtedness by reducing the amount of indebtedness that we are permitted to secure, and ~~obligations as expected, there can~~may negatively impact our access to, and cost of, debt financing. Additionally, our ability to raise additional financing, whether or not secured, could be ~~no assurances~~limited if our credit rating is further downgraded, and/or if we fail to ~~that effect.~~ 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 ~~vibrancy~~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.~~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 derivative contracts for hedging of fuel prices, interest rates and foreign currencies or other agreements. If any of the foregoing occurs for a prolonged period of time it ~~may~~will have a long-term negative impact on our cash flows ~~including~~and our ability to meet our ~~obligations, our results~~financial obligations.

Our substantial debt requires a significant amount of ~~operations~~cash to service and could adversely affect our financial condition.

We have a substantial amount of debt and significant debt service obligations. As of September 30, 2022, we had total debt of $23.3 billion. Our substantial debt has 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 expenses.

Our ~~liquidity could~~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 ~~adversely impacted if we are unable to satisfy the covenants required~~affected by ~~our credit facilities.~~

~~Our debt agreements contain covenants, including covenants restricting~~ our ability to ~~take~~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 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 ~~actions~~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. In the event that we execute and borrow under the $0.7 billion commitment available to draw on at any time on or prior to August 11, 2023 for a 364-day term loan facility, the credit agreement that would govern such term loan facility would impose substantially similar restrictions (including the related qualifications and exceptions) as are set forth in the indenture governing the Priority Guaranteed Notes. 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 September 30, 2022, we have commitments for approximately $7.0 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.

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, 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. In addition, both our export credit facilities and our non-export credit facilities contain covenants that will, once our current waivers expire, require us, among other things, to maintain a specified minimum fixed charge coverage ratio and limit our net debt-to-capital ratio. In addition, our ECA facilities also require us to maintain minimum liquidity and a minimum stock holders' equity. Refer to Note 7. Debt to our consolidated financial statements under Part I, Item 1, Financial Statements for further discussion on our covenants and existing waivers.

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 ~~covenants.~~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 and we may be required to further encumber our assets. In addition, our ability to ~~make borrowings~~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 ~~available credit facilities is subject~~other debt instruments, and the relevant debt holders or lenders could elect to declare the ~~absence~~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 ~~material adverse changes~~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 ~~business. 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 financing~~non-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 ~~the Board~~our board of directors is no longer

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comprised of individuals who were members of ~~the Board~~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.~~downgrade, which would require us to offer to repurchase our debt securities in the event of such change of control.

If we elect to settle conversions of our convertible notes in shares of our common stock or a combination of cash and shares of our common stock, conversions of our convertible notes will result in dilution for our existing shareholders. Furthermore, new equity or convertible debt issuances will also result in dilution for our existing shareholders.

We have an aggregate principal amount of $1.725 billion in convertible notes outstanding. If note holders elect to convert, the notes will be converted into our shares of common stock, cash, or a combination of common stock and cash, at our discretion. Prior to March 15, 2023, August 15, 2023, and May 15, 2025, our convertible notes issued in June 2020, October 2020, and 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. Conversions of our convertible notes into shares of our common stock or a combination of common stock and cash, will result in 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 quarter ended September 30, 2022 and do not expect to pay dividends on our common stock for the foreseeable future.

No cash dividends were declared on our common stock during the ten consecutive quarters ended September 30, 2022. We expect that any income received from operations will be devoted to our future operations and recovery. We do not expect to pay cash dividends on our common stock for the foreseeable future.In addition, in the event we thereafter declare a dividend, we will need to repay our 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.

Increased regulatory oversight, and the phasing out of LIBOR may adversely affect the value of a portion of our indebtedness.

The publication of certain LIBOR settings ceased after December 31, 2021, and uncertainty regarding alternative reference rates remains as many market participants await a wider adoption of replacement products prior to the cessation of the 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 might be affected if we, the agent, and/or the lenders holding a majority of the outstanding loans or commitments under such indebtedness fail to amend such indebtedness to implement a replacement rate. 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.

