Royal Caribbean Cruises (RCL) 10-K risk factor changes: FY2019 vs FY2018

[removed: The] [added: *The] risk factors set forth below and elsewhere in this Annual Report on Form 10-K are important factors that could cause actual results to differ from expected or historical results.

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 [removed: below.][added: below.* *The ordering of the risk factors set forth below is not intended to reflect any Company indication of priority or likelihood.]

Management’s Discussion and Analysis of Financial Condition and Results of Operations for a cautionary note regarding forward-looking [removed: statements.][added: statements.*]

[removed: Adverse] [added: 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 ships and other [removed: assets.][added: assets.]

Any significant deterioration of international, national or local economic [removed: conditions] [added: conditions, including those resulting from geopolitical events and/or international disputes,] could result in a prolonged period of booking slowdowns, depressed cruise prices [removed: and] [added: and/or] reduced onboard revenues.

[removed: Fears] [added: Fears] of terrorist attacks, war, and other hostilities could have a negative impact on our results of [removed: operations.][added: operations.]

[removed: Our] [added: Our] operating costs could increase due to market forces and economic or geo-political factors beyond our [removed: control.][added: control.]

[removed: Fluctuations] [added: Fluctuations] in foreign currency exchange rates, fuel prices and interest rates could affect our financial [removed: results.][added: results.]

[removed: Management’s] [added: *Management’s] Discussion and Analysis of Financial Condition and Results of [removed: Operations”] [added: Operations*”] and “Item 7A.

[removed: Quantitative] [added: *Quantitative] and Qualitative Disclosures About Market [removed: Risk”] [added: Risk*”] for more information.

[removed: Conducting] [added: Conducting] business globally may result in increased costs and other [removed: risks.][added: risks.]

[added: 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 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.

We have operations in and source passengers from the United Kingdom and [removed: other member countries of] the European Union.

[removed: The expected] [added: Additionally, if the] withdrawal [added: is not executed effectively, it] could [removed: potentially] adversely affect tax, legal and regulatory regimes to which our business in the region is subject.

The [removed: expected] withdrawal could also, among other potential outcomes, disrupt the free movement of goods, services and people between the United Kingdom and the European [removed: Union.][added: Union, if not executed effectively.]

[removed: Further, as] [added: Uncertainty during] the [removed: expected withdrawal approaches, continued uncertainty around these issues] [added: transition period] could lead to adverse effects on the economy of the United Kingdom, including the value of the British Pound, and the other economies in which we operate, making it more difficult to source passengers from these regions.

[removed: Price] [added: Price] increases for commercial airline service for our guests or major changes or reduction in commercial airline service and/or availability could adversely impact the demand for cruises and undermine our ability to provide reasonably priced vacation packages to our [removed: guests.][added: guests.]

In addition, changes in the availability of commercial airline services could adversely affect our guests’ ability to obtain [removed: airfare,] [added: air travel,] as well as our ability to [removed: fly] [added: transfer] our guests to or from our cruise ships, which could adversely affect our results of operations.

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

The ownership and/or operation of cruise ships, private destinations, port facilities and shore excursions involves the risk of accidents, illnesses, mechanical failures, environmental incidents and other incidents which may bring into question safety, health, security and vacation satisfaction [removed: which could] [added: and can] negatively impact our [added: sales, operations and] reputation.

Incidents involving cruise ships, and, in particular the safety, health and security of guests and crew and [added: the] media coverage thereof have impacted and could in the future impact demand for our cruises and pricing in the industry.

Our reputation and our business could also be damaged by negative publicity regarding the cruise industry in general, including publicity regarding the spread of contagious [removed: disease] [added: disease, over-tourism in key ports] and [added: destinations and] the potentially adverse environmental impacts of cruising.

The considerable expansion in the use of social [removed: media] and digital [removed: marketing] [added: media] over recent years has compounded the potential scope [added: and reach] of any negative publicity.

In addition, incidents involving cruise ships may result in additional costs to our business, increasing government or other regulatory oversight and, in [removed: the case of incidents involving our ships,] [added: certain cases,] potential litigation.

We are often forced to alter itineraries and occasionally cancel a cruise or a series of cruises or to redeploy our ships due to these types of events, which could have an adverse effect on our [removed: sales] [added: sales, operating costs] and profitability in the current and future periods.

Increases in the frequency, severity or duration of [removed: severe weather events, including those related to climate change,] [added: these types of events] could exacerbate their impact and cause further disruption to our operations or make certain destinations less [removed: desirable.][added: desirable or unavailable impacting our revenues and profitability further.]

[removed: An] [added: An] increase in capacity worldwide or excess capacity in a particular market could adversely impact our cruise sales and/or [removed: pricing.][added: pricing.]

As of December 31, [removed: 2018,] [added: 2019,] a total of [removed: 89] [added: 67] new ships with approximately [removed: 198,000] [added: 159,000] berths are on order for delivery through [removed: 2023] [added: 2024] in the cruise industry.

In addition, to the extent that we or our competitors deploy ships to a particular [removed: itinerary] [added: itinerary/region] and the resulting capacity in that region exceeds the demand, we may lower pricing and profitability may be lower than anticipated.

This risk exists in emerging cruise markets, [removed: such as China,] where capacity has grown rapidly over the past few years and in mature markets where excess capacity is typically redeployed.

[removed: Unavailability] [added: Unavailability] of ports of call may adversely affect our results of [removed: operations.][added: operations.]

The availability of ports and destinations is affected by a number of factors, including [added: industry demand and competition for key ports and destinations,] existing capacity constraints, constraints related to the size of certain ships, security, [removed: 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 [removed: developments, local governmental regulations] [added: developments] and local [removed: community concerns about port development and other adverse impacts on their communities from additional tourists and overcrowding.][added: governmental regulations.]

[removed: Today certain] [added: Certain] ports and destinations are facing a surge of both cruise and non-cruise tourism which, in certain cases, has fueled anti-tourism sentiments and related countermeasures to limit the volume of tourists allowed in these [removed: destinations, including proposed limits on cruise ships and cruise passengers.][added: destinations.]

[removed: In 2019, for] [added: For] example, [added: effective 2020,] the local government of Dubrovnik, Croatia will cap the number of cruise ships that can dock each day to two and the number of corresponding [removed: passengers to 5,000.][added: passengers.]

Similar [added: existing and] potential restrictions in ports and destinations such as [removed: Barcelona, Venice, Amsterdam] [added: Venice] and [removed: the Norwegian fjords] [added: Barcelona] could limit the itinerary and destination options we can offer our passengers going forward.

[removed: Any] [added: Increased demand and competition for key ports of call or destinations,] limitations on the availability or feasibility of [removed: our] [added: use of specific] ports of call [removed: or] [added: and/or constraints] on the availability of shore excursions and other service providers at such ports [added: or destinations] could adversely affect our results of operations.

[removed: Our] [added: Our] reliance on shipyards, their subcontractors and our suppliers to implement our newbuild and ship upgrade programs and to repair and maintain our ships exposes us to risks which, if realized, could adversely impact our [removed: business.][added: business.]

There are a limited number of shipyards with the capability and capacity to [removed: build] [added: build, repair, maintain and/or upgrade] our [removed: new] ships.

Our inability to timely and cost-effectively procure new capacity [added: and the potential delay in ship deliveries and/or scheduled drydocks or modernizations] could have a significant negative impact on our future business plans and results of operations.

Building, repairing, maintaining and/or upgrading a ship is [added: also] sophisticated work that involves significant risks.

Mandatory fuel restrictions, such as the International Maritime Organization's 2020 Low Sulphur Regulation ("IMO 2020"), may also create uncertainty related to the price and availability of certain fuel types potentially impacting operating costs and the value of our related hedging instruments.

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On January 31, 2020, the United Kingdom withdrew from the European Union and immediately entered an 11-month transition period.

Changes in U.S. foreign travel policy may affect our results of operations.

Changes in U.S. foreign policy could result in the imposition of travel restrictions or travel bans on U.S. persons to certain countries or result in the imposition of U.S. rules, regulations or legislation that could expose us to penalties or claims of monetary damages.

The timing and scope of these changes are unpredictable, and they could cause us to cancel scheduled sailings, possibly on short notice, or could result in possible litigation against us.

This, in turn, could decrease our revenue, increase our operating costs and otherwise impair our profitability.

For instance, in June 2019, the U.S. government announced that cruise ships would no longer be allowed to travel between the U.S. and Cuba.

This required us to change our high yielding Cuba sailings on short notice, which impacted our earnings.

Moreover, in May 2019, the U.S. government activated Title III of the Cuban Liberty and Solidarity (Libertad) Act of 1996, popularly known as the Helms-Burton Act.

This allowed certain individuals

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whose property was confiscated by the Cuban government to sue in U.S. courts anyone who "traffics" in the property in question.

The activation of Title III has resulted in litigation against us and others in the tourism industry.

Significant weather, climate events and/or natural disasters could adversely impact our business and results from operations.

Natural disasters (e.g. earthquakes), weather and/or climate events (including hurricanes and typhoons) could impact our source markets and operations resulting in travel restrictions, guest cancellations, an inability to source our crew or our provisions and supplies from certain places.

Disease outbreaks and an increase in concern about the risk of illness could adversely impact our business and results from operations.

Disease outbreaks and increased concern related to illness when travelling to, from, and on our ships could cause a drop in demand for cruises, guest cancellations, travel restrictions, an unavailability of ports and/or destinations, cruise cancellations, ship redeployments and an inability to source our crew, provisions or supplies from certain places.

The recent coronavirus outbreak is currently having these impacts on our operations and, given its fluid and developing nature, has made it extremely difficult for us to forecast the impact it could have on our future operations.

For instance, the resulting measures taken by China and other countries to contain the disease, including travel restrictions, have resulted in the cancellation or itinerary modification of an increasing number of our cruises in Southeast Asia.

In addition, our imposition of measures to protect our guests and crew, including denying boarding to those that have traveled from, to or through mainland China or Hong Kong, has caused us to cancel cruise bookings or restrict certain guests from booking our cruises.

All of these issues are having and are likely to continue to have a material impact on our bookings, operations and our overall financial performance.

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Growing anti-tourism sentiments and environmental concerns related to cruising could adversely impact our operations.

In certain destinations, countermeasures to limit the volume of tourists are being contemplated and/or put into effect, including proposed limits on cruise ships and cruise passengers.

These anti-tourism sentiments and growing environmental scrutiny of the cruise industry and any related countermeasures could adversely impact our operations and financial results and subject us to increasing compliance costs.

