Item 16. Form 10-K Summary

None.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ROYAL CARIBBEAN CRUISES LTD. (Registrant)
By:			/s/ NAFTALI HOLTZ
			Naftali Holtz Chief Financial Officer (Principal Financial Officer and duly authorized signatory)

March 1, 2022

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 1, 2022.

/s/ JASON T. LIBERTY
Jason T. Liberty Director and Chief Executive Officer (Principal Executive Officer)
/s/ NAFTALI HOLTZ
Naftali Holtz Chief Financial Officer (Principal Financial Officer)
/s/ HENRY L. PUJOL
Henry L. Pujol Senior Vice President, Chief Accounting Officer (Principal Accounting Officer)
/s/ RICHARD D. FAIN
Richard D. Fain Chairman of the Board
*
John F. Brock Director
*
Stephen R. Howe Jr. Director
*
William L. Kimsey Director
*
Maritza G. Montiel Director
*
Ann S. Moore Director
*
Eyal M. Ofer Director
*
William K. Reilly Director
*
Vagn O. Sørensen Director
*
Donald Thompson Director
*
Arne Alexander Wilhelmsen Director
*
Amy C. McPherson Director
*
Michael O. Leavitt Director
*

*By:			/s/ NAFTALI HOLTZ
			Naftali Holtz, as Attorney-in-Fact

ROYAL CARIBBEAN CRUISES LTD.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

			Page
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 238)			F-2
Consolidated Statements of Comprehensive (Loss) Income			F-6
Consolidated Balance Sheets			F-7
Consolidated Statements of Cash Flows			F-8
Consolidated Statements of Shareholders' Equity			F-10
Notes to the Consolidated Financial Statements			F-11

Report of Independent Registered Public Accounting Firm

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

Opinions on the Financial Statements and Internal Control over Financial Reporting

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

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

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, effective October 1, 2021, the Company changed the manner in which it accounts for the consolidation of Silversea Cruises.

Basis for Opinions

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

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

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

Emphasis of Matter

As discussed in Note 1 to the consolidated financial statements, the ongoing effects of the COVID-19 pandemic have had, and will continue to have, a material negative impact on the Company’s results of operations and liquidity. Management’s evaluation of the events and conditions and management’s plans to mitigate these matters are also described in Note 1.

F-2

Definition and Limitations of Internal Control over Financial Reporting

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

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

Critical Audit Matters

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

Liquidity - Impact of COVID-19

As described in Note 1 to the consolidated financial statements, the Company restarted its global cruise operations in a phased manner, following a voluntary suspension of global cruise operations that commenced in March 2020 in response to the COVID-19 outbreak. Management believes the impact to their global bookings resulting from COVID-19 will continue to have a material negative impact on the Company’s results of operations and liquidity. Management has implemented a number of measures to mitigate the financial and operational impacts of COVID-19, including reduction of capital expenditures and operating expenses, the issuance of debt and shares of their common stock, the amendment of credit agreements to defer payments, the waiver and/or modification of covenant requirements and the suspension of dividend payments, with the addition of pursuing refinancing opportunities to reduce interest expense and extend maturities. The principal assumptions used in management’s estimate of future liquidity requirements consisted of (i) the expected continued gradual resumption of cruise operations; (ii) the expected sustained increase in revenue per available passenger cruise day during the continued resumption of cruise operations; (iii) the expected lower than comparable historical occupancy levels during the continued resumption of cruise operations, increasing over time until the Company reaches historical occupancy levels; and (iv) the expected spend during the Company’s resumption of cruise operations, including returning crew members to their vessels and maintaining enhanced health and safety protocols. Based on these assumptions regarding the impact of COVID-19 and the Company’s resumption of operations, as well as the Company’s present financial condition, management believes they have sufficient financial resources to fund their obligations for at least the next twelve months from the issuance of the financial statements.

The principal considerations for our determination that performing procedures relating to the impact of COVID-19 on the Company’s liquidity is a critical audit matter are the significant judgment by management when developing the estimate of future liquidity requirements; this in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s estimate of future liquidity requirements and assumptions related to (i) the expected continued gradual resumption of cruise operations; (ii) the expected sustained increase in revenue per available passenger cruise day during the continued resumption of cruise operations; (iii) the expected lower than comparable historical occupancy levels during the continued resumption of cruise operations, increasing over time until the Company reaches historical occupancy levels; and (iv) the expected spend during the Company’s resumption of cruise operations, including returning crew members to their vessels and maintaining enhanced health and safety protocols.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of

F-3

controls relating to management’s estimate of future liquidity requirements. These procedures also included, among others, (i) testing management’s process for estimating future liquidity requirements for the twelve months after the date the financial statements are issued; (ii) testing the completeness and accuracy of underlying data used in the estimate; (iii) evaluating the reasonableness of the significant assumptions used by management related to the expected continued gradual resumption of cruise operations, the expected sustained increase in revenue per available passenger cruise day during the continued resumption of cruise operations, the expected lower than comparable historical occupancy levels during the continued resumption of cruise operations, increasing over time until the Company reaches historical occupancy levels, and the expected spend during the Company’s resumption of cruise operations, including returning crew members to their vessels and maintaining enhanced health and safety protocols; and (iv) evaluating management’s estimate of future liquidity requirements and their disclosure in the consolidated financial statements regarding having sufficient liquidity to satisfy the Company’s obligations for at least the next twelve months from the issuance of the financial statements. Evaluating management’s assumptions related to the expected continued gradual resumption of cruise operations, the expected sustained increase in revenue per available passenger cruise day during the continued resumption of cruise operations, the expected lower than comparable historical occupancy levels during the continued resumption of cruise operations, increasing over time until the Company reaches historical occupancy levels, and the expected spend during the Company’s resumption of cruise operations, including returning crew members to their vessels and maintaining enhanced health and safety protocols, involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the Company; (ii) the consistency with external market and industry data; and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Impairment Assessments – Silversea Cruises Reporting Unit Goodwill and Trade Name

As described in Notes 2, 4 and 5 to the consolidated financial statements, as of December 31, 2021 the Company’s consolidated goodwill balance was $809 million and the indefinite-life intangible assets balance was $321 million, and the goodwill and trade name associated with the Silversea Cruises reporting unit and trade name was $509 million and $319 million, respectively. Management reviews goodwill and indefinite-life intangible assets for impairment at the reporting unit level and asset level, respectively, annually or, when events or circumstances dictate, more frequently. The impairment analysis consists of a comparison of the fair value of the reporting unit or asset with its carrying value. Fair value is estimated by management using a discounted cash flow model in combination with a market-based valuation approach for reporting units and a relief-from-royalty method for trade names. Management’s principal assumptions for the Silversea Cruises reporting unit and trade name were the forecasted net revenues, primarily the timing of returning to normalized operations, occupancy rates from existing and expected ship deliveries, terminal growth rate, royalty rate, and weighted average cost of capital (i.e., discount rate).

The principal considerations for our determination that performing procedures relating to the impairment assessments of the Silversea Cruises reporting unit goodwill and trade name is a critical audit matter are (i) the significant judgment by management when developing the fair value estimates; (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions related to the timing of returning to normalized operations, occupancy rates from existing and expected ship deliveries, terminal growth rates, and discount rates for the goodwill and trade name impairment assessments, and the royalty rate for the trade name impairment assessment; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

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

F-4

model, market-based valuation approach and relief-from-royalty method, and (ii) the discount rate and royalty rate assumptions.

/s/ PricewaterhouseCoopers LLP

Hallandale Beach, Florida

March 1, 2022

We have served as the Company’s auditor since at least 1989, which includes periods before the Company became subject to SEC reporting requirements. We have not been able to determine the specific year we began serving as auditor of the Company.

F-5

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(in thousands, except per share data)

			Year Ended December 31,
			2021						2020						2019
Passenger ticket revenues			$	941,175					$	1,504,569					$	7,857,057
Onboard and other revenues			590,958						704,236						3,093,604
Total revenues			1,532,133						2,208,805						10,950,661
Cruise operating expenses:
Commissions, transportation and other			207,562						344,625						1,656,297
Onboard and other			116,946						157,213						639,782
Payroll and related			838,088						788,273						1,079,121
Food			164,389						161,750						583,905
Fuel			385,322						371,015						697,962
Other operating			945,205						942,232						1,405,698
Total cruise operating expenses			2,657,512						2,765,108						6,062,765
Marketing, selling and administrative expenses			1,370,076						1,199,620						1,559,253
Depreciation and amortization expenses			1,292,878						1,279,254						1,245,942
Impairment and credit losses			82,001						1,566,380						—
Operating (Loss) Income			(3,870,334)						(4,601,557)						2,082,701
Other income (expense):
Interest income			16,773						21,036						26,945
Interest expense, net of interest capitalized			(1,291,753)						(844,238)						(408,513)
Equity investment (loss) income			(135,469)						(213,286)						230,980
Other income (expense) (1)			20,284						(137,085)						(24,513)
			(1,390,165)						(1,173,573)						(175,101)
Net (Loss) Income			(5,260,499)						(5,775,130)						1,907,600
Less: Net Income attributable to noncontrolling interest			—						22,332						28,713
Net (Loss) Income attributable to Royal Caribbean Cruises Ltd.			$	(5,260,499)					$	(5,797,462)					$	1,878,887
(Loss) Earnings per Share:
Basic			$	(20.89)					$	(27.05)					$	8.97
Diluted			$	(20.89)					$	(27.05)					$	8.95
Comprehensive (Loss) Income
Net (Loss) Income			$	(5,260,499)					$	(5,775,130)					$	1,907,600
Other comprehensive income (loss):
Foreign currency translation adjustments			15,703						40,346						869
Change in defined benefit plans			8,707						(19,984)						(19,535)
Gain (loss) on cash flow derivative hedges			4,046						38,010						(151,313)
Total other comprehensive income (loss)			28,456						58,372						(169,979)
Comprehensive (Loss) Income			$	(5,232,043)					$	(5,716,758)					$	1,737,621
Less: Comprehensive Income attributable to noncontrolling interest			—						22,332						28,713
Comprehensive (Loss) Income attributable to Royal Caribbean Cruises Ltd.			$	(5,232,043)					$	(5,739,090)					$	1,708,908

---

(1) Including a $62.6 million net loss related to the 2021 elimination of the Silversea Cruises reporting lag.