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. 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 travel advisories, warnings, rules, regulations or

legislation exposing 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 and regulations can be unpredictable, and they could cause us to cancel scheduled sailings, possibly on short notice, or could result in litigation against us. This, in turn, could decrease our revenue, increase our operating costs and otherwise impair our profitability.

Environmental, labor, health and safety, financial responsibility and other maritime regulations and measures could affect operations and increase operating costs.

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 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 of 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 of these regulations, there can be no assurances that these efforts will be successful over the long term.

There is increasing global regulatory focus 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. However, such climate change-related regulatory activity in the future may adversely affect our business and financial results by 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 our operating costs, including fuel costs. 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 things, to increase 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 2023. If enacted, the Fit for 55 regulations may individually and collectively have a material adverse effect on our business and results of operations due to increased costs associated with compliance and modified itineraries in the affected regions.

In addition, we 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 and may increase our exposure, if any, to environmental-related litigation.

Some environmental groups also have 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. Growing environmental scrutiny of the cruise industry and any related measures could adversely impact our operations and financial results and subject us to reputational impacts and costs.

A change in our tax status under the U.S. Internal Revenue Code, or other jurisdictions, may have adverse effects on our results of operations.

Royal 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 ~~failure~~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 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.

As budgetary constraints continue to adversely impact the jurisdictions in which we operate, increases in income tax regulations, tax audits or tax reform affecting our operations may be imposed.

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 shareholders may have more difficulty challenging 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 results 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 and 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. 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 meet the needs of region-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. We cannot guarantee consistent interpretation, application, and enforcement of newly issued rules and regulations, which could place limits on our operations or increase our costs, as well as negatively impact our future growth strategies in our key growth 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 properly adhere to applicable laws and regulations. In addition, we may be exposed to the risk of penalties and other liabilities if we fail to comply with ~~the terms~~all applicable legal and regulatory requirements. Failure by us, our employees or any of these third parties to adhere to our ~~debt facilities~~policies or applicable laws or regulations could result in ~~an event~~penalties, sanctions, damage to our reputation and related costs, which in turn could negatively affect our results of ~~default. Generally, if an event~~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 and/or environmental or labor regulations, among others. Depending on the nature and scope of ~~default under~~ any ~~debt agreement occurs, then pursuant~~such changes, they could impact our domestic and international business operations. Any such changes, and any international response to ~~cross default acceleration clauses, our outstanding debt and derivative contract payables~~them, could ~~become due~~potentially introduce new barriers to passenger or crew travel and/or ~~terminated. In addition, in such events,~~cross border transactions, impact our ~~credit card processors could hold back payments to create a reserve. We cannot provide assurances that we would have sufficient liquidity to repay,~~ guest experience and/or ~~the ability to refinance the debt if such amounts were accelerated upon an event of default.~~

increase our operating costs.

If we are unable to ~~appropriately balance~~address these risks adequately, 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, such as ordering new ships and/or upgrading our existing fleet, based on expected market preferences and projected demand. There can be no assurance that our strategies will be successful, which could adversely impact our business, financial ~~condition~~position and results of ~~operations. Investments~~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 ~~older tonnage,~~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 ~~particular, run~~ the ~~risk~~event of ~~not meeting expected returns~~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 ~~diluting related asset values.~~

~~Our attempts to expand~~interest rates could affect our ~~business into new markets and new ventures may not be successful.~~

financial results.

We opportunistically seek to grow our business through, among other things, expansion into new destination 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. 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.