Current market conditions characterized by limited shipyard capacity, high demand for shipyard and sub-contractor resources and the growing application of advanced technologies to newbuilds (e.g. LNG) could cause delays in ship deliveries and

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scheduled drydocks across the industry.

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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.

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, and will continue to invest, 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.

Our reliance on third-party sellers is particularly pronounced in certain markets.

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conditions that impact discretionary income of consumers.

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affected by unforeseen events and/or circumstances, which may result in an impairment charge.

The ordering of the risk factors set forth below is not intended to reflect any Company indication of priority or likelihood.

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

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.

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 expected withdrawal has resulted in increased volatility in the global financial markets and, in particular, in global currency exchange rates.

These risks may be exacerbated if a structured withdrawal agreement is not ratified before the March 29, 2019 deadline, and/or if voters of other countries within the European Union similarly elect to exit the European Union in future referendums.

For example, we are currently monitoring developments in Venezuela as well as the U.S. government's recent comments regarding its policy towards Cuba and its impact to our business.

A significant shift in U.S. policy towards Cuba, including the administration’s possible taking action to limit the ability of companies like us to continue to conduct business in Cuba, and/or a significant deterioration in the Cuban economy could impact our Cuban itineraries and associated ticket and tour revenues.

In addition, the administration has stated it is reviewing whether to continue to suspend the right of private parties to bring litigation under the Helms-Burton Act against companies making unauthorized use of property confiscated by the Cuban government.

If such suspension is lifted, monetary and other claims may be brought against us and other companies doing business in Cuba.

Although we believe we have meritorious defenses to any such claims, it is possible that such claims could lead to an adverse impact on our business.

Our cruise ships, port facilities and land destinations may also be adversely impacted by weather or natural disasters or disruptions, such as hurricanes.

In addition, these 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.

These attempts to expand

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 bookings.

For example, in September 2018, we discovered instances of unauthorized access to a number of employee e-mail communications, some of which contained proprietary business and personally identifiable information.

See Item 1.

Business-Regulation-Environmental Regulations.

To the extent the United Kingdom tonnage tax laws change or we do not continue to meet

[removed: Cautionary] [added: Cautionary] Note Concerning Forward-Looking [removed: Statements][added: Statements]

The discussion under this caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this document, [removed: including, for example, under the "Risk Factors" and "Business" captions,] 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 first quarter and full year of [removed: 2019 and] [added: 2020,] our earnings and yield estimates for [removed: 2019] [added: 2020] set forth under the heading "Outlook" [removed: below),] [added: below and our goals for our  program),] business and industry prospects or future results of operations or financial position, made in this Annual Report on Form 10-K are forward-looking.

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

[removed: Overview][added: Overview]

The discussion and analysis of our financial condition and results of operations [removed: have been] [added: is] organized to present the following:

[removed: | • |] [added: -] a review of our critical accounting policies and of our financial presentation, including discussion of certain operational and financial metrics we utilize to assist us in managing our business; [removed: |]

[removed: | • |] [added: -] a discussion of our results of operations for the year ended December 31, [removed: 2018] [added: 2019] compared to the same period in [removed: 2017] [added: 2018] and the year ended December 31, [removed: 2017] [added: 2018] compared to the same period in [removed: 2016; |][added: 2017;]

[removed: | • |] [added: -] a discussion of our business outlook, including our expectations for selected financial items for the first quarter and full year of [removed: 2019;] [added: 2020;] and [removed: |]

[removed: | • |] [added: -] a discussion of our liquidity and capital resources, including our future capital and contractual commitments and potential funding sources. [removed: |]

[removed: Critical] [added: Critical] Accounting [removed: Policies][added: Policies]

[removed: General] [added: *General*] and Note 2.

[removed: Summary] [added: *Summary] of Significant Accounting [removed: Policies] [added: Policies*] to our consolidated financial statements under Item 8.

[removed: Financial] [added: *Financial] Statements and Supplementary [removed: Data).][added: Data*).]

[removed: Ship Accounting][added: *Ship Accounting*]

[removed: Our ships] [added: Ships] represent our most significant assets and are stated at cost less accumulated depreciation and amortization.

Depreciation of ships is generally computed net of a [removed: 15%] [added: 10%-15%] projected residual [removed: value] [added: value,] using the straight-line method over the estimated useful life of the asset, which is generally [removed: 30] [added: 30-35] years.

[removed: constructed ships] [added: The 30-35 year useful life] and [removed: 15% associated] [added: 10%-15%] residual value [removed: are both based on] [added: is] the weighted-average of all major components of a ship.

[removed: Therefore,] [added: However,] we estimate the [removed: costs] [added: costs, useful lives and residual values] of component systems based principally on general and technical information known about major ship component systems and their [removed: lives and] [added: lives, as well as] our knowledge of the cruise vacation industry.

The estimated cost and accumulated depreciation of replaced or refurbished ship components are written off and any resulting losses are recognized [removed: in Cruise] [added: within *Cruise] operating [removed: expenses.][added: expenses* in our Consolidated Statements of Comprehensive Income (Loss).]

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

If we had reduced our estimated average ship useful life by one year, depreciation expense for [removed: 2018] [added: 2019] would have increased by approximately [removed: $63.8] [added: $129.3] million.

If our ships were estimated to have no residual value, depreciation expense for [removed: 2018] [added: 2019] would have increased by approximately [removed: $243.0] [added: $325.1] million.

[removed: Business Combinations][added: *Business Combinations*]

[removed: Business Combination] [added: *Business Combination*] to our consolidated financial statements under Item 8.

[removed: Financial] [added: *Financial] Statements and Supplementary [removed: Data] [added: Data*] for further information on the [removed: acquisition][added: acquisition.]

We account for business combinations in accordance with ASC 805, [removed: Business Combinations,] [added: *Business Combinations*,] by applying the acquisition method of accounting.

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

[removed: Valuation] [added: *Valuation] of Goodwill, Indefinite-Lived Intangible Assets and Long-Lived [removed: Assets][added: Assets*]

[removed: If the qualitative assessment demonstrates] that it is more-likely-than-not that the estimated fair value of the reporting unit exceeds its carrying value, it is not necessary to perform the two-step goodwill impairment test.

The [removed: impairment review for indefinite-life intangible assets] [added: quantitative assessment] consists of a comparison of the fair value of the asset with its carrying amount.

As of December 31, [added: 2019 and] 2018, the carrying amount of indefinite-life intangible assets was [added: $352.3 million and] $351.7 million, [added: respectively,] which primarily relates to the Silversea Cruises trade name acquired in the Silversea Cruises acquisition.

Refer to Note [removed: 6, Intangible][added: 6.]

[removed: Assets] [added: *Intangible Assets*] to our consolidated financial statements under Item 8.

[removed: Financial] [added: *Financial] Statements and Supplemental [removed: Data] [added: Data*] for further information on indefinite-life intangible assets.

[removed: Royal] [added: Royal] Caribbean [removed: International][added: International]

During the fourth quarter of [removed: 2018,] [added: 2019,] we performed a qualitative assessment of the Royal Caribbean International reporting unit.

[removed: As of] December 31, [removed: 2018,] [added: 2019,] the carrying amount of goodwill attributable to our Royal Caribbean reporting unit was [removed: $286.7] [added: $299.2] million.

[removed: Silversea Cruises][added: Silversea Cruises]

[removed: Financial] [added: *Financial] Statements and Supplemental [removed: Data] [added: Data*] for further information on the Silversea Cruises acquisition.

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We employ a cost allocation methodology at the component level, in order to support the estimated weighted-average useful lives and residual values, as well as to determine the net cost basis of assets being replaced.

We periodically review estimated useful lives and residual values for ongoing reasonableness, considering long term views on our intended use of each class of ships and the planned level of improvements to maintain and enhance vessels within those classes.

In the event a factor is identified that may trigger a change in the estimated useful lives and residual values of our ships, a review of the estimate is completed.

In the fourth quarter of 2019, we completed a modernization of the *Oasis of the Seas* under our ship upgrade program.

The level of capital investment, as well as planned investment levels in the other ships within the Oasis class, triggered a review of the estimated useful lives and residual values of the Oasis-class ships.

Following a review of the estimate, considering the intended use of the vessel and assessment of the estimated lives of component assets forming the Oasis class ships, we concluded a change to the estimated lives and residual values of Oasis class ships was required.

Effective fourth quarter of 2019, we revised the estimated useful lives and residual values of the Oasis-class ships from 30 years with a 15% residual value to 35 years with a 10% residual value.

The change in the estimated useful lives and residual values was accounted for prospectively as a change in accounting estimate.

For further information regarding this change in accounting estimate, refer to Note 2.

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

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tanks, port services such as tugs, pilotage and line handling, and freight associated with these items.

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

If the qualitative assessment demonstrates

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

As of

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*Business Combination* to our consolidated financial statements under Item 8.

The indefinite-life intangible asset related to the Silversea Cruises trade name acquired in the Silversea Cruises acquisition was recorded at fair value at July 31, 2018, the acquisition date.

During the fourth quarter of 2019, we performed a qualitative assessment of the Silversea Cruises trade name.

As a result of the assessment performed no impairment charge was recorded related to trade name intangible assets for the year ended December 31, 2019.

We value floors which are embedded within our interest rate swaps using standard option pricing models with inputs based on the options’ contract terms, such as exercise price and maturity, and readily available market data, such as forward interest rates and interest rate volatility.

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

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 *Program* refers to the multi-year program designed to communicate and motivate employees to work towards company specific goals.

The program includes five goals by 2025: delivering $20.00 adjusted earnings per share; further reducing the company’s carbon footprint by 25% against a 2019 base; delivering strong returns on invested capital; and continuing to improve on record guest satisfaction and employee engagement metrics.

These goals have been put in place to focus our leadership on achieving outsized improvements in our performance going forward and are purposely aspirational.

The strategies that we will employ to achieve the goals of the program are consistent with our ongoing operating strategies as listed in the *Operating Strategies* section.

During the six-year time horizon of this program, there are many factors that will impact our ability to achieve these ambitious goals.

In particular, our goal of reducing our carbon footprint by 25% will be challenging and will depend on our ability to take aggressive steps including the use of new technologies that have not yet been developed or proven.

For the periods presented, Gross Cruise Costs exclude (i) restructuring charges incurred

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Due to

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By all accounts, 2019 was another year of very strong performance.