F-6

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED BALANCE SHEETS

			As of December 31,
			2021						2020
			(in thousands, except share data)
Assets
Current assets
Cash and cash equivalents			$	2,701,770					$	3,684,474
Trade and other receivables, net of allowances of $13,411 and $3,867 at December 31, 2021 and December 31, 2020, respectively			408,067						284,149
Inventories			150,224						118,703
Prepaid expenses and other assets			286,026						154,339
Derivative financial instruments			54,184						70,082
Total current assets			3,600,271						4,311,747
Property and equipment, net			25,907,949						25,246,595
Operating lease right-of-use assets			542,128						599,985
Goodwill			809,383						809,480
Other assets, net of allowances of $86,781 and $81,580 at December 31, 2021 and December 31, 2020, respectively			1,398,624						1,497,380
Total assets			$	32,258,355					$	32,465,187
Liabilities and shareholders' equity
Current liabilities
Current portion of long-term debt			$	2,243,131					$	961,768
Commercial paper			—						409,319
Current portion of operating lease liabilities			68,922						102,677
Accounts payable			545,978						353,422
Accrued interest			251,974						252,668
Accrued expenses and other liabilities			887,575						615,750
Derivative financial instruments			127,236						56,685
Customer deposits			3,160,867						1,784,832
Total current liabilities			7,285,683						4,537,121
Long-term debt			18,847,209						17,957,956
Long-term operating lease liabilities			534,726						563,876
Other long-term liabilities			505,181						645,565
Total liabilities			27,172,799						23,704,518
Commitments and Contingencies (Note 17)
Shareholders' equity
Preferred stock ($0.01 par value; 20,000,000 shares authorized; none outstanding)			—						—
Common stock ($0.01 par value; 500,000,000 shares authorized; 282,703,246 and 265,198,371 shares issued, December 31, 2021 and December 31, 2020, respectively)			2,827						2,652
Paid-in capital			7,557,297						5,998,574
Retained earnings			302,276						5,562,775
Accumulated other comprehensive loss			(710,885)						(739,341)
Treasury stock (27,882,987 and 27,799,775 common shares at cost, December 31, 2021 and December 31, 2020, respectively)			(2,065,959)						(2,063,991)
Total shareholders' equity			5,085,556						8,760,669
Total liabilities and shareholders’ equity			$	32,258,355					$	32,465,187

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

F-7

			Year Ended December 31,
			2021						2020						2019
			(in thousands)
Operating Activities
Net (Loss) Income			$	(5,260,499)					$	(5,775,130)					$	1,907,600
Adjustments:
Depreciation and amortization			1,292,878						1,279,254						1,245,942
Impairment and credit losses			82,001						1,566,380						—
Net deferred income tax (benefit) expense			(42,979)						(8,791)						7,745
(Gain) loss on derivative instruments not designated as hedges			(1,492)						49,316						(1,431)
Share-based compensation expense			63,638						39,779						75,930
Equity investment loss (income)			135,469						213,286						(230,980)
Amortization of debt issuance costs			125,116						89,442						31,991
Amortization of debt discounts and premiums			123,439						66,776						31,616
Loss on extinguishment of debt			138,759						41,109						6,326
Currency translation adjustment losses			—						69,044						—
Change in fair value of contingent consideration			—						(45,126)						18,400
Changes in operating assets and liabilities:
(Increase) decrease in trade and other receivables, net			(181,707)						121,055						(9,898)
(Increase) decrease in inventories			(34,527)						27,077						(8,533)
(Increase) decrease in prepaid expenses and other assets			(152,071)						295,876						15,669
Increase (decrease) in accounts payable			188,518						(133,815)						75,281
(Decrease) increase in accrued interest			(694)						182,578						(4,460)
Increase (decrease) in accrued expenses and other liabilities			235,446						(180,479)						96,490
Increase (decrease) in customer deposits			1,426,647						(1,643,560)						280,139
Dividends received from unconsolidated affiliates			—						2,215						150,177
Other, net			(15,757)						12,061						28,362
Net cash (used in) provided by operating activities			(1,877,815)						(3,731,653)						3,716,366
Investing Activities
Purchases of property and equipment			(2,229,704)						(1,965,131)						(3,024,663)
Cash received on settlement of derivative financial instruments			44,492						15,874						7,621
Cash paid on settlement of derivative financial instruments			(74,249)						(161,335)						(68,836)
Investments in and loans to unconsolidated affiliates			(70,228)						(100,609)						(25,569)
Cash received on loans to unconsolidated affiliates			31,334						21,086						32,870
Proceeds from the sale of property and equipment and other assets			176,039						27,796						—
Other, net			(22,423)						(16,247)						(12,829)
Net cash used in investing activities			(2,144,739)						(2,178,566)						(3,091,406)

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

F-8

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

			Year Ended December 31,
			2021						2020						2019
			(in thousands)
Financing Activities
Debt proceeds			4,467,789						13,547,189						3,525,564
Debt issuance costs			(201,698)						(374,715)						(50,348)
Repayments of debt			(2,296,990)						(3,845,133)						(4,060,244)
Premium on repayment of debt			(135,372)						—						—
Proceeds from issuance of commercial paper notes			—						6,765,816						26,240,540
Repayments of commercial paper notes			(414,570)						(7,837,635)						(25,613,111)
Purchase of treasury stock			—						—						(99,582)
Dividends paid			—						(326,421)						(602,674)
Proceeds from common stock issuances			1,621,860						1,431,375						—
Other, net			(442)						(10,688)						(10,516)
Net cash provided by (used in) financing activities			3,040,577						9,349,788						(670,371)
Effect of exchange rate changes on cash			(727)						1,167						1,297
Net (decrease) increase in cash and cash equivalents			(982,704)						3,440,736						(44,114)
Cash and cash equivalents at beginning of year			3,684,474						243,738						287,852
Cash and cash equivalents at end of year			$	2,701,770					$	3,684,474					$	243,738
Supplemental Disclosures
Cash paid during the year for:
Interest, net of amount capitalized			$	834,245					$	418,164					$	246,312
Non-Cash Investing Activities
Notes receivable issued upon sale of property and equipment and other assets			$	16,000					$	53,419					$	—
Purchases of property and equipment included in accounts payable and accrued expenses and other liabilities			$	14,097					$	16,189					$	86,155
Non-Cash Financing Activities
Purchase of Silversea Cruises non-controlling interest			$	—					$	592,313					$	—
Termination of Silversea Cruises contingent consideration obligation			$	—					$	16,564					$	—
Common stock issuances pending cash settlement and included in trade receivables			$	—					$	121,352					$	—

---

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

F-9

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

			Common Stock						Paid-in Capital						Retained Earnings						Accumulated Other Comprehensive Income (Loss)						Treasury Stock						Total Shareholders' Equity
			(in thousands, except per share data)
Balances at January 1, 2019			$	2,358					$	3,420,900					$	10,263,282					$	(627,734)					$	(1,953,345)					$	11,105,461
Activity related to employee stock plans			7						73,059						—						—						(5,164)						67,902
Common stock dividends, $2.96 per share			—						—						(618,843)						—						—						(618,843)
Changes related to cash flow derivative hedges			—						—						—						(151,313)						—						(151,313)
Change in defined benefit plans			—						—						—						(19,535)						—						(19,535)
Foreign currency translation adjustments			—						—						—						869						—						869
Purchases of treasury stock			—						—						—						—						(99,582)						(99,582)
Net Income attributable to Royal Caribbean Cruises Ltd.			—						—						1,878,887						—						—						1,878,887
Balances at December 31, 2019			2,365						3,493,959						11,523,326						(797,713)						(2,058,091)						12,163,846
Activity related to employee stock plans			9						29,750						—						—						—						29,759
Common stock issuance			226						1,552,500																								1,552,726
Equity component of convertible notes, net of issuance costs			—						307,640						—						—						—						307,640
Acquisition of Silversea non-controlling interest			52						608,825						—						—						—						608,877
Common stock dividends, $0.78 per share			—						—						(163,089)						—						—						(163,089)
Changes related to cash flow derivative hedges			—						—						—						38,010						—						38,010
Change in defined benefit plans			—						—						—						(19,984)						—						(19,984)
Foreign currency translation adjustments			—						—						—						40,346						—						40,346
Purchases of treasury stock			—						5,900						—						—						(5,900)						—
Net Income attributable to Royal Caribbean Cruises Ltd.			—						—						(5,797,462)						—						—						(5,797,462)
Balances at December 31, 2020			2,652						5,998,574						5,562,775						(739,341)						(2,063,991)						8,760,669
Activity related to employee stock plans			5						62,991						—						—						—						62,996
Common stock issuance			170						1,495,732						—						—						—						1,495,902
Changes related to cash flow derivative hedges			—						—						—						4,046						—						4,046
Change in defined benefit plans			—						—						—						8,707						—						8,707
Foreign currency translation adjustments			—						—												15,703						—						15,703
Purchases of treasury stock			—						—						—						—						(1,968)						(1,968)
Net Loss attributable to Royal Caribbean Cruises Ltd.			—						—						(5,260,499)						—						—						(5,260,499)
Balances at December 31, 2021			$	2,827					$	7,557,297					$	302,276					$	(710,885)					$	(2,065,959)					$	5,085,556