~~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, 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, such as China, where we have a large number of travel agent charter and group sales and less retail agency and direct booking. In addition, the travel agent industry is sensitive to economic conditions that impact discretionary income. Significant disruptions, especially disruptions impacting those agencies that sell a high volume of our business, or contractions in the industry could reduce the number of travel agencies available for usare exposed to market risk attributable to changes in foreign currency exchange rates, fuel prices and ~~sell our cruises, which~~interest rates. Significant changes in any of the foregoing could ~~have an adverse impact on our financial condition and results of operations.~~

~~Disruptions in our shoreside operations or our information systems may adversely affect our results of operations.~~

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 September 30, 2022, we had approximately $5.9 billion of indebtedness that bears interest at variable rates. This amount represented approximately 25.0% of our total indebtedness. As of September 30, 2022, a hypothetical 1% increase in prevailing interest rates would increase our forecasted 2022 interest expense by approximately $9.8 million.

Additionally, the value of our earnings in foreign currencies is adversely impacted by a strong U.S. dollar. In addition, ~~substantial or repeated information systems failures, computer viruses or cyber-attacks~~any significant increase in fuel prices could 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 and the value of our shoreside or shipboard operations could adversely impact our business. We do not generally carry business interruption insurance for our shoreside operations or our information systems. As such, any losses or damages incurred by us could have an adverse impact on our results of operations.

related hedging instruments.

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.~~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.

~~Table~~We are experiencing difficulty in recruiting and retaining qualified personnel primarily due to a competitive labor market. Our ability to rehire crew may be negatively impacted by increasing demands related to our health and safety protocols, including vaccine requirements, and by a reduced labor supply as previous crew may have obtained alternative employment during our suspension of ~~Contents~~

cruise operations. A prolonged shortage of qualified personnel and/or increased turnover could decrease our ability to operate our business in an optimal manner. The shortage and competitive labor market may result in increased costs if we need to hire temporary personnel, and/or increased wages and/or benefits in order to attract and retain employees, all of which may negatively impact our results of operations.

As of ~~December 31, 2016, 85%~~September 30, 2022, approximately 87% 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.

~~Business activities that involve our co-investment with third parties may subject us to additional risks.~~

Partnerships, joint ventures, and other business structures involving our co-investment 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 could become bankrupt or otherwise lack the financial resources to meet their obligations, or could have or develop business interests, policies or objectives thatIf we are inconsistent with ours. With the sale of 51% of our interest in Pullmantur Holdings in July 2016, we continue to expand the breadth of our co-investment activities, which also include TUI Cruises, SkySea Cruises, Grand Bahama Shipyard and minority ownership investments in various port development and other projects. In addition to financial risks, our co-investment activities may also present managerial and operational risks and expose us to reputational or legal concerns. These or other issues related to our co-investment with third parties could adversely impact our 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 required 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. Interruptions to our supply chain could increase 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. 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.

~~A failure~~ to keep pace with developments, design, and implementation in technology ~~or technological obsolescence could impair~~, our operations or competitive ~~position.~~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, ~~and a failure to do so~~which could ~~result in higher than anticipated costs or could~~ impair our operating results.

We may be unable to procure 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 have adopted, could adversely affect our results of operations.

We are exposed to cyber security attacks and data breaches and the risks and costs associated with ~~cyber security~~protecting our systems and maintaining data ~~privacy, including protecting the~~ integrity and ~~security of our guests’, employees’ and business partners’ personal information.~~

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 or 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 frequency and sophistication of, and methods used to conduct, these attacks, have increased over time.

A successful cyber security attack may target us directly, or it may be the result of a third party’s inadequate 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 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 technology, personnel, monitoring and other investments.