We introduced three new vessels - *Spectrum of the Seas, Celebrity Flora,* and TUI Cruise*s Mein Schiff 2*, launched a very successful Perfect Day destination at Coco Cay, modernized six ships and implemented Excalibur, our digital transformation platform, on most of the fleet.

| | |

| --- | --- |

The 30-year useful life of our newly

Significant

We derive forward prices from forward fuel curves based on pricing inputs provided by third-party institutions that transact in the fuel indices we hedge.

For the periods presented, Gross Cruise Costs exclude the impairment loss and other costs related to the exit of our tour operations business, the transaction costs related to the Silversea Cruises acquisition, the impact of the

For the periods presented, Net Cruise Costs 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.

For the periods presented, Net Yields excludes initiative costs related to the sale of the Pullmantur and CDF brands.

Due to significant uncertainty, we

Adjusted EPS for 2018 represents the fifth straight year we achieved double digit earnings growth with an 18% increase compared to 2017.

Additionally, Net Yields on a Constant-Currency basis increased for the ninth consecutive year.

For the year ended December 31, 2018, our Net Yields on a Constant-Currency basis increased by 4.4%, primarily driven by increases in both ticket and onboard yields.

Net onboard revenue yield in 2018 grew by 5.1% year-over-year on a Constant Currency basis.

For the first time in our history, in 2018, three of our Global Brands each welcomed a ship.

Royal Caribbean International welcomed newbuild Symphony of the Seas in March; Azamara Club Cruises welcomed Azamara Pursuit in September; and Celebrity Cruises welcomed newbuild Celebrity Edge in November.

In addition, in July 2018, we acquired a 66.7% equity stake in Silversea Cruises, an ultra-luxury and expedition cruise line with nine ships.

This acquisition enhances our presence in the ultra-luxury and expedition markets and provide us with an opportunity to drive long-term capacity growth in these markets.

In 2019, we expect our capacity to increase by 8.6% as each of the ships added to our Global Brands' fleet in 2018 will have it first full year of sailings.

In addition, our Royal Caribbean brand will welcome Spectrum of the Seas, our first ship tailored to the Chinese market, which will expand our commitment to that market.

In the second quarter of 2019, our Celebrity Cruises brand will welcome Celebrity Flora, the brand's first newbuild designed specifically for the Galapagos Islands.

Additionally, we will have our first full year with Silversea Cruises and will launch Perfect Day at CocoCay in Spring 2019, the first development in our Perfect Day Island Collection.

From an offering perspective, we are expanding our short Caribbean program that includes the newly modernized Mariner of the Seas and the soon-to-be modernized Navigator of the Seas.

We are also improving our Alaska itineraries to include larger ships for both our Royal Caribbean International and Celebrity Cruises brands.

Additionally, Silversea Cruises' newest ship, the Silver Muse, will be in Alaska and Azamara will have its first Alaskan season.

| • | On July 31, 2018, we acquired a 66.7% equity stake in Silversea Cruises for $1.02 billion in cash and contingent consideration payable upon achievement of certain 2019-2020 performance metrics by Silversea Cruises. Due to the three-month reporting lag, our consolidated results of operations for the year ended December 31, 2018 only include results for August and September 2018 for Silversea Cruises. Refer to Note 1. General and Note 3. Business Combination to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for further information on the three-month reporting lag and the Silversea Cruises acquisition. |

| • | In March 2018, we took delivery of Symphony of the Seas. To finance the purchase, we borrowed $1.2 billion under a previously committed unsecured term loan. Refer to Note 9. Debt to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for further information. The ship entered service at the end of the first quarter of 2018. |

| • | In March 2018, we completed the purchase of Azamara Pursuit, which entered service during the third quarter of 2018. |

| • | In April 2018, TUI Cruises, our 50% joint venture, took delivery of a new Mein Schiff 1 and also sold the original Mein Schiff 1 to an affiliate of TUI AG. Due to the sale of the original Mein Schiff 1, we recognized a gain of $21.8 million for the year ended December 31, 2018 related to our deferred gain from the 2009 sale of this ship to TUI Cruises. Refer to Note 8. Other Assets to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for further information. |

| • | In October 2018, we took delivery of Celebrity Edge. To finance the purchase, we borrowed $729.0 million under a previously committed unsecured term loan. Refer to Note 9. Debt to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for further information. The ship entered service in December 2018. |

| • | For the year ended December 31, 2018, we recognized an impairment loss of $23.3 million related to the Skysea Holding investment, debt facility and other receivables due, which is reported within Other income |

(expense) within our consolidated statements of comprehensive income (loss).

| | | | | | | | | | | | |

| 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 | | ) |

| Restructuring charges | — | | | | — | | | | 8,452 | | |

| Other initiative costs | — | | | | — | | | | 5,027 | | |

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| (2) | These amounts do not include November and December 2015 amounts for Pullmantur as the net Pullmantur result for those months was included within Other expense in our consolidated statements of comprehensive income (loss) for the year ended December 31, 2016, as a result of the elimination of the Pullmantur reporting lag, and did not affect Gross Yields, Net Yields, Gross Cruise Costs, |

Additionally, effective August 2016, we no longer include Pullmantur Holdings in these amounts.

[removed: Financial] [added: Financial] Instruments and [removed: Other][added: Other]

[removed: General][added: *General*]

(Refer to Note [removed: 17.][added: 18.]

[removed: Fair] [added: *Fair] Value [removed: Measurements and] [added: Measurements* *and] Derivative [removed: Instruments] [added: Instruments*] to our consolidated financial statements under Item 8.

[removed: Financial] [added: *Financial] Statements and Supplementary [removed: Data.)][added: Data.*)]

[removed: Interest] [added: *Interest] Rate [removed: Risk][added: Risk*]

At December 31, [removed: 2018,] [added: 2019,] approximately [removed: 59.1%] [added: 62.1%] of our long-term debt was effectively fixed as compared to [removed: 57.4%] [added: 59.1%] as of December 31, [removed: 2017.][added: 2018.]

At December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] we maintained interest rate swap agreements on the following fixed-rate debt instruments:

| [removed: Debt Instrument] [added: Debt Instrument] | [removed: Swap] [added: | | Swap] Notional as of December 31, [removed: 2018] [added: 2019] (In [removed: thousands)] [added: thousands)] | | | [removed: Maturity] [added: Maturity] | [removed: Debt] [added: | | Debt] Fixed [removed: Rate] [added: Rate] | [removed: Swap] [added: | | Swap] Floating Rate: LIBOR [removed: plus] [added: plus] | [removed: All-in] [added: | | All-in] Swap Floating Rate as of December 31, [removed: 2018] [added: 2019] | [added: | |]

| [removed: Oasis] [added: *Oasis] of the [removed: Seas] [added: Seas*] term loan | [added: | |] $ | [removed: 105,000] [added: 70,000] | | October 2021 | [added: | |] 5.41% | [added: | |] 3.87% | [removed: 6.63%] | [added: | 5.8% | | |]

| Unsecured senior notes | [added: | |] 650,000 | | | November 2022 | [added: | |] 5.25% | [added: | |] 3.63% | [removed: 6.25%] | [added: | 5.54% | | |]

The estimated fair value of our long-term fixed-rate debt at December 31, [removed: 2018] [added: 2019] was [removed: $2.7] [added: $5.6] billion, using quoted market prices, where available, or using the present value of expected future cash flows which incorporates risk profile.

The fair value of our fixed to floating interest rate swap agreements was estimated to be a liability of [removed: $25.4] [added: $1.6] million as of December 31, [removed: 2018,] [added: 2019,] based on the present value of expected future cash flows.

A hypothetical one percentage point decrease in interest rates at December 31, [removed: 2018] [added: 2019] would increase the fair value of our hedged and unhedged long-term fixed-rate debt by approximately [removed: $133.9] [added: $266.2] million and would increase the fair value of our fixed to floating interest rate swap agreements by approximately [removed: $24.3] [added: $16.5] million.

A hypothetical one percentage point increase in interest rates would increase our forecasted [removed: 2019] [added: 2020] interest expense by approximately [removed: $35.7] [added: $37.4] million, assuming no change in foreign currency exchange rates.

At December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] we maintained interest rate swap agreements on the following floating-rate debt instruments:

| [removed: Debt Instrument] [added: Debt Instrument] | [removed: Swap] [added: | | Swap] Notional as of December 31, [removed: 2018] [added: 2019] (In [removed: thousands)] [added: thousands)] | | | [removed: Maturity] [added: Maturity] | [removed: Debt] [added: | | Debt] Floating [removed: Rate] [added: Rate] | | [removed: All-in] [added: | | | | | | | All-in] Swap Fixed [removed: Rate] [added: Rate] | [added: | |]

| [removed: Celebrity Reflection] [added: *Celebrity Reflection*] term loan | [added: | |] $ | [removed: 327,250] [added: 272,708] | | October 2024 | [added: | |] LIBOR plus | [added: | |] 0.40% | [added: | |] 2.85% | [added: | | | | |]

| [removed: Quantum] [added: *Quantum] of the [removed: Seas] [added: Seas*] term loan | [removed: 490,000] | | [added: 428,750] | [added: | |] October 2026 | [added: | |] LIBOR plus | [added: | |] 1.30% | [added: | |] 3.74% | [added: | | | | |]

| [removed: Anthem] [added: *Anthem] of the [removed: Seas] [added: Seas*] term loan | [removed: 513,542] | | [added: 453,125] | [added: | |] April 2027 | [added: | |] LIBOR plus | [added: | |] 1.30% | [added: | |] 3.86% | [added: | | | | |]

| [removed: Ovation] [added: *Ovation] of the [removed: Seas] [added: Seas*] term loan | [removed: 657,083] | | [added: 587,917] | [added: | |] April 2028 | [added: | |] LIBOR plus | [added: | |] 1.00% | [added: | |] 3.16% | [added: | | | | |]

| [removed: Harmony] [added: *Harmony] of the [removed: Seas] [added: Seas*] term loan (1) | [removed: 627,660] | | [added: 551,325] | [added: | |] May 2028 | [added: | |] EURIBOR plus | [added: | |] 1.15% | [added: | |] 2.26% | [added: | | | | |]

[removed: |] (1) [removed: |] Interest rate swap agreements hedging the Euro-denominated term loan for [removed: Harmony] [added: *Harmony] of the [removed: Seas] [added: Seas*] include EURIBOR zero-floors matching the hedged debt EURIBOR zero-floor. [removed: Amount presented is based on the exchange rate as of December 31, 2018. |]

The fair value of our floating to fixed interest rate swap agreements was estimated to be [removed: an asset] [added: a liability] of [removed: $7.6] [added: $65.4] million as of December 31, [removed: 2018] [added: 2019] based on the present value of expected future cash flows.