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

F-10

ROYAL CARIBBEAN CRUISES LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 1**. General**

Description of Business

We are a global cruise company. We own and operate three global cruise brands: Royal Caribbean International, Celebrity Cruises and Silversea Cruises (collectively, our "Global Brands"). We also own a 50% joint venture interest in TUI Cruises GmbH ("TUIC"), which operates the German brands TUI Cruises and Hapag-Lloyd Cruises (collectively, our "Partner Brands"). We account for our investments in our Partner Brands under the equity method of accounting. Together, our Global Brands and our Partner Brands operated a combined 61 ships as of December 31, 2021. Our ships offer a selection of worldwide itineraries that call on more than 1,000 destinations on all seven continents.

Management's Plan and Liquidity

We have restarted our global cruise operations in a phased manner, following our voluntary suspension of global cruise operations that commenced in March of 2020 in response to the COVID-19 pandemic. Our return to service efforts incorporate our enhanced health and safety protocols, and the requirements of regulatory agencies, which has resulted in reduced guest occupancy, modified itineraries and vaccination protocols.

By the end of December 2021, we operated 50 of our Global and Partner Brand ships, representing over 85% of our fleet's capacity, and carried approximately 1.3 million guests since we resumed operations. We expect to operate approximately 95% of our planned capacity in the first quarter of 2022. Additionally, we expect that the rest of the fleet will return to operations before the summer season.

Uncertainties remain as to the specifics, timing and costs of administering and implementing our health and safety measures, some of which may be significant. Based on our assessment of these requirements and recommendations, the status of COVID-19 infection, and its related variants, and/or vaccination rates in the U.S. or globally or for other reasons, we may determine it necessary to cancel or modify certain of our Global Brands’ cruise sailings. We believe the impact to our global bookings resulting from COVID-19 will continue to have a material negative impact on our results of operations and liquidity, which may be prolonged beyond containment of the disease and its variants.

Significant events affecting travel, including COVID-19 and our gradual resumption of cruise operations, typically have an impact on the booking pattern for cruise vacations, with the full extent of the impact generally determined by the length of time the event influences travel decisions. The estimation of our future liquidity requirements include numerous assumptions that are subject to various risks and uncertainties. The principal assumptions used to estimate our future liquidity requirements consist of:

*•*Expected continued gradual resumption of cruise operations;

• Expected sustained increase in revenue per available passenger cruise day during our continued resumption of cruise operations;

• Expected lower than comparable historical occupancy levels during our continued resumption of cruise operations, increasing over time until we reach historical occupancy levels; and

• Expected spend during our continued resumption of cruise operations, including returning our crew members to our vessels and maintaining enhanced health and safety protocols.

There can be no assurance that our assumptions and estimates are accurate due to possible variables, including, but not limited to, the uncertainties associated with regulatory requirements and recommendations, subsequent changes to and/or enforceability of those requirements and recommendations, our ability to meet the requirements and recommendations, and whether efforts by countries to contain the disease and its variants will further restrict our ability to resume operations. We have implemented a number of proactive measures to mitigate the financial and operational impacts of COVID-19, including reduction of capital expenditures and operating expenses, the issuance of debt and shares of our common stock, the amendment of credit agreements to defer payments, the waiver and/or modification of covenant requirements and the suspension of

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

F-11

dividend payments. Additionally, we expect to continue to pursue refinancing opportunities to reduce interest expense and extend maturities.

As of December 31, 2021, we had liquidity of $3.5 billion, including $0.1 billion of undrawn revolving credit facility capacity, $2.7 billion in cash and cash equivalents and a $0.7 billion commitment for a 364-day term loan facility. Our revolving credit facilities were mostly utilized through a combination of amounts drawn and letters of credit issued under the facilities as of December 31, 2021. We temporarily applied the net proceeds of the $1.0 billion January 2022 Unsecured Notes to repay borrowings under our revolving credit facilities, bringing our undrawn revolving credit facility capacity to $1.1 billion as of the date of the issuance of this report, from $0.1 billion as of December 31, 2021.

During the fourth quarter of 2021, we amended $7.3 billion of outstanding export-credit financing plus committed export-credit facilities to modify financial covenant levels for 2023 and 2024, following the waiver period through and including the fourth quarter of 2022. Refer to Note 8. Debt for further discussion on the $1.0 billion senior notes issued in January of 2022, our 2021 financing activities, and for further information regarding the amendments made to our debt facilities and credit card processing agreements, including related covenants. As of December 31, 2021, we were in compliance with our financial covenants.

Based on our assumptions regarding the impact of COVID-19 and our resumption of operations, as well as our present financial condition, we believe that we have sufficient financial resources to fund our obligations for at least the next twelve months from the issuance of these financial statements.

Beyond the next 12 months, in June of 2023, approximately $3.2 billion of long- term debt will need to be refinanced in order to maintain the Company's liquidity position.

In February 2022, we entered into certain agreements with Morgan Stanley & Co., LLC (“MS”) where MS agrees to provide backstop committed financing to refinance, repurchase and/or repay in whole or in part our existing and outstanding 10.875% Senior Secured Notes due 2023, 9.125% Priority Guaranteed Notes due 2023, and 4.25% Convertible Notes due 2023. Pursuant to the agreements, we may, at our sole option, issue and sell to MS (subject to the satisfaction of certain conditions) five-year senior unsecured notes with gross proceeds of up to $3.15 billion at any time between April 1, 2023 and June 29, 2023, to refinance the aforementioned notes.

If the Company is unable to maintain the required minimum level of liquidity or negotiate its minimum liquidity requirements, it could have a significant adverse effect on the Company’s business, financial condition and operating results.

Basis for Preparation of Consolidated Financial Statements

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Estimates are required for the preparation of financial statements in accordance with these principles. Actual results could differ from these estimates. Refer to Note 2*. Summary of Significant Accounting Policies* for a discussion of our significant accounting policies.

All significant intercompany accounts and transactions are eliminated in consolidation. We consolidate entities over which we have control, usually evidenced by a direct ownership interest of greater than 50%, and variable interest entities where we are determined to be the primary beneficiary. Refer to Note 7*. Other Assets* for further information regarding our variable interest entities. For affiliates we do not control but over which we have significant influence on financial and operating policies, usually evidenced by a direct ownership interest from 20% to 50%, the investment is accounted for using the equity method.

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

On July 9, 2020, we acquired the remaining 33.3% interest in Silversea Cruises that we did not already own from Heritage Cruise Holding Ltd. As a result of the acquisition of the noncontrolling interest, Silversea Cruises is now a wholly owned cruise brand. As consideration for the noncontrolling interest, we issued to Heritage 5.2 million shares of common stock, par value

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

F-12

ROYAL CARIBBEAN CRUISES LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

$0.01 per share, of Royal Caribbean Cruises Ltd. Pursuant to the agreement governing the acquisition, among other things, the parties terminated any existing obligation to issue Heritage any contingent consideration, at fair value, in connection with our acquisition of a 66.7% interest in Silversea Cruises on July 31, 2018. The share purchase did not result in a change of control. The purchase was accounted for as an equity transaction and no gain or loss was recognized in earnings.

Prior to October 1, 2021, we consolidated the operating results of Silversea Cruises on a three-month reporting lag to allow for more timely preparation of our consolidated financial statements. Effective October 1, 2021, we eliminated the three-month reporting lag to reflect Silversea Cruises' financial position, results of operations and cash flows concurrently and consistently with the fiscal calendar of the Company ("elimination of the Silversea reporting lag"). The elimination of the Silversea reporting lag represents a change in accounting principle which we believe to be preferable because it provides more current information to the users of our financial statements. A change in accounting principle requires retrospective application, if material. The impact of the elimination of the reporting lag was immaterial to prior periods and is immaterial for our fiscal year ended December 31, 2021. As a result, we have accounted for this change in accounting principle in our consolidated results for the year ended December 31, 2021. Accordingly, the results of Silversea Cruises from October 1, 2020 to December 31, 2021 are included in our consolidated statement of comprehensive loss for the year ended December 31, 2021. To effect the change, we have reflected the third quarter 2021 operating results for Silversea Cruises, which were a net loss of $62.6 million within Other income (expense) in our consolidated statement of comprehensive loss for the year ended December 31, 2021.

Note 2**. Summary of Significant Accounting Policies**

Revenues and Expenses

Deposits received on sales of passenger cruises are initially recorded as customer deposit liabilities on our balance sheet. Customer deposits are subsequently recognized as passenger ticket revenues, together with revenues from onboard and other goods and services and all associated cruise operating expenses of a voyage. For further information on revenue recognition, refer to Note 3*. Revenue*.