We are also subject to various risks associated with the collection, handling, storage, and transmission of sensitive ~~information, including risks related to compliance with applicable laws and other contractual obligations, as well as the risk that our systems collecting such information could be compromised.~~information. In the regular course of ~~doing~~ business, we collect ~~large volumes of internal~~employee, customer, and ~~customer~~other third-party data, including personally identifiable information and individual ~~credit~~payment 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 which is expected to take effect in May 2018), as well as industry standards,~~ relating to the collection, use, retention, security and transfer of personally identifiable information and individual ~~credit~~payment 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~~

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~~to transfers of information between the Company and its subsidiaries, and among the Company, its subsidiaries~~ and other ~~parties with which the Company~~applicable laws has ~~commercial relations. Several jurisdictions have passed laws in this area,~~caused, 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 may cause, us to incur substantial costs or require us to change our business ~~practices. If we fail~~practices, and our failure to ~~comply with the various applicable data collection and privacy laws, we could be exposed~~do 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 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 ~~adversely impacted.~~successful in preventing or defending from all cyber security 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.

In addition, even if we are fully compliant with legal and/or industry standards and any relevant contractual requirements, we still may not be able to prevent security breaches involving sensitive data and/or critical systems. Any breach, theft, loss, or fraudulent use of guest, employee, third-party or company data, ~~or breach of any critical systems used in our land based or marine operations,~~ 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. Additionally, the techniques and sophistication used to conduct cyber-attacks and breaches of information technology systems, as well as the sources and targets of these attacks, change frequently and are often not recognized until such attacks are launched or have been in place for a period of time. Our security measures cannot provide assurance that we will be successful in preventing or identifying such breaches.

~~The potential unavailability of insurance coverage or an inability to obtain insurance coverage at commercially reasonable rates 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 a cyber-security breach. The limits of insurance coverage we purchase are based on the availability of the coverage, evaluation of our risk profile and cost of coverage. Accordingly, we are not protected against all risks which could result in an unexpected decrease in our revenue and results of operations in the event of an incident.

Our protection and indemnity (“P&I”) liability insurance is placed on a mutual basis and we are subject to additional premium calls in amounts based on claim records of all members of the P&I Club. We are also subject to additional premium assessments including, but not limited to, investment or underwriting shortfalls experienced by the P&I Club.

We cannot be certain that insurance and reinsurance coverage will be available to us and at commercially reasonable rates in the future. 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. Such events could adversely affect our financial condition or results of operations.

~~Environmental, labor, health and safety, financial responsibility and other maritime regulations could affect operations and increase operating costs.~~

The United States 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, that could increase our direct cost to operate in certain markets, increase our cost for 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 of these regulations, there can be no assurances that these efforts will be successful or completed on a timely basis.

There is increasing global regulatory focus on climate change and greenhouse gas (GHG) emissions. These regulatory efforts, both internationally and in the United States 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 financial results by requiring us to reduce our emissions, purchase allowances or otherwise pay for our emissions. Such activity may also impact us by increasing our operating costs, including fuel costs.

Some environmental groups have also lobbied for more stringent regulation of cruise ships and have generated negative publicity about the cruise vacation industry and its environmental impact. See Item 1. ~~Business-Regulation-Environmental Regulations~~ ~~of our Annual Report on Form 10-K for the year ended December 31, 2016.~~

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~~A change in our tax status under the United States Internal Revenue Code, or other jurisdictions, may have adverse effects on our income~~.

We 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 United States. Drinker Biddle & Reath LLP, our U.S. tax counsel, has delivered 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 a ship or 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 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 such that it no longer qualifies as an equivalent exemption jurisdiction, 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.

~~As budgetary constraints continue to adversely impact the jurisdictions in which we operate, increases in income tax regulations, tax audits or tax reform affecting our operations may be imposed.~~

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 ~~United States~~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 aour 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.