[removed: Foreign] [added: *Foreign] Currency Exchange Rate [removed: Risk][added: Risk*]

The estimated fair value, as of December 31, [removed: 2018,] [added: 2019,] of our Euro-denominated forward contracts associated with our ship construction contracts was a liability of [removed: $40.7] [added: $139.2] million, based on the present value of expected future cash flows.

As of December 31, [removed: 2018,] [added: 2019,] the aggregate cost of our ships on order, not including ships on order by our Partner Brands and the Silversea Cruises ships that remain contingent upon final documentation and financing, was approximately [removed: $11.4] [added: $14.8] billion, of which we had deposited [removed: $651.7] [added: $881.5] million as of such date.

Approximately [removed: 53.5%] [added: 65.9%] and [removed: 54.0%] [added: 53.5%] of the aggregate cost of the ships under construction was exposed to fluctuations in the Euro exchange rate at December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] respectively.

A hypothetical 10% strengthening of the Euro as of December 31, [removed: 2018,] [added: 2019,] assuming no changes in comparative interest rates, would result in a [removed: $609.0] [added: $972.2] million increase in the United States dollar cost of the foreign currency denominated ship construction contracts exposed to fluctuations in the Euro exchange rate.

As of December 31, [removed: 2018,] [added: 2019,] we maintained foreign currency forward contracts and designated them as hedges of a portion of our net investment in TUI Cruises of [removed: €101.0] [added: €173.0] million, or approximately [removed: $115.5] [added: $194.2] million based on the exchange rate at December 31, [removed: 2018.][added: 2019.]

[removed: We] [added: As of December 31, 2018, we] had designated debt as a hedge of our net investments primarily in TUI Cruises of approximately €280.0 million, or approximately $320.2 [removed: million, through December 31, 2018.][added: million.]

[removed: As of December 31, 2017, we] [added: We] had designated debt as a hedge of our net investments primarily in TUI Cruises of approximately [removed: €246.0] [added: €319.0] million, or approximately [removed: $295.3 million.][added: $358.1 million, through December 31, 2019.]

We have included [added: net gains of] approximately [removed: $86.1] [added: $96.8] million and [removed: $68.5] [added: $86.1] million of foreign-currency transaction [removed: losses] [added: remeasurement] and [removed: of] changes in the fair value of derivatives in the foreign currency translation adjustment component of [removed: Accumulated] [added: *Accumulated] other comprehensive [removed: loss] [added: loss*] at December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] respectively.

During [removed: 2018,] [added: 2019,] we maintained an average of approximately [removed: $741.5] [added: $689.7] million of these foreign currency forward contracts.

For the years ended December 31, [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016] [added: 2017] changes in the fair value of the foreign currency forward contracts resulted in [removed: (losses)] gains [added: (losses)] of approximately [removed: $(62.4)] [added: $1.4] million, [removed: $62.0] [added: $(62.4)] million and [removed: $(51.1)] [added: $62.0] million, respectively, which offset gains (losses) arising from the remeasurement of monetary assets and liabilities denominated in foreign currencies in those same years of [removed: $57.6] [added: $0.4] million, [removed: $(75.6)] [added: $57.6] million and [removed: $39.8] [added: $(75.6)] million, respectively.

These changes were recognized in earnings within [removed: Other] [added: *Other] income [removed: (expense)] [added: (expense)*] in our consolidated statements of comprehensive income (loss).

[removed: Fuel] [added: *Fuel] Price [removed: Risk][added: Risk*]

Fuel cost (net of the financial impact of fuel swap agreements), as a percentage of our total revenues, was approximately [removed: 7.5%] [added: 6.4%] in [removed: 2018, 7.8%] [added: 2019, 7.5%] in [removed: 2017] [added: 2018] and [removed: 8.4%] [added: 7.8%] in [removed: 2016.][added: 2017.]

As of December 31, [removed: 2018,] [added: 2019,] we had fuel swap agreements to pay fixed prices for fuel with an aggregate notional amount of approximately [removed: $1.1 billion,] [added: $810.0 million,] maturing through [removed: 2022.][added: 2023.]

The fuel swap agreements represented [removed: 58%] [added: 54%] of our projected [removed: 2019] [added: 2020] fuel requirements, [removed: 54%] [added: 30%] of our projected [removed: 2020] [added: 2021] fuel requirements, [removed: 28%] [added: 19%] of our projected [removed: 2021] [added: 2022] fuel requirements and [removed: 19%] [added: 5%] of our projected [removed: 2022] [added: 2023] fuel requirements.

| | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | $ | 720,000 | | | | | | | | | | | | | |

[Table of C](#i7106eeeef4144183a197870618be0282_7)[ontents](#i7106eeeef4144183a197870618be0282_7)

| | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| *Odyssey of the Seas* term loan (2) | | | 460,000 | | | October 2032 | | | LIBOR plus | | | 0.95% | | | 3.20% | | | | | |

| | | | $ | 2,753,825 | | | | | | | | | | | | | | | | |

Amount presented is based on the exchange rate as of December 31, 2019.

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

The anticipated unsecured term loan for the financing of *Odyssey of the Seas* is expected to be drawn in October 2020.

[Table of C](#i7106eeeef4144183a197870618be0282_7)[ontents](#i7106eeeef4144183a197870618be0282_7)

| | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| | $ | 755,000 | | | | | |

| | $ | 2,615,535 | | | | | |

| | |

| --- | --- |

[removed: General][added: General]

We control and operate four global cruise brands: Royal Caribbean International, Celebrity Cruises, Azamara [removed: Club Cruises and, most recently,] [added: and] Silversea Cruises (collectively, our "Global Brands").

Together, our Global Brands and our Partner Brands operate a combined total of [removed: 60] [added: 61] ships in the cruise vacation industry with an aggregate capacity of approximately [removed: 135,520] [added: 141,570] berths as of December 31, [removed: 2018.][added: 2019.]

[removed: Our] [added: Our] Global [removed: Brands][added: Brands]

Our Global Brands include Royal Caribbean International, Celebrity Cruises, [removed: Azamara Club Cruises] [added: Azamara,] and Silversea Cruises.

[removed: Royal] [added: *Royal] Caribbean [removed: International][added: International*]

Royal Caribbean International’s strategy is to attract an array of vacationing guests by providing a wide variety of itineraries to destinations worldwide, including Alaska, Asia, Australia, Bahamas, Bermuda, Canada, the Caribbean, Europe, the Panama Canal and New Zealand, with cruise lengths ranging from two to [removed: 23] [added: 19] nights.

Royal Caribbean International operates [removed: 25] [added: 26] ships with an aggregate capacity of approximately [removed: 82,500] [added: 87,150] berths, including the brand's newest ship, [removed: Symphony] [added: *Spectrum] of the [removed: Seas,] [added: Seas*,] which entered service in [removed: March 2018.][added: April 2019.]

Additionally, as of December 31, [removed: 2018,] [added: 2019,] we have [removed: five] [added: six] ships on order with an aggregate capacity of approximately [removed: 25,300] [added: 32,400] berths.

These ships consist of our [removed: fourth and] fifth Quantum-class [removed: ships,] [added: ship,] which [removed: are] [added: is] scheduled to enter service in the [removed: second quarter of 2019 and] fourth quarter of 2020, [removed: respectively,] our fifth [added: and sixth] Oasis-class [removed: ship,] [added: ships,] which [removed: is] [added: are] scheduled to enter service in the second quarter of [removed: 2021,] [added: 2021] and the [added: fourth quarter of 2023, respectively, and the] first [removed: two] [added: three] ships of a new generation, known as our Icon-class, which are expected to enter service in [removed: 2022] [added: 2022, 2024] and [removed: 2024,] [added: 2025,] respectively.

[removed: Celebrity Cruises][added: *Celebrity Cruises*]

[removed: Celebrity] [added: TUI] Cruises operates [removed: 13 ships] [added: seven ships,] with an aggregate capacity of approximately [removed: 26,070 berths,] [added: 17,600 berths as of December 31, 2019,] including the brand's [removed: first Edge-class] [added: newest] ship, [removed: Celebrity Edge,] [added: *Mein Schiff 2*,] which entered service in [removed: December 2018.][added: January 2019.]

Additionally, as of December 31, [removed: 2018,] [added: 2019,] we have [removed: four] [added: three] ships on order with an aggregate capacity of approximately 9,400 berths.

These ships consist of three Edge-class ships, which are expected to enter service in the second quarter of 2020 and the fourth quarters of 2021 and 2022, [removed: respectively, and a ship designed for the Galapagos Islands, which is expected to enter service in the second quarter of 2019.][added: respectively.]

Azamara [removed: Club Cruises] is designed to serve the up-market segment of the North American, United Kingdom and Australian markets.

[removed: Azamara Club Cruises’] [added: Azamara's] strategy is to deliver distinctive destination experiences through unique itineraries with more overnights and longer stays as well as comprehensive tours allowing guests to experience the destination in more depth.

Azamara [removed: Club Cruises] offers a variety of itineraries to popular destinations, including Asia, Australia/New Zealand, Northern and Western Europe, the Mediterranean, [removed: Cuba] and South America with cruise lengths ranging from [removed: four] [added: three] to [removed: 21] [added: 26] nights.

[removed: Azamara Club] [added: Celebrity] Cruises operates [removed: three] [added: 14] ships with an aggregate capacity of approximately [removed: 2,100] [added: 26,220] berths, including [removed: Azamara Pursuit,] [added: the brand's newest ship designed for the Galapagos Islands, *Celebrity Flora*,] which entered service [removed: during] [added: in] the [removed: third] [added: second] quarter of [removed: 2018.][added: 2019.]

[removed: Silversea Cruises][added: *Silversea Cruises*]

Refer to Note [removed: 3.][added: 1.]

[removed: Business Combinations] [added: *Business Combination*] to our consolidated financial statements under Item 8.

[removed: Financial Statements and] [added: *Financial Statements* *and] Supplementary [removed: Data] [added: Data*] for [removed: further] [added: more] information on the [added: three-month reporting lag and the] Silversea Cruises acquisition.

Silversea Cruises operates [removed: nine] [added: eight] ships, with an aggregate capacity of approximately [removed: 2,650] [added: 2,450] berths offering cruise itineraries generally ranging from six to 25 nights.