Cash and Cash Equivalents

Cash and cash equivalents include cash and marketable securities with original maturities of less than 90 days.

Inventories

Inventories consist of provisions, supplies and fuel carried at the lower of cost (weighted-average) or net realizable value.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. We capitalize interest as part of the cost of acquiring certain assets. Improvement costs that we believe add value to our ships are capitalized as additions to the ship, the useful lives of the improvements are estimated and depreciated over the shorter of the improvements' estimated useful lives or that of the associated ship, and the replaced assets are disposed of on a net cost basis. The estimated cost and accumulated depreciation of replaced or refurbished ship components are written off and any resulting losses are recognized in Cruise operating expenses. Liquidated damages received from shipyards as a result of the late delivery of a new ship are recorded as reductions to the cost basis of the ship.

Depreciation of property and equipment is computed using the straight-line method over the estimated useful life of the asset. The useful lives of our ships are generally 30-35 years, net of a 10%-15% projected residual value. The 30-35-year useful life and 10%-15% residual value are based on the weighted-average of all major components of a ship. Our useful life and residual value estimates take into consideration the impact of anticipated technological changes, long-term cruise and vacation market conditions and historical useful lives of similarly-built ships. In addition, we take into consideration our estimates of the weighted-average useful lives of the ships' major component systems, such as hull, superstructure, main electric, engines and cabins. We employ a cost allocation methodology at the component level, in order to support the estimated weighted-average useful lives and residual values, as well as to determine the net cost basis of assets being replaced. Given the very large and complex nature of our ships, our accounting estimates related to ships and determinations of ship improvement costs to be capitalized require considerable judgment and are inherently uncertain. Depreciation for assets under finance leases is computed using the shorter of the lease term or related asset life, unless the asset is a finance lease due to title transferring or a purchase option that is reasonably certain of being exercised, in which case the asset is depreciated over the related asset life.

Depreciation of property and equipment is computed utilizing the following useful lives:

F-13

ROYAL CARIBBEAN CRUISES LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

			Years
Ships			generally, 30-35
Ship improvements			3-25
Buildings and improvements			10-40
Computer hardware and software			3-10
Transportation equipment and other			3-30
Leasehold improvements			Shorter of remaining lease term or useful life 3-30

We periodically review estimated useful lives and residual values for ongoing reasonableness, considering long term views on our intended use of each class of ships and the planned level of improvements to maintain and enhance vessels within those classes. In the event a factor is identified that may trigger a change in the estimated useful lives and residual values of our ships, a review of the estimate is completed.

We review long-lived assets for impairment whenever events or changes in circumstances indicate, based on estimated undiscounted future cash flows, that the carrying value of these assets may not be fully recoverable. For purposes of recognition and measurement of an impairment loss, long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The lowest level for which we maintain identifiable cash flows that are independent of the cash flows of other assets and liabilities is at the ship level for our ships. If estimated future cash flows are less than the carrying value of an asset, an impairment charge is recognized to the extent its carrying value exceeds fair value. Refer to Note 6*. Property and Equipment* for further information on determination of fair value for long-lived assets.

We use the deferral method to account for drydocking costs. Under the deferral method, drydocking costs incurred are deferred and charged to expense on a straight-line basis over the period to the next scheduled drydock, which we estimate to be a period of thirty to sixty months based on the vessel's age as required by Class. Deferred drydock costs consist of the costs to drydock the vessel and other costs incurred in connection with the drydock which are necessary to maintain the vessel's Class certification. Class certification is necessary in order for our cruise ships to be flagged in a specific country, obtain liability insurance and legally operate as passenger cruise ships. The activities associated with those drydocking costs cannot be performed while the vessel is in service and, as such, are done during a drydock as a planned major maintenance activity. The significant deferred drydock costs consist of hauling and wharfage services provided by the drydock facility, hull inspection and related activities (e.g., scraping, pressure cleaning, bottom painting), maintenance to steering propulsion, thruster equipment and ballast tanks, port services such as tugs, pilotage and line handling, and freight associated with these items. We perform a detailed analysis of the various activities performed for each drydock and only defer those costs that are directly related to planned major maintenance activities necessary to maintain Class. The costs deferred are related to activities not otherwise routinely periodically performed to maintain a vessel's designed and intended operating capability. Repairs and maintenance activities are charged to expense as incurred.

Goodwill

Goodwill represents the excess of cost over the fair value of net tangible and identifiable intangible assets acquired. We review goodwill for impairment at the reporting unit level annually or, when events or circumstances dictate, more frequently. The impairment review for goodwill consists of a qualitative assessment of whether it is more-likely-than-not that a reporting unit's fair value is less than its carrying value, and if necessary, a goodwill impairment test. Factors to consider when performing the qualitative assessment include general economic conditions, limitations on accessing capital, changes in forecasted operating results, changes in fuel prices and fluctuations in foreign exchange rates. 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 goodwill impairment test. We may elect to bypass the qualitative assessment and proceed directly to step one, for any reporting unit, in any period. On a periodic basis, we elect to bypass the qualitative assessment and proceed to step one to corroborate the results of recent years' qualitative assessments. We can resume the qualitative assessment for any reporting unit in any subsequent period.

The goodwill impairment analysis consists of a comparison of the fair value of the reporting unit with its carrying value. We typically estimate the fair value of our reporting units using a discounted cash flow model, which may also include a combination of a market-based valuation approach. The estimation of fair value utilizing discounted expected future cash flows includes numerous uncertainties which require our significant judgment when making assumptions of expected revenues, operating costs, marketing, selling and administrative expenses, interest rates, ship additions and retirements as well as

F-14

ROYAL CARIBBEAN CRUISES LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

assumptions regarding the cruise vacation industry's competitive environment and general economic and business conditions, among other factors. The principal assumptions used in the discounted cash flow model for our 2021 impairment assessments were: (i) forecasted net revenues, primarily the timing of returning to normalized operations, occupancy rates from existing and expected ship deliveries, and terminal growth rate; and (ii) weighted average cost of capital (i.e., discount rate). The discounted cash flow model uses the most current projected operating results for the upcoming fiscal year as a base. We discount the projected cash flows using rates specific to the reporting unit based on its weighted-average cost of capital. If the fair value of the reporting unit exceeds its carrying value, no write-down of goodwill is required. If the fair value of the reporting unit is less than the carrying value of its net assets, an impairment is recognized based on the amount by which the carrying value of a reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to such reporting unit.

Intangible Assets

In connection with our acquisitions, we have acquired certain intangible assets to which value has been assigned based on our estimates. Intangible assets that are deemed to have an indefinite life are not amortized, but are subject to an annual impairment test, or when events or circumstances dictate, more frequently. The impairment review for indefinite-life intangible assets can be performed using a qualitative or quantitative impairment assessment. The quantitative assessment consists of a comparison of the fair value of the asset with its carrying value. We estimate the fair value of these assets using a discounted cash flow model and various valuation methods depending on the nature of the intangible asset, such as the relief-from-royalty method for trademarks and trade names. The principal assumptions used in the discounted cash flows model for our 2021 impairment assessments were: (i) forecasted net revenues, primarily the timing of returning to normalized operations, occupancy rates from existing and expected ship deliveries, and terminal growth rate; (ii) royalty rate; and (iii) weighted average cost of capital (i.e., discount rate). If the carrying value exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. If the fair value exceeds its carrying value, the indefinite-life intangible asset is not considered impaired.

Other intangible assets assigned finite useful lives are amortized on a straight-line basis over their estimated useful lives.

Contingencies — Litigation

On an ongoing basis, we assess the potential liabilities related to any lawsuits or claims brought against us. While it is typically difficult to determine the timing and ultimate outcome of such actions, we use our best judgment to determine if it is probable that we will incur an expense related to the settlement or final adjudication of such matters and whether a reasonable estimation of such probable loss, if any, can be made. In assessing probable losses, we take into consideration estimates of the amount of insurance recoveries, if any, which are recorded as assets when recoverability is probable. We accrue a liability when we believe a loss is probable and the amount of loss can be reasonably estimated. Due to the inherent uncertainties related to the eventual outcome of litigation and potential insurance recoveries, it is possible that certain matters may be resolved for amounts materially different from any provisions or disclosures that we have previously made.

Advertising Costs

Advertising costs are expensed as incurred except those costs which result in tangible assets, such as brochures, which are treated as prepaid expenses and charged to expense as consumed. Advertising costs consist of media and online advertising as well as brochure, production and direct mail costs.

Media advertising was $303.2 million, $138.1 million and $309.4 million, and brochure, production and direct mail costs were $88.9 million, $69.1 million and $156.0 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Derivative Instruments

We enter into various forward, swap and option contracts to manage our interest rate exposure and to limit our exposure to fluctuations in foreign currency exchange rates and fuel prices. These instruments are recorded on the balance sheet at their fair value and the vast majority are designated as hedges. We also use non-derivative financial instruments designated as hedges of our net investment in our foreign operations and investments. Although certain of our derivative financial instruments do not qualify or are not accounted for under hedge accounting, our objective is not to hold or issue derivative financial instruments for trading or other speculative purposes.

At inception of the hedge relationship, a derivative instrument that hedges the exposure to changes in the fair value of a firm commitment or a recognized asset or liability is designated as a fair value hedge. A derivative instrument that hedges a forecasted transaction or the variability of cash flows related to a recognized asset or liability is designated as a cash flow hedge.