We ~~are not a United States corporation~~cannot predict the quantum or outcome of any such proceedings and the impact that they will have on our ~~shareholders~~financial results, but any such impact may be ~~subject to the uncertainties~~material. While some of ~~a foreign legal system in protecting their interests.~~

~~Our corporate affairs~~these claims are ~~governed~~covered by ~~our Articles~~insurance, we cannot be certain that all 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 United States. However, while most states have a fairly well developed body of case law interpreting their respective corporate statutes, there are very few judicial cases in Liberia interpreting the Business Corporation Act of Liberia. As such, the rights and fiduciary responsibilities of directors under Liberian law are not as clearly established as the rights and fiduciary responsibilities of directors under statutes or judicial precedent in certain United States jurisdictions. For example, the right of shareholders to bring a derivative action in Liberian courts maythem will be, more limited than in United States 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 to actions by management, directors or controlling shareholders than would shareholders of a corporation incorporated in a United States jurisdiction.

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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 Board approval~~ which could ~~result in the entrenchment~~have an adverse impact on our financial condition or results of current management. These include provisions in our Articles of Incorporation that prevent third parties, other than A. Wilhelmsen AS. and Cruise Associates, from acquiring beneficial ownership of more than 4.9% of our outstanding shares without the consent of our Board of Directors.operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Share Repurchases

~~The following table presents the total number~~There were no repurchases of ~~shares of our~~ common stock ~~that we repurchased~~ during the quarter ended September 30, ~~2017:~~2022. In connection with our debt covenant waivers, we agreed with our lenders not to engage in stock repurchases for so long as our debt covenant waivers are in effect.

Period Total number of shares purchased Average price paid per share
Total number of shares purchased as part of publicly announced plans or programs⁽¹⁾
Approximate dollar value of shares that may yet be purchased under the plans or programs
July 1, 2017 - July 31, 2017 — — — $500,000,000
August 1, 2017 - August 31, 2017 827,826 $120.78 827,826 $400,000,000
September 1, 2017 - September 30, 2017 212,128 $117.83 212,128 $375,000,000
Total 1,039,954 1,039,954

⁽¹⁾On April 28, 2017, we announced that our board of directors authorized a 12-month common stock repurchase program for up to $500 million. The timing and number of shares to be repurchased will depend on a variety of factors including price and market conditions. During the third quarter of 2017, we repurchased 1.0 million shares of our common stock for a total of $125.0 million in open market transactions that were recorded within ~~Treasury stock~~ ~~in our consolidated balance sheet. Repurchases under the program may be made at management's discretion from time to time on the open market or through privately negotiated transactions.~~

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Item 6. Exhibits



~~10.1~~4.1		~~Novation Agreement,~~Indenture, dated asAugust 5, 2022, among the Company and The Bank of ~~July 24, 2017, between Hibisyeu Finance Ltd., Royal Caribbean Cruises Ltd., Citibank Europe Plc, UK Branch, Citicorp Trustee~~New York Mellon Trust Company, ~~Limited, Citibank~~ N.A., ~~London Branch, HSBC France, Sumitomo Mitsui Banking Corporation Europe Limited, Paris Branch and the banks and financial institutions~~ as ~~lender parties thereto~~Trustee (incorporated by reference to Exhibit ~~10.1~~4.1 to the Company’s Current Report on Form 8-K filed on ~~July 28, 2017)~~August 8, 2022).
4.2
~~10.2~~	~~Novation Agreement,~~Indenture, dated asAugust 18, 2022, among the Company and The Bank of ~~July 24, 2017, between Hoediscus Finance Ltd., Royal Caribbean Cruises Ltd., Citibank Europe Plc, UK Branch, Citicorp Trustee~~New York Mellon Trust Company, ~~Limited, Citibank~~ N.A., ~~London Branch, HSBC France, Sumitomo Mitsui Banking Corporation Europe Limited, Paris Branch~~as Trustee, Principal Paying Agent, Transfer Agent, and ~~the banks and financial institutions as lender parties thereto~~Registrar (incorporated by reference to Exhibit ~~10.2~~4.1 to the Company’s Current Report on Form 8-K filed on ~~July 28, 2017)~~August 18, 2022).
10.1
~~10.3~~	~~Novation~~Amendment to Term Loan Agreement, dated as of ~~July 24, 2017, between Houatorris Finance Ltd.,~~September 19, 2022, among Royal Caribbean Cruises Ltd., ~~Citibank Europe Plc, UK Branch, Citicorp Trustee Company Limited, Citibank N.A., London Branch, HSBC France, Sumitomo Mitsui Banking Corporation Europe Limited, Paris Branch and~~as the ~~banks and~~Borrower, the various financial institutions ~~as lender parties~~party thereto ~~(incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on July 28, 2017).~~and Bank of America, N.A.
10.2
~~10.4~~	~~Icon 1 Hull No. S-1400 Credit~~LIBOR Replacement Amendment to Term Loan Agreement, dated as of ~~October 11, 2017,~~September 19, 2022, between Royal Caribbean Cruises Ltd., as the Borrower ~~the Lenders from time to time party thereto, KfW IPEX-Bank GmbH,~~and Bank of America, N.A., as Hermes Agent, Facility Agent, Documentation Agent and Initial Mandated Lead Arranger and BNP Paribas Fortis SA/NV as Finnvera Agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 17, 2017).Administrative Agent.
31.1	��
~~10.5~~	Icon 2 Hull No. S-1401 Credit Agreement, dated as of October 11, 2017, between Royal Caribbean Cruises Ltd., as the Borrower, the Lenders from time to time party thereto, KfW IPEX-Bank GmbH, as Hermes Agent, Facility Agent, Documentation Agent and Initial Mandated Lead Arranger and BNP Paribas Fortis SA/NV as Finnvera Agent (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on October 17, 2017).