[removed: As of December 31, 2018, Silversea] [added: Additionally, TUI] Cruises has three ships on order with an aggregate capacity of approximately [removed: 1,200] [added: 11,100] berths, [removed: which] [added: that] are scheduled [removed: for delivery] [added: to enter service] in the [removed: first and] [added: second quarter of 2023, the] third quarter of [removed: 2020] [added: 2024] and the [removed: third] [added: first] quarter of [removed: 2021,] [added: 2026,] respectively.

[removed: Our] [added: Our] Partner [removed: Brands][added: Brands]

[removed: General] [added: *General*] and Note 8.

[removed: Other Assets] [added: *Other Assets*] to our consolidated financial statements under Item 8.

[removed: Financial] [added: *Financial] Statements and Supplementary [removed: Data] [added: Data*] for further details.

[removed: TUI Cruises][added: *TUI Cruises*]

[removed: Pullmantur][added: *Pullmantur*]

The Pullmantur brand is a joint venture owned 49% by us and 51% by Cruises Investment Holdings [removed: S.A.R.L.,] [added: S.A.,] an affiliate of Springwater Capital LLC.

The [removed: four] [added: three] ships operated by Pullmantur have an aggregate capacity of approximately [removed: 7,450] [added: 6,050] berths.

[removed: Industry][added: Industry]

Cruising is considered a well-established vacation sector in the North [removed: American and] [added: American,] European [added: and Australian] markets and a developing sector in several other emerging markets.

| [removed: Year] [added: Year] | | [removed: North America(1)(2)] | | [removed: Europe(1)(3)] | | [removed: Asia/Pacific(1)(4)] [added: North America(1)(2)] | [added: | | | | | Europe(1)(3) | | | | | | Asia/Pacific(1)(4) | | |]

| 2015 | | [added: | | | |] 3.36% | | [added: | | | |] 1.25% | | [added: | | | |] 0.08% | [added: | |]

| 2016 | | [added: | | | |] 3.43% | | [added: | | | |] 1.23% | | [added: | | | |] 0.11% | [added: | |]

| 2017 | | [added: | | | |] 3.56% | | [added: | | | |] 1.28% | | [added: | | | |] 0.15% | [added: | |]

[removed: | (1) | Source:] [added: (1)Source:] Our estimates are based on a combination of data obtained from publicly available sources including the International Monetary Fund, United Nations, Department of Economic and Social Affairs, Cruise Lines International Association ("CLIA") and G.P. Wild. [removed: In addition, our estimates incorporate our own analysis utilizing the same publicly available cruise industry data as a base. |]

[removed: | (2) | Our] [added: (2)Our] estimates include the United States and Canada. [removed: |]

[Table of C](#i7106eeeef4144183a197870618be0282_7)[ontents](#i7106eeeef4144183a197870618be0282_7)

*Azamara*

These destination experiences include over 1,700 pre and post-voyage land programs.

Azamara operates three ships with an aggregate capacity of approximately 2,100 berths.

As of December 31, 2019, Silversea Cruises has five ships on order with an aggregate capacity of approximately 2,400 berths.

Two ships are scheduled to enter service in the third quarter of 2020, another in the third quarter of 2021, with the remaining two ships scheduled to enter service in the first quarters of 2022 and 2023.

[Table of C](#i7106eeeef4144183a197870618be0282_7)[ontents](#i7106eeeef4144183a197870618be0282_7)

On February 7, 2020, TUI Cruises entered into an agreement to acquire Hapag-Lloyd Cruises, a luxury and expedition brand for German-speaking guests, from TUI AG.

Hapag-Lloyd Cruises operates two luxury liners and three smaller expedition ships.

The transaction is subject to regulatory approval and customary closing conditions.

*Zenith* was sold to a third party in January 2020.

To offset the decrease in capacity to the Pullmantur brand, commencing in the second quarter of 2021, we expect to charter *Grandeur of the Seas* to Pullmantur.

| | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| 2018 | | | | | | 3.87% | | | | | | 1.38% | | | | | | 0.16% | | |

| 2019 | | | | | | 3.89% | | | | | | 1.41% | | | | | | 0.20% | | |

In addition, our estimates incorporate our own analysis utilizing the same publicly available cruise industry data as a base.

As of December 31, 2019, there were approximately

[Table of C](#i7106eeeef4144183a197870618be0282_7)[ontents](#i7106eeeef4144183a197870618be0282_7)

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| 2019 | | | | | | 579,000 | | | | | | 141,570 | | | | | | 30,000 | | | | | | 14,246 | | | | | | 7,554 | | | | | | 7,317 | | |

We use data obtained from Seatrade Insider, Cruise Industry News and company press releases to estimate weighted-average supply of berths and CLIA and G.P. Wild to estimate cruise guest information.

In addition, our estimates incorporate our own analysis utilizing the same publicly available cruise industry data as a base.

The compound annual growth rate in cruise guests sourced from this market was approximately 24% from 2015 to 2019.

The recent coronavirus outbreak and the resulting measures taken by China and other countries to move aggressively to contain the disease, including travel restrictions, have resulted in the cancellation of several of our cruises in Southeast Asia and modification of several itineraries in the region.

In addition, we have imposed several measures to protect our guests and crew, including denying boarding to those that have traveled from, to or through mainland China or Hong Kong.

See *Outlook* for further discussion.

[Table of C](#i7106eeeef4144183a197870618be0282_7)[ontents](#i7106eeeef4144183a197870618be0282_7)

Our strategic emphasis on People, Profits and Planet has led us to focus on the following principal operating strategies:

- provide extraordinary destination experiences and state-of-the-art port facilities to our guests,

- continue to integrate digital technological capabilities, data analytics and artificial intelligence into our operations to service customer preferences and expectations in an innovative manner, create efficiencies and enhance employee satisfaction, and

*Protect the environment*

This includes reducing our carbon footprint through the energy and carbon efficiencies included in the design of our new capacity, our ongoing energy management program on our existing fleet and the development of new technologies.

[Table of C](#i7106eeeef4144183a197870618be0282_7)[ontents](#i7106eeeef4144183a197870618be0282_7)

Our long-term partnership with the World Wildlife Fund focuses on greenhouse gas reduction strategies, sustainable food supplies, sustainable destinations and guest education on ocean conservation issues, including climate change, which supports onboard conservation efforts such as our reduced use of plastics and increased sourcing of sustainable seafood.

We are also committed to water quality and management projects onboard and in the communities in which we operate.

*Investing in our workforce and promoting gender equality, diversity and inclusion*

We support the equal representation of women in all levels.

We foster diversity and inclusion among our broad employee base.

Azamara Club Cruises

Additionally, Silversea Cruises signed a memorandum of understanding with Meyer Werft to build two ships of a new generation, which are expected to enter service in 2022 and 2023, respectively.

The memorandum of understanding with Meyer Werft is contingent upon completion of final documentation and financing, which are expected to be completed in the first quarter of 2019.

TUI Cruises operates six ships, with an aggregate capacity of approximately 14,750 berths as of December 31, 2018.

Additionally, TUI Cruises has four ships on order with an aggregate capacity of approximately 13,900 berths, of which one ship was delivered in January 2019 and the remaining ships on order are scheduled for delivery in the second quarter of 2023, the third quarter of 2024 and the first quarter of 2026, respectively.

SkySea Cruises

In March 2018, we and Ctrip.com International Ltd. announced the decision to end the Skysea Holding International Ltd. ("Skysea Holding") venture in which we have a 36% ownership interest.

In September 2018, Skysea Holding ceased cruising operations and in December 2018, the Golden Era, the ship operated by Skysea Cruises, and owned by the wholly-owned subsidiary of Skysea Holding, was sold to an affiliate of TUI AG, our joint venture partner in TUI Cruises.

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| 2014 | | 3.46% | | 1.23% | | 0.06% |

| 2018 | | 3.59% | | 1.31% | | 0.19% |

___________________________________________________________________

| | |

| --- | --- |

| | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| 2014 | | 448,000 | | 105,750 | | 22,039 | | 12,269 | | 6,387 | | 2,382 |

The Asia/Pacific region is experiencing the highest growth rate of the major regions, although it represents a relatively small sector compared to North America.

Our principal operating strategies are to:

| • | further enhance our technological capabilities to service customer preferences and expectations in an innovative manner, while supporting our strategic focus on profitability, and |

Human capital

We believe that having a local presence in these markets provides us with the ability to react more quickly to local market conditions and better understand our consumer base in each market.

We further extend our geographic reach with a network of approximately 76 independent international

representatives located throughout the world covering more than 180 countries.

In addition, we regularly evaluate opportunities to order new ships, purchase existing ships or sell ships in our current fleet.

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

The need to develop and use innovative technology is increasingly important.

In the past year, we have digitalized the guest journey from port check-in and onboard purchases to digital stateroom features.

As the use of our various websites, mobile and social media platforms continue to increase both on shore and shipboard by both our guests and crew, we continually invest in our systems, infrastructure and technologies to facilitate this growth.

For instance, in 2018, we continued to advance our onboard technology in areas such as Internet connectivity at sea, stateroom automation and guest-to-guest chat.

Additionally, we continue to invest in our distribution channels to ensure the best go-to-market approach, whether through travel partners or direct to customer.

Commensurate with our destination strategy, we intend to invest in technology to service our guests seamlessly as they transition from ship to our private destinations to enjoy Internet connectivity or local activities.

In addition, we maintain and invest in our websites, including mobile applications and mobile websites, which allow guests to directly plan, book and customize their cruise, including the ability to add a variety of onboard amenities.

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Rhapsody of the Seas | | 1997 | | 1997 | | 2,000 | | Western Caribbean, Europe |

| Azamara Club Cruises | | | | | | | | |

| Discoverer | | 1989 | | 2014 | | 100 | | Africa, Australia, Asia |

| Zenith | | 1992 | | 2014 | | 1,400 | | Europe |

We are routinely involved in [removed: other] claims typical within the [removed: cruise vacation] [added: travel and tourism] industry.

[removed: We] [added: Although the outcome of any litigation is inherently unpredictable and subject to significant uncertainties, we] believe [added: it is unlikely that] the outcome of such claims, net of expected insurance recoveries, will [removed: not] have a material adverse impact on our financial [removed: condition or] [added: condition,] results of operations and cash flows.