F-15

ROYAL CARIBBEAN CRUISES LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Changes in the fair value of derivatives that are designated as fair value hedges are offset against changes in the fair value of the underlying hedged assets, liabilities or firm commitments. Gains and losses on derivatives that are designated as cash flow hedges are recorded as a component of Accumulated other comprehensive loss until the underlying hedged transactions are recognized in earnings. The foreign currency transaction gain or loss of our non-derivative financial instruments and the changes in the fair value of derivatives designated as hedges of our net investment in foreign operations and investments are recognized as a component of Accumulated other comprehensive loss along with the associated foreign currency translation adjustment of the foreign operation or investment. In certain hedges of our net investment in foreign operations and investments, we exclude forward points from the assessment of hedge effectiveness and we amortize the related amounts directly into earnings.

On an ongoing basis, we assess whether derivatives used in hedging transactions are "highly effective" in offsetting changes in the fair value or cash flow of hedged items. For our net investment hedges, we use the dollar offset method to measure effectiveness. For all other hedging programs, we use the long-haul method to assess hedge effectiveness using regression analysis for each hedge relationship. The methodology for assessing hedge effectiveness is applied on a consistent basis for each one of our hedging programs (i.e., interest rate, foreign currency ship construction, foreign currency net investment and fuel). For our regression analyses, we use an observation period of up to three years, utilizing market data relevant to the hedge horizon of each hedge relationship. High effectiveness is achieved when a statistically valid relationship reflects a high degree of offset and correlation between the changes in the fair values of the derivative instrument and the hedged item. If it is determined that a derivative is not highly effective as a hedge or hedge accounting is discontinued, any change in fair value of the derivative since the last date at which it was determined to be effective is recognized in earnings.

Cash flows from derivative instruments that are designated as fair value or cash flow hedges are classified in the same category as the cash flows from the underlying hedged items. In the event that hedge accounting is discontinued, cash flows subsequent to the date of discontinuance are classified within investing activities. Cash flows from derivative instruments not designated as hedging instruments are classified as investing activities.

We consider the classification of the underlying hedged item’s cash flows in determining the classification for the designated derivative instrument’s cash flows. We classify derivative instrument cash flows from hedges of benchmark interest rate or hedges of fuel expense as operating activities due to the nature of the hedged item. Likewise, we classify derivative instrument cash flows from hedges of foreign currency risk on our newbuild ship payments as investing activities.

Foreign Currency Translations and Transactions

We translate assets and liabilities of our foreign subsidiaries whose functional currency is the local currency, at exchange rates in effect at the balance sheet date. We translate revenues and expenses at weighted-average exchange rates for the period. Equity is translated at historical rates and the resulting foreign currency translation adjustments are included as a component of Accumulated other comprehensive loss, which is reflected as a separate component of Shareholders' equity. Exchange gains or losses arising from the remeasurement of monetary assets and liabilities denominated in a currency other than the functional currency of the entity involved are immediately included in our earnings, except for certain liabilities that have been designated to act as a hedge of a net investment in a foreign operation or investment. Exchange gains (losses) were $24.3 million, $(1.5) million and $0.4 million for the years ended December 31, 2021, 2020 and 2019, respectively, and were recorded within Other income (expense). The majority of our transactions are settled in United States dollars. Gains or losses resulting from transactions denominated in other currencies are recognized in income at each balance sheet date.

Concentrations of Credit Risk

We monitor our credit risk associated with financial and other institutions with which we conduct significant business and, to minimize these risks, we select counterparties with credit risks acceptable to us and we seek to limit our exposure to an individual counterparty. Credit risk, including but not limited to counterparty nonperformance under derivative instruments, our credit facilities and new ship progress payment guarantees, is not considered significant, as we primarily conduct business with large, well-established financial institutions, insurance companies and export credit agencies many of which we have long-term relationships with and which have credit risks acceptable to us or where the credit risk is spread out among a large number of counterparties. As of December 31, 2021 and December 31, 2020, we had counterparty credit risk exposure under our derivative instruments of $1.9 million and $26.9 million respectively, which was limited to the cost of replacing the contracts in the event of non-performance by the counterparties to the contracts, the majority of which are currently our lending banks. We do not anticipate nonperformance by any of our significant counterparties. In addition, we have established guidelines we follow regarding credit ratings and instrument maturities to maintain safety and liquidity. We do not normally require collateral or other security to support credit relationships; however, in certain circumstances this option is available to us.

F-16

ROYAL CARIBBEAN CRUISES LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Loss) Earnings Per Share

Basic (loss) earnings per share is computed by dividing Net (Loss) Income attributable to Royal Caribbean Cruises Ltd. by the weighted-average number of shares of common stock outstanding during each period. Diluted (loss) earnings per share incorporates the incremental shares issuable upon the assumed exercise of stock options and conversion of potentially dilutive securities.

Stock-Based Employee Compensation

We measure and recognize compensation expense at the estimated fair value of employee stock awards. Compensation expense for awards and the related tax effects are recognized as they vest. We use the estimated amount of expected forfeitures to calculate compensation costs for all outstanding awards.

Segment Reporting

As of December 31, 2021, we controlled and operated three global cruise brands: Royal Caribbean International, Celebrity Cruises and Silversea Cruises. We also own a 50% joint venture interest in TUIC, that operates the German brands TUI Cruises and Hapag-Lloyd Cruises. We believe our brands possess the versatility to enter multiple cruise market segments within the cruise vacation industry. Although each of these brands has its own marketing style as well as ships and crews of various sizes, the nature of the products sold and services delivered by these brands share a common base (i.e., the sale and provision of cruise vacations). Our brands also have similar itineraries as well as similar cost and revenue components. In addition, our brands source passengers from similar markets around the world and operate in similar economic environments with a significant degree of commercial overlap. As a result, our brands have been aggregated as a single reportable segment based on the similarity of their economic characteristics, types of consumers, regulatory environment, maintenance requirements, supporting systems and processes as well as products and services provided. Our Chief Executive Officer has been identified as the chief operating decision-maker and all significant operating decisions including the allocation of resources are based upon the analyses of the Company as one segment. Refer to Note 3*. Revenue* for passenger ticket revenue information by geographic area.

Recent Accounting Pronouncements

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

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for convertible instruments. The guidance removes certain accounting models which separate the embedded conversion features from the host contract for convertible instruments, requiring bifurcation only if the convertible debt feature qualifies as a derivative under ASC 815 or for convertible debt issued at a substantial premium. The ASU removes certain settlement conditions required for equity contracts to qualify for the derivative scope exception, permitting more contracts to qualify for it. In addition, the guidance eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. The ASU is effective for annual reporting periods beginning after December 15, 2021, including interim reporting periods within those annual periods, with early adoption permitted no earlier than the fiscal year beginning after December 15, 2020. We plan to adopt the new guidance on January 1, 2022 using the modified retrospective approach and expect to record a cumulative effect of adoption of approximately $146 million to retained earnings. The adoption will also result in a reduction to additional paid in capital of $308 million, and an increase to debt by $162 million primarily as a result of the reversal of the remaining non-cash convertible debt discount. The guidance will also result in a decrease in interest expense and will require us to use the more dilutive "if-converted" method when calculating the dilutive impact of our convertible debt instruments on earnings per share.

F-17

ROYAL CARIBBEAN CRUISES LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 3**. Revenue**

Revenue Recognition

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

The majority of our revenues are derived from passenger cruise contracts which are reported within Passenger ticket revenues in our consolidated statements of comprehensive income (loss). Our performance obligation under these contracts is to provide a cruise vacation in exchange for the ticket price. We satisfy this performance obligation and recognize revenue over the duration of each cruise, which generally range from one to 25 nights.

Passenger ticket revenues include charges to our guests for port costs that vary with passenger head counts. These types of port costs, along with port costs that do not vary by passenger head counts, are included in our operating expenses. The amounts of port costs charged to our guests and included within Passenger ticket revenues on a gross basis were $104.8 million,$125.0 million and $666.8 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Our total revenues also include Onboard and other revenues, which consist primarily of revenues from the sale of goods and services onboard our ships that are not included in passenger ticket prices. We receive payment before or concurrently with the transfer of these goods and services to passengers during a cruise and recognize revenue at the time of transfer over the duration of the related cruise.

As a practical expedient, we have omitted disclosures on our remaining performance obligations as the duration of our contracts with customers is less than a year.

Disaggregated Revenues

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

			Year Ended December 31,
			2021						2020						2019
Revenues by itinerary
North America(1)			$	1,039,783					$	1,342,429					$	6,392,354
Asia/Pacific(2)			128,348						411,865						1,529,898
Europe(3)			180,256						18,604						1,942,057
Other regions			77,985						241,590						567,904
Total revenues by itinerary			1,426,372						2,014,488						10,432,213
Other revenues(4)			105,761						194,317						518,448
Total revenues			$	1,532,133					$	2,208,805					$	10,950,661

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

(2)Includes Southeast Asia (e.g., Singapore, Thailand and the Philippines), East Asia (e.g., China and Japan), South Asia (e.g., India and Pakistan) and Oceania (e.g., Australia and Fiji Islands) regions.

(3)Includes European countries (e.g., the Nordics, Germany, France, Italy, Spain and the United Kingdom).