~~10.6~~	Amendment to the Credit Agreement, dated as of October 12, 2017, among Royal Caribbean Cruises Ltd., the various financial institutions as are or shall become parties thereto and Nordea Bank AB (PUBL), New York branch, as administrative agent for the lender parties (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on October 17, 2017).

~~10.7~~	Form of 2008 Equity Incentive Plan Restricted Stock Unit Agreement - Executive Officer Grants (Non-Vesting Into Retirement)*

~~31.1~~	Certification of the ~~Chairman and~~ Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934*1934
31.2
~~31.2~~	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934*1934
32.1
~~32.1~~	Certifications of the ~~Chairman and~~ Chief Executive Officer and the Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code**



**		~~Filed herewith~~
**	Furnished herewith

Interactive Data File

101The following financial statements of Royal Caribbean Cruises Ltd. for the period ended September 30, ~~2017,~~2022, formatted in ~~XBRL~~iXBRL (Inline extensible Reporting Language) are filed herewith:

(i)the Consolidated Statements of Comprehensive ~~Income (Loss)~~Loss for the ~~quarter~~quarters and nine months ended September 30, ~~2017~~2022 and ~~2016;~~2021;


~~(ii)~~	~~the Consolidated Balance Sheets at September 30, 2017 and December 31, 2016;~~

(ii) the Consolidated Balance Sheets at September 30, 2022 and December 31, 2021;

(iii)the Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2017~~2022 and ~~2016;~~2021; and

(iv)the Notes to the Consolidated Financial Statements, tagged in summary and detail.

104 Cover page interactive data file (the cover page XBRL tags are embedded within the Inline XBRL document).

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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)


						/s/ ~~JASON T. LIBERTY~~NAFTALI HOLTZ
						~~Jason T. Liberty~~Naftali Holtz
						~~Executive Vice President,~~ Chief Financial Officer
November ~~7, 2017~~3, 2022						(Principal Financial Officer and duly authorized signatory)



			Page

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements			1

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			2125

Item 3. Quantitative and Qualitative Disclosures About Market Risk			3942

Item 4. Controls and Procedures			3942

PART II. OTHER INFORMATION

Item 1. Legal Proceedings			4044

Item 1A. Risk Factors			4044

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			4857

Item 6. Exhibits			4958

SIGNATURES			5059



Debt Instrument	Swap Notional as of September 30, 2017 (In thousands)		Maturity	Debt Fixed Rate	Swap Floating Rate: LIBOR plus	All-in Swap Floating Rate as of September 30, 2017
Oasis of the Seas term loan	$	157,500	October 2021	5.41%	3.87%	5.29%
Unsecured senior notes	650,000		November 2022	5.25%	3.63%	4.95%
	$	807,500