On August 27, 2019, two lawsuits were filed against Royal Caribbean Cruises Ltd. in the U.S. District Court for the Southern District of Florida 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 alleges it holds an interest in the Havana Cruise Port Terminal and the complaint filed by Javier Garcia-Bengochea 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 Royal Caribbean Cruises Ltd. trafficked in those properties by embarking and disembarking passengers at these facilities.

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

Royal Caribbean Cruises Ltd. filed its answer to each complaint on October 4, 2019.

We believe we have meritorious defenses to the claims, and we intend to vigorously defend ourselves against them.

We believe that it is unlikely that the outcome of these matters will have a material adverse impact to our financial condition, results of operations or cash flows.

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

On September 24, 2018, a proposed class-action lawsuit was filed by Roger and Maureen Carretta against Royal Caribbean Cruises Ltd. d/b/a Royal Caribbean International in the United States District Court for the Southern District of Florida relating to the marketing and sales of our Travel Protection Program.

The plaintiffs purported to represent an alleged class of passengers who purchased the Travel Protection Program.

The complaint alleged that the Company concealed that it received "kickbacks," in the form of undisclosed commissions on the sale of the travel insurance portion of the product from an underwriter, and allegedly improperly bundled Travel Insurance Policies with non-insurance products.

The complaint sought damages in an indeterminate amount.

On November 26, 2018, the Court dismissed the entire action with prejudice on the grounds that, among others, the claim was filed beyond the time limitations contained in the passenger ticket contract.

Plaintiffs did not appeal the decision and the time period for filing an appeal has lapsed.

[removed: UNITED STATES][added: UNITED STATES]

[removed: SECURITIES] [added: SECURITIES] AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: Washington,] [added: Washington,] D.C. [removed: 20549][added: 20549]

[removed: FORM 10-K][added: FORM 10-K]

| [removed: (Mark One)] [added: (Mark One)] | | [added: | | | |]

| [removed: x] [added: ☒] | [removed: ANNUAL] [added: | | ANNUAL] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] | [added: | |]

[removed: For] [added: For] the fiscal year ended December 31, [removed: 2018][added: 2019]

| [removed: o] [added: ☐] | [removed: TRANSITION] [added: | | TRANSITION] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] | [added: | |]

[removed: For] [added: For] the transition period from [removed: to][added: to]

[removed: Commission] [added: Commission] file number: [removed: 1-11884][added: 1-11884]

[removed: ROYAL] [added: ROYAL] CARIBBEAN CRUISES [removed: LTD.][added: LTD.]

| [removed: Republic] [added: Republic] of [removed: Liberia] [added: Liberia] (State or other jurisdiction of incorporation or organization) | [removed: 98-0081645] [added: | | 98-0081645] (I.R.S. Employer Identification No.) | [added: | |]

[removed: 1050] [added: 1050] Caribbean Way, Miami, Florida [removed: 33132][added: 33132]

[removed: (305) 539-6000][added: (305) 539-6000]

| [removed: Title] [added: Title] of each [removed: class] [added: class] | | [removed: Name] [added: | | | | Trading Symbol(s) | | | | | | Name] of each exchange on which [removed: registered] [added: registered] | [added: | |]

| Common Stock, par value $.01 per share | | [added: | | | | RCL | | | | | |] New York Stock Exchange | [added: | |]

Yes [removed: x] [added: ☒] No [removed: o][added: ☐]

Yes [removed: o] [added: ☐] No [removed: x][added: ☒]

| Large accelerated filer [removed: x] [added: ☒] | | [added: | | | |] Accelerated filer [removed: o] [added: ☐] | | [added: | | | |] Non-accelerated filer [removed: o] [added: ☐] | | [added: | | | |] Smaller reporting company [removed: o] [added: ☐] | [added: | | | | | | | | | | | | | |]

| Emerging growth company [removed: o] [added: ☐] | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | |]

The aggregate market value of the registrant's common stock at June 30, [removed: 2018] [added: 2019] (based upon the closing sale price of the common stock on the New York Stock Exchange on June [removed: 29, 2018)] [added: 28, 2019)] held by those persons deemed by the registrant to be non-affiliates was approximately [removed: $18.5] [added: $22.0] billion.

Shares of the registrant's common stock held by each executive officer and director and by each entity or person that, to the registrant's knowledge, owned 10% or more of the registrant's outstanding common stock as of June 30, [removed: 2018] [added: 2019] have been excluded from this number in that these persons may be deemed affiliates of the registrant.

There were [removed: 209,186,598] [added: 209,000,016] shares of common stock outstanding as of February [removed: 14, 2019.][added: 21, 2020.]

[removed: DOCUMENTS] [added: DOCUMENTS] INCORPORATED BY [removed: REFERENCE][added: REFERENCE]

Portions of the registrant's Definitive Proxy Statement relating to its [removed: 2019] [added: 2020] Annual Meeting of Shareholders are incorporated by reference in Part III, Items 10-14 of this Annual Report on Form 10-K as indicated herein.

[removed: TABLE] [added: TABLE] OF [removed: CONTENTS][added: CONTENTS]

| | | | | [removed: Page] | [added: | | | | | | | Page | | | | | | | | |]

[removed: | [PART I](#s4417DA85C7295EAA89E736FEADAA1797) | | | | |][added: PART I]

| [Item [removed: 1.](#s44BAD6BEC7585683936A8F257337620F)] [added: 1.](#i7106eeeef4144183a197870618be0282_13)] | | [removed: [Business](#s44BAD6BEC7585683936A8F257337620F)] | | [removed: [1](#s44BAD6BEC7585683936A8F257337620F)] | [added: | [Business](#i7106eeeef4144183a197870618be0282_13) | | | | | | [2](#i7106eeeef4144183a197870618be0282_13) | | | | | | | | |]

| [Item [removed: 1A.](#s240134A88FBA52129194FFA5D266212D)] [added: 1A.](#i7106eeeef4144183a197870618be0282_16)] | | [added: | | | |] [Risk [removed: Factors](#s240134A88FBA52129194FFA5D266212D)] [added: Factors](#i7106eeeef4144183a197870618be0282_16)] | | [removed: [23](#s240134A88FBA52129194FFA5D266212D)] | [added: | | | [23](#i7106eeeef4144183a197870618be0282_16) | | | | | | | | |]

| [Item [removed: 1B.](#sCCA3B02D642A58DC9125C3A9A531B60E)] [added: 1B.](#i7106eeeef4144183a197870618be0282_19)] | | [added: | | | |] [Unresolved Staff [removed: Comments](#sCCA3B02D642A58DC9125C3A9A531B60E)] [added: Comments](#i7106eeeef4144183a197870618be0282_19)] | | [removed: [33](#sCCA3B02D642A58DC9125C3A9A531B60E)] | [added: | | | [34](#i7106eeeef4144183a197870618be0282_19) | | | | | | | | |]

| [Item [removed: 2.](#s0FC545ACA73258F89B7835C1461258BC)] [added: 2.](#i7106eeeef4144183a197870618be0282_22)] | | [removed: [Properties](#s0FC545ACA73258F89B7835C1461258BC)] | | [removed: [33](#s0FC545ACA73258F89B7835C1461258BC)] | [added: | [Properties](#i7106eeeef4144183a197870618be0282_22) | | | | | | [34](#i7106eeeef4144183a197870618be0282_22) | | | | | | | | |]

| [Item [removed: 3.](#sCB1F6E9EDC9E587B92E2CD52C529913D)] [added: 3.](#i7106eeeef4144183a197870618be0282_25)] | | [added: | | | |] [Legal [removed: Proceedings](#sCB1F6E9EDC9E587B92E2CD52C529913D)] [added: Proceedings](#i7106eeeef4144183a197870618be0282_25)] | | [removed: [33](#sCB1F6E9EDC9E587B92E2CD52C529913D)] | [added: | | | [34](#i7106eeeef4144183a197870618be0282_25) | | | | | | | | |]

| [Item [removed: 4.](#s5DE319E0DD505601A729BDB414616599)] [added: 4.](#i7106eeeef4144183a197870618be0282_28)] | | [added: | | | |] [Mine Safety [removed: Disclosures](#s5DE319E0DD505601A729BDB414616599)] [added: Disclosures](#i7106eeeef4144183a197870618be0282_28)] | | [removed: [33](#s5DE319E0DD505601A729BDB414616599)] | [added: | | | [34](#i7106eeeef4144183a197870618be0282_28) | | | | | | | | |]

| [Item [removed: 5.](#sD5C2731230265CE39B53AD2A2EC1970F)] [added: 5.](#i7106eeeef4144183a197870618be0282_34)] | | [added: | | | |] [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#sD5C2731230265CE39B53AD2A2EC1970F)] [added: Securities](#i7106eeeef4144183a197870618be0282_34)] | | [removed: [34](#sD5C2731230265CE39B53AD2A2EC1970F)] | [added: | | | [35](#i7106eeeef4144183a197870618be0282_34) | | | | | | | | |]

| [Item [removed: 6.](#s457DE77E23525F53AD72C00AE5EA3F74)] [added: 6.](#i7106eeeef4144183a197870618be0282_37)] | | [added: | | | |] [Selected Financial [removed: Data](#s457DE77E23525F53AD72C00AE5EA3F74)] [added: Data](#i7106eeeef4144183a197870618be0282_37)] | | [removed: [36](#s457DE77E23525F53AD72C00AE5EA3F74)] | [added: | | | [37](#i7106eeeef4144183a197870618be0282_37) | | | | | | | | |]

| [Item [removed: 7.](#s85AE6C6DBDF1531485FE6F2C93476264)] [added: 7.](#i7106eeeef4144183a197870618be0282_40)] | | [added: | | | |] [Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s85AE6C6DBDF1531485FE6F2C93476264)] [added: Operations](#i7106eeeef4144183a197870618be0282_40)] | | [removed: [38](#s85AE6C6DBDF1531485FE6F2C93476264)] | [added: | | | [39](#i7106eeeef4144183a197870618be0282_40) | | | | | | | | |]

| [Item [removed: 7A.](#s8A18171D7AFA596BAD9346D7ADF0D6F8)] [added: 7A.](#i7106eeeef4144183a197870618be0282_91)] | | [added: | | | |] [Quantitative and Qualitative Disclosures About Market [removed: Risk](#s8A18171D7AFA596BAD9346D7ADF0D6F8)] [added: Risk](#i7106eeeef4144183a197870618be0282_91)] | | [removed: [62](#s8A18171D7AFA596BAD9346D7ADF0D6F8)] | [added: | | | [67](#i7106eeeef4144183a197870618be0282_91) | | | | | | | | |]

| [Item [removed: 8.](#sCB8D11A5C0EB5454B8296A4A2DE1B260)] [added: 8.](#i7106eeeef4144183a197870618be0282_94)] | | [added: | | | |] [Financial Statements and Supplementary [removed: Data](#sCB8D11A5C0EB5454B8296A4A2DE1B260)] [added: Data](#i7106eeeef4144183a197870618be0282_94)] | | [removed: [64](#sCB8D11A5C0EB5454B8296A4A2DE1B260)] | [added: | | | [69](#i7106eeeef4144183a197870618be0282_94) | | | | | | | | |]

| [Item [removed: 9.](#sC1EA0CC92D6352109CBA17761ADEE186)] [added: 9.](#i7106eeeef4144183a197870618be0282_97)] | | [added: | | | |] [Changes In and Disagreements With Accountants on Accounting and Financial [removed: Disclosure](#sC1EA0CC92D6352109CBA17761ADEE186)] [added: Disclosure](#i7106eeeef4144183a197870618be0282_97)] | | [removed: [64](#sC1EA0CC92D6352109CBA17761ADEE186)] | [added: | | | [69](#i7106eeeef4144183a197870618be0282_97) | | | | | | | | |]

| | | | | | |

| --- | --- | --- | --- | --- | --- |

or

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| --- | --- | --- | --- | --- | --- |