(4)Includes revenues primarily related to cancellation fees, vacation protection insurance and pre- and post-cruise tours and fees for operating certain port facilities. Amounts also include revenues related to our bareboat charter, procurement and management related services we perform on behalf of our unconsolidated affiliates. Refer to Note 7*. Other Assets* for more information on our unconsolidated affiliates.

Passenger ticket revenues are attributed to geographic areas based on where the reservation originates. For the years ended December 31, 2021, 2020 and 2019, our guests were sourced from the following areas:

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

			Year Ended December 31,
			2021						2020						2019
Passenger ticket revenues:
United States			76		%				67		%				65		%
All other countries (1)			24		%				33		%				35		%

(1)No other individual country's revenue exceeded 10% for the years ended December 31, 2021, 2020 and 2019.

Customer Deposits and Contract Liabilities

Our payment terms generally require an upfront deposit to confirm a reservation, with the balance due prior to the cruise. Deposits received on sales of passenger cruises are initially recorded as Customer deposits in our consolidated balance sheets and subsequently recognized as passenger ticket revenues during the duration of the cruise. Additionally, refunds payable to guests who have elected cash refunds for cancelled sailings are recorded in Accounts Payable. ASC 606, Revenues from Contracts with Customers, defines a “contract liability” as an entity’s obligation to transfer goods or services to a customer for which the entity has received consideration from the customer. We do not consider customer deposits to be a contract liability until the customer no longer retains the unilateral right, resulting from the passage of time, to cancel such customer's reservation and receive a full refund.

The reduction in demand for cruising due to the COVID-19 pandemic resulted in lower than historical levels of advance bookings and the associated customer deposits received. At the same time, we experienced significant cancellations as a result of the COVID-19 pandemic, which led to issuance of refunds to customers, while the remainder have been rebooked on future cruises or received credits in lieu of cash refunds.

As of December 31, 2021, refunds due to customers mostly as a result of cancelling their sailings were $38.8 million compared to $95.8 million as of December 31, 2020 and are included within Accounts payable in our consolidated balance sheets. Customer deposits also include deposits related to cancelled cruises prior to the election of a cash refund by guests. Due to the uncertainty related to the timing and pace of our return for cruising, we are unable to estimate the amount of the December 31, 2021 customer deposits that will be recognized in earnings compared to amounts that will be refunded to customers or issued as a credit for future travel through the end of 2022. Customer deposits presented in our consolidated balance sheets include contract liabilities of $814.3 million and $124.8 million as of December 31, 2021 and December 31, 2020, respectively.

We have provided flexibility to guests with bookings on sailings cancelled due to COVID-19 by allowing guests to receive future cruise credits (“FCC”) or elect to receive refunds in cash. As of December 31, 2021, our customer deposit balance includes approximately $600.0 million of unredeemed FCCs. As of December 31, 2021, the expiration date of the FCCs was extended until April 2022 for sailings departing on or before December 2022. Given the uncertainty of travel demand caused by COVID-19 and lack of comparable historical experience of FCC redemptions, we are unable to estimate the number of FCCs that may expire unused in future periods and get recognized as breakage. We will update our breakage analysis as future information is received.

Contract Receivables and Contract Assets

Although we generally require full payment from our customers prior to their cruise, we grant credit terms to a relatively small portion of our revenue sourced in select markets outside of the United States. As a result, we have outstanding receivables from passenger cruise contracts in those markets. We also have receivables from credit card merchants for cruise ticket purchases and goods and services sold to guests during cruises that are collected before, during or shortly after the cruise voyage. In addition, we have receivables due from concessionaires onboard our vessels. These receivables are included within Trade and other receivables, net in our consolidated balance sheets.

We have contract assets that are conditional rights to consideration for satisfying the construction services performance obligations under a service concession arrangement. As of December 31, 2021 and 2020, our contract assets were $52.9 million and $53.7 million, respectively, and were included within Other assets in our consolidated balance sheets. Given the short duration of our cruises and our collection terms, we do not have any other significant contract assets.

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

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

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

commissions were $75.4 million and $1.1 million as of December 31, 2021 and 2020, respectively. Our prepaid travel advisor commissions at December 31, 2020 were expensed and reported primarily within Other operating in our consolidated statements of comprehensive income (loss) during the year ended December 31, 2021.

Note 4**. Goodwill**

The impact of COVID-19 on our operating plans and projected cash flows resulted in the completion of interim impairment assessments in respect of certain reporting units as of March 31, 2020 and June 30, 2020, in addition to our annual goodwill impairment assessments performed as of November 30, 2020, and November 30, 2021. Refer to Note 1. General for further information regarding COVID-19 and its impact to the Company.

In respect to the Royal Caribbean International reporting unit, we determined that the fair value of the Royal Caribbean International reporting unit exceeded its carrying value as of March 31, 2020 and June 30, 2020 by approximately 30% and 8%, respectively, resulting in no impairment to the Royal Caribbean International goodwill in those periods. We did not perform an interim impairment evaluation of Royal Caribbean International's goodwill during the quarter ended September 30, 2020 as no triggering events were identified. As of November 30, 2020, we performed our annual goodwill impairment review and determined the fair value of the Royal Caribbean International reporting unit exceeded its carrying value by approximately 14%. We did not perform interim impairment evaluations during the quarters ended March 31, 2021, June 30, 2021, and September 30, 2021 as no triggering events were identified.

In respect to the Silversea Cruises reporting unit, we determined the carrying value of the reporting unit exceeded its fair value as of March 31, 2020. Accordingly, we recognized a goodwill impairment charge of $576.2 million for the quarter ended March 31, 2020. We did not perform interim impairment evaluations of Silversea Cruises' reporting unit during the quarters ended June 30, 2020 and September 30, 2020 as no triggering events were identified. As of November 30, 2020, we performed our annual goodwill impairment review and determined the fair value of the Silversea Cruises reporting unit exceeded its carrying value by approximately 12%. We did not perform interim impairment evaluations during the quarters ended March 31, 2021, June 30, 2021, and September 30, 2021 as no triggering events were identified.

As of November 30, 2021, we performed our annual goodwill impairment reviews and determined no incremental impairment losses existed at the date of this annual assessment. We determined the fair value of the Royal Caribbean International and Silversea Cruises reporting units exceeded their carrying values by approximately 38% and 35%, respectively, at the date of this annual assessment.

The gradual resumption of cruise operations, as further discussed in Note 1. General, and possibility of further delays or suspensions create uncertainty in forecasting operating cash flows. The fair value of the Royal Caribbean International reporting unit as of March 31, 2020 was determined using a probability-weighted discounted cash flow model. For the June 30, 2020 and November 30, 2020 assessments, we used a probability-weighted discounted cash flow model in combination with a market-based valuation approach. For the Silversea reporting unit, a probability-weighted discounted cash flow model in combination with a market-based valuation approach was used for all periods assessed in 2020. As of November 30, 2021, a discounted cash flow model was used in combination with a market-based valuation approach for both reporting units. This requires the use of assumptions that are subject to risk and uncertainties. The principal assumptions used in the discounted cash flow analyses that support our Royal Caribbean International and Silversea Cruises reporting unit impairment assessments consisted of:

• Forecasted net revenues, primarily the timing of returning to normalized operations, occupancy rates from existing and expected ship deliveries, and terminal growth rate; and

• Weighted average cost of capital (i.e., discount rate).

The adverse impact COVID-19 will continue to have on our business, operating results, cash flows and overall financial condition is uncertain and may result in changes to the assumptions used in the impairment tests discussed above, which may result in impairments to these assets in the future.

The carrying value of goodwill attributable to our Royal Caribbean International, Celebrity Cruises and Silversea Cruises reporting units and the changes in such balances during the years ended December 31, 2021 and 2020 were as follows (in thousands):

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

			Royal Caribbean International						Celebrity Cruises						Silversea Cruises (1)						Total
Balance at December 31, 2019			$	299,226					$	1,632					$	1,084,786					$	1,385,644
Impairment charge			—						—						(576,208)						(576,208)
Transfer of goodwill attributable to the 2019 purchase of photo operations onboard our ships (2)			(2,694)						2,694						—						—
Foreign currency translation adjustment			44						—						—						44
Balance at December 31, 2020			296,576						4,326						508,578						809,480
Foreign currency translation adjustment			(97)						—						—						(97)
Balance at December 31, 2021			$	296,479					$	4,326					$	508,578					$	809,383

---

(1)In 2018, we acquired a 66.7% equity stake in Silversea Cruises. Our controlling interest purchase price allocation was final during 2019. In 2020, we acquired the remaining 33.3% minority interest, making Silversea Cruises a wholly owned brand. Refer to Note 1. General for further information.

(2)In 2019, we purchased the photo operations onboard our ships from our former concessionaire. The acquisition was accounted for as a business purchase combination using the purchase method of accounting which requires the use of fair value measurements. The business combination, including purchase transaction and assets acquired, was immaterial to our consolidated financial statements.

Note 5. Intangible Assets

Intangible assets consist of finite and indefinite life assets and are reported within Other assets in our consolidated balance sheets.

The impact of COVID-19 on our operating plans and projected cash flows resulted in the completion of an interim impairment assessment for the Silversea Cruises trade name as of March 31, 2020, in addition to our annual indefinite-lived intangible asset impairment assessments performed as of November 30, 2020 and November 30, 2021. Refer to Note 1. General for further information regarding COVID-19 and its impact to the Company.