Derivatives under ASC 815-20 Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) on Derivative (Effective Portion)												Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)	Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (Effective Portion)
	Quarter Ended September 30, 2017			Quarter Ended September 30, 2016			Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016				Quarter Ended September 30, 2017			Quarter Ended September 30, 2016			Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016
(In thousands)
Interest rate swaps	$	(3,154	)	$	6,598		$	(24,703	)	$	(126,505	)	Interest expense, net of interest capitalized	$	(7,860	)	$	(11,953	)	$	(24,580	)	$	(32,019	)
Foreign currency forward contracts	122,211			11,405			221,861			22,715			Depreciation and amortization expenses	(2,710		)	(2,710		)	(8,130		)	(5,408		)
Foreign currency forward contracts	—			—			—			—			Other expense	(1,512		)	(3,465		)	(9,187		)	(10,206		)
Foreign currency forward contracts	—			—			—			—			Other operating	—			—			—			(207		)
Foreign currency collar options	—			—			—			—			Depreciation and amortization expenses	(602		)	(601		)	(1,806		)	(1,806		)
Fuel swaps	—			—			—			—			Other expense	1,758			2,760			6,533			9,356
Fuel swaps	67,878			(3,090		)	33,183			94,640			Fuel	(32,386		)	(64,654		)	(114,149		)	(223,484		)
	$	186,935		$	14,913		$	230,341		$	(9,150	)		$	(43,312	)	$	(80,623	)	$	(151,319	)	$	(263,774	)



Derivatives under ASC 815-20 Cash Flow Hedging Relationships	Location of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
		Quarter Ended September 30, 2017		Quarter Ended September 30, 2016			Nine Months Ended September 30, 2017		Nine Months Ended September 30, 2016
(In thousands)
Interest rate swaps	Other expense	—		90			—		(1,152		)
Foreign currency forward contracts	Other expense	75		—			100		(57		)
Fuel swaps	Other expense	3,351		(8		)	1,014		(3,949		)
		$	3,426	$	82		$	1,114	$	(5,158	)



	Payments due by period
			Less than		1-3		3-5		More than
	Total		1 year		years		years		5 years
Operating Activities:
Operating lease obligations⁽¹⁾	$	242,989	$	28,742	$	42,299	$	24,910	$	147,038
Interest on long-term debt⁽²⁾	1,073,803		233,134		352,304		246,912		241,453
Other⁽³⁾	850,768		170,063		297,523		165,395		217,787
Investing Activities:	0
Ship purchase obligations⁽⁴⁾	10,692,368		1,658,774		2,751,170		4,230,704		2,051,720
Financing Activities:	0
Long-term debt obligations⁽⁵⁾	7,557,801		1,511,773		1,991,501		1,209,893		2,844,634
Capital lease obligations⁽⁶⁾	34,406		3,935		7,051		8,272		15,148
Other⁽⁷⁾	33,684		8,525		20,012		5,147		—
Total	$	20,485,819	$	3,614,946	$	5,461,860	$	5,891,233	$	5,517,780



Period	Total number of shares purchased	Average price paid per share	Total number of shares purchased as part of publicly announced plans or programs⁽¹⁾	Approximate dollar value of shares that may yet be purchased under the plans or programs
July 1, 2017 - July 31, 2017	—	—	—	$500,000,000
August 1, 2017 - August 31, 2017	827,826	$120.78	827,826	$400,000,000
September 1, 2017 - September 30, 2017	212,128	$117.83	212,128	$375,000,000
Total	1,039,954		1,039,954