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

Yes ☒ No ☐

Yes ☒ No ☐

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

Yes ☐ No ☒

[Table of C](#i7106eeeef4144183a197870618be0282_7)[ontents](#i7106eeeef4144183a197870618be0282_7)

ROYAL CARIBBEAN CRUISES LTD.

| | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| [PART II](#i7106eeeef4144183a197870618be0282_31) | | | | | | | | | | | | | | | | | | | | |

| [PART IV](#i7106eeeef4144183a197870618be0282_112) | | | | | | | | | | | | | | | | | | | | |

| [Signatures](#i7106eeeef4144183a197870618be0282_121) | | | | | | | | | | | | | | | | | | [77](#i7106eeeef4144183a197870618be0282_121) | | |

[Table of C](#i7106eeeef4144183a197870618be0282_7)[ontents](#i7106eeeef4144183a197870618be0282_7)

[Table of C](#i7106eeeef4144183a197870618be0282_7)[ontents](#i7106eeeef4144183a197870618be0282_7)

10-K 1 rcl-20181231x10k.htm 10-K

| | |

| --- | --- |

or

| | | |

| --- | --- | --- |

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| | | | | |

| --- | --- | --- | --- | --- |

| [PART II](#sD8297BEC1F3354E8AFC282D4D1B18147) | | | | |

| [PART IV](#s156B00463D515A789C74E62E97E986AB) | | | | |

| [Signatures](#s920C189803E05961ACBBCC612F6B6BB1) | | | | [71](#s920C189803E05961ACBBCC612F6B6BB1) |

Information about our cruise ships, including their size and primary areas of operation, may be found within the [removed: Operating] [added: *Operating] Strategies - Fleet upgrade, maintenance and [removed: expansion] [added: expansion*] section and the [removed: Operations] [added: *Operations] - Cruise Ships and [removed: Itineraries] [added: Itineraries*] sections in Item [removed: 1.][added: 1*.]

Information regarding our cruise ships under construction, estimated expenditures and financing may be found within the [removed: Future] [added: *Future] Capital [removed: Commitments] [added: Commitments*] and [removed: Funding] [added: *Funding] Needs and [removed: Sources] [added: Sources*] sections of Item 7.

[removed: Management’s] [added: *Management’s] Discussion and Analysis of Financial Condition and Results of [removed: Operations.][added: Operations.*]

Business*.

Business.

[removed: PART II][added: PART II]

[Table of C](#i7106eeeef4144183a197870618be0282_7)[ontents](#i7106eeeef4144183a197870618be0282_7)

[removed: Market Information][added: Market Information]

[removed: Holders][added: Holders]

As of February [removed: 14, 2019,] [added: 21, 2020,] there were [removed: 1,398] [added: 1,318] record holders of our common stock.

[removed: Dividends][added: Dividends]

Refer to Note [removed: 11.][added: 12*.]

Shareholders' [removed: Equity] [added: Equity*] to our consolidated financial statements under Item 8.

[removed: Financial] [added: *Financial] Statements and Supplemental [removed: Data] [added: Data*] for further information on dividends declared.

[removed: Share Repurchases][added: Share Repurchases]

As of December 31, [removed: 2018,] [added: 2019,] we have approximately [removed: $700.0] [added: $600.0] million that remains available for future common stock repurchase transactions under a 24-month common stock repurchase program for up to $1.0 billion authorized by our board of directors on May 9, 2018.

[removed: Financial] [added: *Financial] Statements and Supplemental [removed: Data] [added: Data*] for further information.

[removed: Performance Graph][added: Performance Graph]

The following graph compares the total return, assuming reinvestment of dividends, on an investment in the Company, based on performance of the Company's common stock, with the total return of the Standard & Poor's 500 Composite Stock Index ("S&P 500") and the Dow Jones United States Travel and Leisure Index for a five year period by measuring the changes in common stock prices from December 31, [removed: 2013] [added: 2014] to December 31, [removed: 2018.][added: 2019.]

[removed: ][added: ]

The stock performance graph assumes for comparison that the value of the Company's common stock and of each index was $100 on December 31, [removed: 2013] [added: 2014] and that all dividends were reinvested.

The following table presents the total number of shares of our common stock that we repurchased during the quarter ended December 31, 2019:

| | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Period | | | Total number of shares purchased | | | | | | Average price paid per share | | | | | | Total number of shares purchased as part of publicly announced plans or programs | | | | | | Approximate dollar value of shares that may yet be purchased under the plans or programs | | |

| October 1, 2019 - October 31, 2019 | | | — | | | | | | — | | | | | | — | | | | | | $ | 700,000,000 | |

| November 1, 2019 - November 30, 2019 | | | 859,701 | | | | | | $ | 115.83 | | | | | 859,701 | | | | | | $ | 600,417,000 | |

| December 1, 2019 - December 31, 2019 | | | — | | | | | | — | | | | | | — | | | | | | $ | 600,417,000 | |

| Total | | | 859,701 | | | | | | | | | | | | 859,701 | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | |

Refer to Note 12*.

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

[Table of C](#i7106eeeef4144183a197870618be0282_7)[ontents](#i7106eeeef4144183a197870618be0282_7)

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| | | | | | | 12/14 | | | 12/15 | | | | | | 12/16 | | | | | | 12/17 | | | | | | 12/18 | | | | | | 12/19 | | |

| Royal Caribbean Cruises Ltd. | | | | | | 100.00 | | | 124.74 | | | | | | 103.42 | | | | | | 153.30 | | | | | | 128.55 | | | | | | 179.92 | | |

| S&P 500 | | | | | | 100.00 | | | 101.38 | | | | | | 113.51 | | | | | | 138.29 | | | | | | 132.23 | | | | | | 173.86 | | |

| Dow Jones U.S. Travel & Leisure | | | | | | 100.00 | | | 105.90 | | | | | | 113.92 | | | | | | 141.05 | | | | | | 133.16 | | | | | | 165.04 | | |

[Table of C](#i7106eeeef4144183a197870618be0282_7)[ontents](#i7106eeeef4144183a197870618be0282_7)

During the quarter ended December 31, 2018, there were no common stock repurchases.

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| | 12/13 | | 12/14 | | 12/15 | | 12/16 | | 12/17 | | 12/18 |

| Royal Caribbean Cruises Ltd. | 100.00 | | 176.94 | | 220.72 | | 182.99 | | 271.25 | | 227.46 |

| S&P 500 | 100.00 | | 113.69 | | 115.26 | | 129.05 | | 157.22 | | 150.33 |

| Dow Jones U.S. Travel & Leisure | 100.00 | | 116.37 | | 123.23 | | 132.56 | | 164.13 | | 154.95 |

The selected consolidated financial data presented below for the years ended December 31, [removed: 2014] [added: 2015] through December 31, [removed: 2018] [added: 2019] and as of the end of each such year, except for Adjusted Net Income amounts, are derived from our audited consolidated financial statements and should be read in conjunction with those financial statements and the related notes as well as in conjunction with Item 7.

[removed: Management's] [added: *Management's] Discussion and Analysis of Financial Condition and Results of [removed: Operations.][added: Operations*.]

| | [removed: Year] [added: | | Year] Ended December [removed: 31,] [added: 31,] | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| | [removed: 2018] [added: | | 2019 | | | | | | 2018] (1) | | | | [removed: 2017] | | [added: 2017] | | [removed: 2016] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] | | [added: 2015] | [added: | | | | | | | | | | | | | | | | | | | | | | | | | |]

| | [removed: (in] [added: | | (in] thousands, except per share [removed: data)] [added: data)] | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| [removed: Operating Data:] [added: Operating Data:] | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Total revenues | [added: | |] $ | [added: 10,950,661 | | | | | $ |] 9,493,849 | | | [added: | |] $ | 8,777,845 | | | [added: | |] $ | 8,496,401 | | | [added: | |] $ | 8,299,074 | | | [removed: $] | [removed: 8,073,855] | | [added: | | | | | | | | | | | | | | | | | | | |]

| Operating Income | [added: | |] $ | [added: 2,082,701 | | | | | $ |] 1,894,801 | | | [added: | |] $ | 1,744,056 | | | [added: | |] $ | 1,477,205 | | | [added: | |] $ | 874,902 | | | [removed: $] | [removed: 941,859] | | [added: | | | | | | | | | | | | | | | | | | | |]

| Net Income [added: (2)] | [added: | |] $ | [added: 1,907,600 | | | | | $ |] 1,815,792 | | | [added: | |] $ | 1,625,133 | | | [added: | |] $ | 1,283,388 | | | [added: | |] $ | 665,783 | | | [removed: $] | [removed: 764,146] | | [added: | | | | | | | | | | | | | | | | | | | |]

| Net Income attributable to Royal Caribbean Cruises Ltd. | [added: | |] $ | [added: 1,878,887 | | | | | $ |] 1,811,042 | | | [added: | |] $ | 1,625,133 | | | [added: | |] $ | 1,283,388 | | | [added: | |] $ | 665,783 | | | [removed: $] | [removed: 764,146] | | [added: | | | | | | | | | | | | | | | | | | | |]