As a result of our evaluation, we determined the carrying value of the Silversea Cruises trade name exceeded its fair value as of March 31, 2020. Accordingly, we recognized an impairment charge of $30.8 million for the quarter ended March 31, 2020. We did not perform interim impairment evaluations of Silversea Cruises' trade name during the quarters ended June 30, 2020 and September 30, 2020, as no triggering events were identified. As of November 30, 2020, we performed our annual trade name impairment review and determined the fair value of the Silversea Cruise trade name exceeded its carrying value by approximately 3%. We did not perform interim impairment evaluations of Silversea Cruises' trade name during the quarters ended March 31, 2021, June 30, 2021, and September 30, 2021 as no triggering events were identified.

As of November 30, 2021, we performed our annual trade name impairment review and determined no incremental impairment losses existed at the date of this annual assessment. We determined the fair value of the Silversea Cruises trade name exceeded its carrying value by approximately 19% at the date of this annual assessment. The adverse impact COVID-19 will continue to have on our business, operating results, cash flows and overall financial condition is uncertain and may result in changes to the assumptions used in the impairment tests discussed above. In addition, delays in achieving occupancy levels at historical levels or changes to our planned ship deliveries could adversely impact our expected occupancy rates and may result in additional impairment charges of the Silversea Cruises trade name in the future.

The gradual resumption of cruise operations, as further discussed in Note 1. General, and possibility of further delays or suspensions create uncertainty in forecasting operating cash flows. The determination of our trade name fair values using a discounted cash flow model and various valuation methods depending on the nature of the intangible asset, such as the relief-from-royalty method, require the use of assumptions that are subject to risk and uncertainties. The principal assumptions used in the discounted cash flow analyses that support the Silversea Cruises trade name impairment assessments consisted of:

• Forecasted net revenues, primarily the timing of returning to normalized operations, occupancy rates from existing and expected ship deliveries, and terminal growth rate;

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

• Royalty rate; and

• Weighted average cost of capital (i.e., discount rate).

The following is a summary of our intangible assets as of December 31, 2021 (in thousands, except weighted average amortization period), with Silversea Cruises' trade name representing approximately $318.7 million of the indefinite-lived intangible asset balance:

						As of December 31, 2021
						Remaining Weighted Average Amortization Period (Years)						Gross Carrying Value						Accumulated Amortization						Accumulated Impairment Losses						Net Carrying Value
Finite-life intangible assets:
Customer relationships						11.6						$	97,400					$	22,186					$	—					$	75,214
Galapagos operating license						22.6						47,669						9,802						—						37,867
Other finite-life intangible assets						0						11,560						11,560						—						—
Total finite-life intangible assets												156,629						43,548						—						113,081
Indefinite-life intangible assets (1)												352,275						—						30,800						321,475
Total intangible assets, net												$	508,904					$	43,548					$	30,800					$	434,556

(1) Primarily relates to the Silversea Cruises trade name.

The following is a summary of our intangible assets as of December 31, 2020 (in thousands, except weighted average amortization period):

						As of December 31, 2020
						Remaining Weighted Average Amortization Period (Years)						Gross Carrying Value						Accumulated Amortization						Accumulated Impairment Losses			Net Carrying Value
Finite-life intangible assets:
Customer relationships						12.8						$	97,400					$	14,069					$	—		$	83,331
Galapagos operating license						23.8						47,669						7,621						—			40,048
Other finite-life intangible assets						0						11,560						11,560						—			—
Total finite-life intangible assets												156,629						33,250						—			123,379
Indefinite-life intangible assets (1)												352,275						—						30,800			321,475
Total intangible assets, net												$	508,904					$	33,250					$	30,800		$	444,854

(1) Primarily relates to the Silversea Cruises trade name.

The estimated future amortization for finite-life intangible assets for each of the next five years is as follows (in thousands):

Year
2022						$	8,179
2023						$	8,179
2024						$	8,179
2025						$	8,179
2026						$	8,179

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 6**. Property and Equipment**

Property and equipment consists of the following (in thousands):

			As of December 31,
			2021						2020
Ships			$	31,357,703					$	29,872,655
Ship improvements			2,152,457						2,108,922
Ships under construction			1,180,486						1,078,243
Land, buildings and improvements, including leasehold improvements and port facilities			746,785						524,849
Computer hardware and software, transportation equipment and other			1,650,249						1,678,903
Total property and equipment			37,087,680						35,263,572
Less—accumulated depreciation and amortization(1)			(11,179,731)						(10,016,977)
			$	25,907,949					$	25,246,595

(1)Amount includes accumulated depreciation and amortization for assets in service.

Ships under construction include progress payments for the construction of new ships as well as planning, design, capitalized interest and other associated costs. We capitalized interest costs of $58.8 million, $59.1 million, and $56.5 million for the years ended December 31, 2021, 2020 and 2019, respectively.

During 2021, we took delivery of Odyssey of the Seas, Silver Dawn and, with our joint venture partner TUIC, we took delivery of Hanseatic Spirit. The November 2021 delivery and related financing for the Silver Dawn was reported in our consolidated financial statements as of and for the year ended December 31, 2021, as a result of the elimination of the Silversea Cruises three month reporting lag. In January of 2022, we took delivery of Wonder of the Seas. Refer to Note 8*. Debt* for further information on the financings for Odyssey of the Seas and Wonder of the Seas and to Note 9. Leases on the financing for Silver Dawn.

During the first quarter 2020, we determined that the lease for Silver Explorer, operated by Silversea Cruises and previously classified as a finance lease, was an operating lease based on modification of the terms of the lease. Accordingly, Silver Explorer is included within Operating lease right-of use assets, Current portion of operating lease liabilities, and Long term lease liabilities in our consolidated balance sheets. Refer to Note 9*. Leases* for further information.

Long-lived Assets impairments

We review our long-lived assets for impairment whenever events or circumstances indicate potential impairment losses exist. The impact of COVID-19 on our expected future operating cash flows, as well as decisions to dispose of certain vessels, resulted in the identification of impairment triggers for certain vessels in 2020. Refer to Note 1. General for further information regarding COVID-19 and its impact to the Company.

We estimated the recoverability of certain vessels using undiscounted cash flow analyses at interim dates throughout 2020 and at December 31, 2020. A number of vessels were found to have net carrying values in excess of their estimated undiscounted future cash flows and, as such, were subject to fair value assessments. Fair value was determined based on our intended use of the identified vessels and, as such, we used a combination of discounted cash flows, replacement cost, scrap and residual value techniques to estimate fair value. Differences between the estimated fair values and the net carrying values were recorded as an impairment charge within the period the loss was identified. Consequently, we recorded $635.5 million of impairment losses during the year ended 2020. Included in this 2020 amount are $171.3 million impairment losses recorded for the three ships that we chartered to Pullmantur Holdings, prior to its filing for reorganization. Refer to Note 7*. Other Assets* for further information regarding Pullmantur's reorganization. During the quarter ended September 30, 2020, we sold the ships previously chartered to Pullmantur Holdings to third parties for amounts approximating their carrying values and no further impairment was recorded. Also included in the $635.5 million impairment loss for the year ended December 31, 2020, is a $166.8 million impairment charge for the three Azamara ships included in the sale of the Azamara brand, effective March 19, 2021. There were no vessel impairment charges for the year ended December 31, 2021.

The suspension of operations, as discussed in Note 1. General, and the possibility of further suspensions create uncertainty in forecasting undiscounted cash flows, which are used to determine if a vessel is at risk of impairment and in estimating the fair value of our ships. Our principal assumptions used in our undiscounted cash flows consisted of:

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

• The timing of our return to service, changes in market conditions and port or other restrictions;

• Forecasted net revenues, primarily the timing of returning to normalized operations, and occupancy rates; and

• Intended use of the vessel for the remaining useful life.

The adverse impact COVID-19 will continue to have on our business, operating results, cash flows and overall financial condition is uncertain and may result in changes to the assumptions used in the impairment tests discussed above, which may result in additional impairments to these assets in the future.

During the years ended December 31, 2021 and 2020, we also determined that certain construction in progress projects would be reduced in scope or would no longer be completed as a result of our capital cost containment measures in response to the COVID-19 impact on our liquidity. We recorded property and equipment impairment charges of $55.2 million and $91.5 million, during the years ended December 31, 2021 and December 31, 2020, respectively, which primarily related to construction in progress assets.

These impairment charges were reported within Impairment and Credit Losses in our consolidated statements of comprehensive (loss) income.

Note 7**. Other Assets**

A Variable Interest Entity ("VIE") is an entity in which the equity investors have not provided enough equity to finance the entity's activities or the equity investors (1) cannot directly or indirectly make decisions about the entity's activities through their voting rights or similar rights; (2) do not have the obligation to absorb the expected losses of the entity; (3) do not have the right to receive the expected residual returns of the entity; or (4) have voting rights that are not proportionate to their economic interests and the entity's activities involve or are conducted on behalf of an investor with a disproportionately small voting interest.

We have determined that TUI Cruises GmbH ("TUIC"), our 50%-owned joint venture, which operates the brands TUI Cruises and Hapag-Lloyd Cruises, is a VIE. We have determined that we are not the primary beneficiary of TUIC. We believe that the power to direct the activities that most significantly impact TUIC’s economic performance are shared between ourselves and TUI AG, our joint venture partner. All the significant operating and financial decisions of TUIC require the consent of both parties, which we believe creates shared power over TUIC. Accordingly, we do not consolidate this entity and account for this investment under the equity method of accounting.