| Adjusted Net Income attributable to Royal Caribbean [removed: Ltd.(2) (3)] [added: Ltd.(3)] (4) (5) | [added: | |] $ | [added: 2,002,847 | | | | | $ |] 1,873,363 | | | [added: | |] $ | 1,625,133 | | | [added: | |] $ | 1,314,689 | | | [added: | |] $ | 1,065,066 | | | [removed: $] | [removed: 755,729] | | [added: | | | | | | | | | | | | | | | | | | | |]

| [removed: Per] [added: Per] Share [removed: Data—Basic:] [added: Data—Basic:] | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Net Income attributable to Royal Caribbean Cruises Ltd. | [added: | |] $ | [added: 8.97 | | | | | $ |] 8.60 | | | [added: | |] $ | 7.57 | | | [added: | |] $ | 5.96 | | | [added: | |] $ | 3.03 | | | [removed: $] | [removed: 3.45] | | [added: | | | | | | | | | | | | | | | | | | | |]

| Adjusted Net Income attributable to Royal Caribbean Cruises Ltd. | [added: | |] $ | [added: 9.56 | | | | | $ |] 8.90 | | | [added: | |] $ | 7.57 | | | [added: | |] $ | 6.10 | | | [added: | |] $ | 4.85 | | | [removed: $] | [removed: 3.41] | | [added: | | | | | | | | | | | | | | | | | | | |]

| Weighted-average shares | [added: | | 209,405 | | | | | |] 210,570 | | | | [added: | |] 214,617 | | | | [added: | |] 215,393 | | | | [added: | |] 219,537 | | | | [removed: 221,658] | | | [added: | | | | | | | | | | | | | | | | | | | |]

| [removed: Per] [added: Per] Share [removed: Data—Diluted:] [added: Data—Diluted:] | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Net Income attributable to Royal Caribbean Cruises Ltd. | [added: | |] $ | [added: 8.95 | | | | | $ |] 8.56 | | | [added: | |] $ | 7.53 | | | [added: | |] $ | 5.93 | | | [added: | |] $ | 3.02 | | | [removed: $] | [removed: 3.43] | | [added: | | | | | | | | | | | | | | | | | | | |]

| Adjusted Net Income attributable to Royal Caribbean Cruises Ltd. | [added: | |] $ | [added: 9.54 | | | | | $ |] 8.86 | | | [added: | |] $ | 7.53 | | | [added: | |] $ | 6.08 | | | [added: | |] $ | 4.83 | | | [removed: $] | [removed: 3.39] | | [added: | | | | | | | | | | | | | | | | | | | |]

| Weighted-average shares and potentially dilutive shares | [added: | | 209,930 | | | | | |] 211,554 | | | | [added: | |] 215,694 | | | | [added: | |] 216,316 | | | | [added: | |] 220,689 | | | | [removed: 223,044] | | | [added: | | | | | | | | | | | | | | | | | | | |]

| Dividends declared per common share | [added: | |] $ | [added: 2.96 | | | | | $ |] 2.60 | | | [added: | |] $ | 2.16 | | | [added: | |] $ | 1.71 | | | [added: | |] $ | 1.35 | | | [removed: $] | [removed: 1.10] | | [added: | | | | | | | | | | | | | | | | | | | |]

| [removed: Balance] [added: Balance] Sheet [removed: Data:] [added: Data:] | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Total assets (6) [added: (7)] | [added: | |] $ | [added: 30,320,284 | | | | | $ |] 27,698,270 | | | [added: | |] $ | 22,360,926 | | | [added: | |] $ | 22,310,324 | | | [added: | |] $ | 20,782,043 | | | [removed: $] | [removed: 20,524,060] | | [added: | | | | | | | | | | | | | | | | | | | |]

| Total debt, including commercial paper and capital leases | [added: | |] $ | [added: 11,034,876 | | | | | $ |] 10,777,699 | | | [added: | |] $ | 7,539,451 | | | [added: | |] $ | 9,387,436 | | | [added: | |] $ | 8,527,243 | | | [removed: $] | [removed: 8,254,818] | | [added: | | | | | | | | | | | | | | | | | | | |]

| Common stock | [added: | |] $ | [added: 2,365 | | | | | $ |] 2,358 | | | [added: | |] $ | 2,352 | | | [added: | |] $ | 2,346 | | | [added: | |] $ | 2,339 | | | [removed: $] | [removed: 2,331] | | [added: | | | | | | | | | | | | | | | | | | | |]

| Total shareholders' equity | [added: | |] $ | [added: 12,163,846 | | | | | $ |] 11,105,461 | | | [added: | |] $ | 10,702,303 | | | [added: | |] $ | 9,121,412 | | | [added: | |] $ | 8,063,039 | | | [removed: $] | [removed: 8,284,359] | | [added: | | | | | | | | | | | | | | | | | | | |]

[removed: | (2) | For 2018, 2017 and 2016, refer to Financial Presentation and Results of Operations under Item 7. Management's] [added: *Management's] Discussion and Analysis of Financial Condition and Results of [removed: Operations] [added: Operations*] for the definition of Adjusted Net Income and a reconciliation of Adjusted Net Income to Net income. [removed: |]

[removed: | (3) | Amount] [added: (2)Amount] for 2017 includes a gain of $30.9 million related to the sale of [removed: Legend] [added: *Legend] of the [removed: Seas. |][added: Seas*.]

[removed: | (4) | Amount] [added: (5)Amount] for 2015 excludes the impairment of Pullmantur related assets of $399.3 million. [removed: |]

[removed: | (6) | We] [added: (6)We] reclassified prepaid commissions of $64.6 million from [removed: Customer deposits] [added: *Customer deposits*] to [removed: Prepaid] [added: *Prepaid] expenses and other [removed: assets] [added: assets*] in our consolidated balance sheet as of December 31, 2017 in order to conform to the current year presentation. [removed: |]

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(1)On July 31, 2018, we acquired a 66.7% equity stake in Silversea Cruise Holding Ltd ("Silversea Cruises").

Refer to Note 3.

*Business Combination* to our consolidated financial statements under Item 8.

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

(3)For 2019, 2018 and 2017, refer to *Financial Presentation* and *Results of Operations* under Item 7.

(4)Amount for 2016 excludes the net loss related to the elimination of the Pullmantur reporting lag of $21.7 million, the net gain related to the sale of the Pullmantur and CDF Croisieres de France brands of $3.8 million, restructuring charges of $8.5 million and other initiative costs of $5.0 million.

[Table of C](#i7106eeeef4144183a197870618be0282_7)[ontents](#i7106eeeef4144183a197870618be0282_7)

(7)Upon adoption of the new Lease accounting guidance effective January 1, 2019, we recognized right-of-use assets relating to operating leases within *Operating lease right-of-use assets* in our consolidated balance sheet.

As of December 31, 2019, we reported *Operating lease right-of-use assets* of $687.6 million in our consolidated balance sheet.

The comparative information presented has not been recast and continues to be reported under the accounting standards in effect for those periods.

For further information on leases, refer to Note 10.

*Leases.*

[Table of C](#i7106eeeef4144183a197870618be0282_7)[ontents](#i7106eeeef4144183a197870618be0282_7)

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| (1) | On July 31, 2018, we acquired a 66.7% equity stake in Silversea Cruise Holding Ltd ("Silversea Cruises"). Refer to Note 3. Business Combination to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for information on the Silversea Cruises acquisition. |

| (5) | Amount for 2014 excludes restructuring and related impairment charges of $4.3 million, other initiative costs of $21.2 million, an $11.0 million loss related to the estimated impact of Pullmantur's non-core businesses that were sold in 2014 and a loss of $17.4 million recognized on the sale of Celebrity Century. Additionally, the amount for 2014 excludes $28.9 million of net income resulting from |

the change in our voyage proration methodology and the reversal of a deferred tax asset valuation allowance of $33.5 million due to Spanish tax reform.

[Table of C](#i7106eeeef4144183a197870618be0282_7)[ontents](#i7106eeeef4144183a197870618be0282_7)

[removed: Evaluation] [added: Evaluation] of Disclosure Controls and [removed: Procedures][added: Procedures]

[removed: Management's] [added: Management's] Report on Internal Control Over Financial [removed: Reporting][added: Reporting]

Our management, with the participation of our Chairman and Chief Executive Officer and our Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting based on the [removed: Internal] [added: *Internal] Control-Integrated Framework [removed: (2013)] [added: (2013)*] issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, [removed: 2018.][added: 2019.]

The effectiveness of our internal control over financial reporting as of December 31, [removed: 2018] [added: 2019] has been audited by PricewaterhouseCoopers LLP, the independent registered public accounting firm that audited our consolidated financial statements included in this Annual Report on Form 10-K, as stated in its report, which is included herein on page F-2.

[removed: Changes] [added: Changes] in Internal Control Over Financial [removed: Reporting][added: Reporting]

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Exchange Act Rule 13a-15(d) during the quarter ended December 31, [removed: 2018] [added: 2019] that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

[removed: Inherent] [added: Inherent] Limitations on Effectiveness of [removed: Controls][added: Controls]

In July 31, 2018, we acquired Silversea Cruise Holding Ltd. ("Silversea Cruises").

Due to the timing of this acquisition, we excluded Silversea Cruises from the scope of our management's assessment of the effectiveness of our internal control over financial reporting as of December 31, 2018.

The total assets, excluding goodwill and identifiable intangible assets, and total revenues of Silversea Cruises represent approximately 5.0% and 1.4%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2018.

This exclusion is in accordance with the general guidance issued by the SEC Staff that an assessment of a recent business acquisition may be omitted from management's report on internal control over financial reporting in the first year of consolidation.

We are in the process of evaluating the controls and procedures at Silversea Cruises and integrating Silversea Cruises into our internal control over financial reporting.

[removed: PART III][added: PART III]

[removed: Items] [added: Items] 10, 11, 12, 13 and 14.

Directors, Executive Officers and Corporate Governance; Executive Compensation; Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters; Certain Relationships and Related Transactions; and Director Independence and Principal Accountant Fees and [removed: Services.][added: Services.]

Except for information concerning executive officers (called for by Item 401(b) of Regulation S-K), which is included in Part I of this Annual Report on Form 10-K, the information required by Items 10, 11, 12, 13 and 14 is incorporated herein by reference to certain sections of the Royal Caribbean Cruises Ltd. Definitive Proxy Statement relating to our [removed: 2019] [added: 2020] Annual Meeting of Shareholders (the "Proxy Statement") to be filed with the Securities and Exchange Commission no later than 120 days after the close of the fiscal year.