On June 30, 2020, TUIC acquired Hapag-Lloyd Cruises, a luxury and expedition brand for German-speaking guests, from TUI AG for approximately €1.2 billion, or approximately $1.3 billion as of the purchase date. Hapag-Lloyd Cruises operates two luxury liners and two smaller expedition ships. We and TUI AG each made an equity contribution of €75.0 million, or approximately $84.2 million to TUIC to fund a portion of the purchase price, the remainder of which was financed by third-party financing.

As of December 31, 2021, the net book value of our investment in TUIC was $444.4 million, primarily consisting of $322.4 million in equity and a loan of €103.0 million, or approximately $117.2 million, based on the exchange rate at December 31, 2021. As of December 31, 2020, the net book value of our investment in TUIC was $538.4 million, primarily consisting of $387.5 million in equity and a loan of €118.9 million, or approximately $145.5 million, based on the exchange rate at December 31, 2020. The loan, which was made in connection with the sale of Splendour of the Seas in April 2016, accrues interest at a rate of 6.25% per annum and is payable over 10 years. This loan is 50% guaranteed by TUI AG and is secured by a first priority mortgage on the ship. The majority of these amounts were included within Other assets in our consolidated balance sheets. During the quarter ended March 31, 2021, we and TUI AG each contributed €59.5 million, or approximately $69.9 million based on the exchange rate at March 31, 2021, of additional equity through a combination of cash contributions and conversion of existing receivables. In June 2021, Hapag-Lloyd Cruises received delivery of the Hanseatic Spirit, a 230 berth luxury expedition cruise vessel.

TUIC has various ship construction and financing agreements which include certain restrictions on each of our and TUI AG’s ability to reduce our current ownership interest in TUIC below 37.55% through May 2033. Our investment amount and outstanding term loan are substantially our maximum exposure to loss in connection with our investment in TUIC.

We have determined that Pullmantur Holdings, in which we have a 49% noncontrolling interest and Springwater Capital LLC has a 51% interest, is a VIE for which we are not the primary beneficiary as we do not have the power to direct the activities that most significantly impact the entity's economic performance. In 2020, Pullmantur Holdings and certain of its

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

subsidiaries filed for reorganization under the terms of the Spanish insolvency laws due to the negative impact of the COVID-19 pandemic on the companies, and on July 15, 2021, Pullmantur Holdings and certain of its subsidiaries filed for liquidation. We suspended the equity method of accounting for Pullmantur Holdings during the second quarter of 2020 as we do not intend to fund the entity's future losses and lost our ability to exert significant influence over the entity's activities as a result of the reorganization and liquidation process.

In connection with the reorganization, we terminated the agreements chartering three of our ships to Pullmantur Holdings and sold the ships to third parties during the quarter ended September 30, 2020 for amounts approximating their carrying values. Refer to Note 6. Property and Equipment for further discussion on the impact of the ships' sale on our consolidated financial statements. In addition, we recognized a loss of $69.0 million within Other expense in our consolidated statements of comprehensive (loss) income, during the quarter ended June 30, 2020 representing deferred currency translation adjustment losses, net of hedging, as we no longer had significant involvement in the Pullmantur operation.

During the quarter ended June 30, 2020, we entered into an agreement with Springwater Capital LLC to settle the guarantees previously issued by them and for costs that we incurred as a result of Pullmantur S.A.'s reorganization. As part of this settlement, we agreed to provide Pullmantur guests the option to apply their paid deposits toward a Royal Caribbean International or Celebrity Cruises sailing, or request a cash refund. The estimated total cash refunds expected to be paid to Pullmantur guests and other expenses incurred as part of the liquidation were approximately $10.2 million and $21.6 million for the years ended December 31, 2021 and 2020, respectively. These amounts were recorded in Other operating and in Other expense in our consolidated statements of comprehensive (loss) income for the years ended December 31, 2021 and 2020.

We have determined that Grand Bahama Shipyard Ltd. ("Grand Bahama"), a ship repair and maintenance facility in which we have a 40% noncontrolling interest, is a VIE. This facility serves cruise and cargo ships, oil and gas tankers and offshore units. We utilize this facility, among other ship repair facilities, for our regularly scheduled drydocks and certain emergency repairs as may be required. During the years ended December 31, 2021 and 2020, we made payments of $9.3 million and $0.2 million, respectively, to Grand Bahama for ship repair and maintenance services. We have determined that we are not the primary beneficiary of this facility, as we do not have the power to direct the activities that most significantly impact the facility's economic performance. Accordingly, we do not consolidate this entity.

Given the impact of the COVID-19 pandemic to our business, we evaluated whether our equity method investments were other than temporarily impaired. During the quarter ended March 31, 2020, we performed an impairment evaluation on our investment in Grand Bahama. As a result of the evaluation, we did not deem our investment balance to be recoverable and recorded an impairment charge of $30.1 million. The impairment assessment and the resulting charge on our equity method investment in Grand Bahama were determined based on management’s estimates and projections. We are currently recognizing our share of net accumulated equity method losses against the carrying value of our loans receivable from Grand Bahama, for which there were no impairments during 2021.

For further information on the measurements used to estimate the fair value of our equity investments, refer to Note 16. Fair Value Measurements and Derivative Instruments.

As of December 31, 2021, we had exposure to credit loss in Grand Bahama consisting of a $11.1 million loan. Our loan to Grand Bahama matures March of 2026 and bears interest at LIBOR plus 3.5% to 3.75%, capped at 5.75%. Interest payable on the loan is due on a semi-annual basis. During the year ended December 31, 2021, we received principal and interest payments of $8.9 million related to a term loan that had fully matured. We did not receive any principal and interest payments during the year ended December 31, 2020. The remaining loan balance is included within Other assets in our consolidated balance sheets.

We monitor credit risk associated with the loan through our participation on Grand Bahama’s board of directors along with our review of Grand Bahama’s financial statements and projected cash flows. Effective April 1, 2020, we placed the loan in non-accrual status based on our review of Grand Bahama's projected cash flows which have been adversely affected by impacts to their operations caused by the 2019 crane accident related to Oasis of the Seas, Hurricane Dorian and most recently, COVID-19. During the year ended December 31, 2021, no credit losses were recorded related to the fully matured loan, nor the outstanding loan.

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

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

						Year ended December 31,
						2021						2020						2019
Share of equity (loss) income from investments						$	(135,469)					$	(213,286)					$	230,980
Dividends received (1)						$	—					$	2,215					$	150,177

(1) For the year ended December 31, 2019, TUI Cruises paid us dividends totaling €170.0 million, or approximately $190.3 million, based on the exchange rates at the time of the transactions. There were no dividends received from TUI Cruises for the years ended December 31, 2021 and 2020, respectively. The amounts included in the table above are net of tax withholdings.

						As of December 31,
						2021						2020
Total notes receivable due from equity investments						$	130,587					$	164,596
Less-current portion (1)						21,508						29,501
Long-term portion (2)						$	109,079					$	135,095

---

(1) Included within Trade and other receivables, net in our consolidated balance sheets.

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

We also provide ship management services to TUI Cruises GmbH and provided management services to Pullmantur Holdings (which filed for reorganization, and liquidation in Spain in 2020). Additionally, we bareboat chartered to Pullmantur Holdings the vessels previously operated by its brands, which were retained by us following the sale of our 51% interest in Pullmantur Holdings. These bareboat charters were terminated when Pullmantur Holdings filed for reorganization in Spain. We recorded the following as it relates to these services in our operating results within our consolidated statements of comprehensive income (loss) (in thousands):

						Year ended December 31,
						2021						2020						2019
Revenues						$	24,568					$	21,372					$	47,242
Expenses						$	6,275					$	4,986					$	4,304

Summarized financial information for our affiliates accounted for under the equity method of accounting was as follows (in thousands):

						As of December 31,
						2021						2020
Current assets						$	736,263					$	488,329
Non-current assets						5,241,302						5,456,061
Total assets						$	5,977,565					$	5,944,390
Current liabilities						$	1,225,032					$	1,106,700
Non- current liabilities						3,860,646						3,771,992
Total liabilities						$	5,085,678					$	4,878,692

						Year ended December 31,
						2021						2020						2019
Total revenues						$	679,137					$	619,795					$	2,354,744
Total expenses						(897,308)						(939,481)						(1,875,952)
Net (loss) income						$	(218,171)					$	(319,686)					$	478,792

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Credit Losses

We reviewed our notes receivable for credit losses in connection with the preparation of our financial statements. In evaluating the credit loss allowance, management considered factors such as historical loss experience, the types of loans and the amount of loans in the loan portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, peer group information and prevailing economic conditions. Based on these credit loss estimation factors, during the year ended December 31, 2021, we recorded a loss provision of $43.8 million. The 2021 loss provision was primarily related to a note receivable of approximately $24.3 million due from an investment previously reported under the equity-method of accounting, which we subsequently determined was no longer recoverable and wrote the amount off from our credit loss allowance. The 2021 credit loss provision also includes $12.6 million of other receivable balances primarily related to loans due from travel advisors. Our credit loss allowance beginning balance as of January 1, 2021 primarily relates to credit losses recognized during 2020 on notes receivable for the previous sale of our property and equipment of $81.6 million.

The following table summarizes our credit loss allowance related to receivables for the year ended December 31, 2021 (in thousands):

						Credit Loss Allowance
Balance at January 1, 2021						$	85,447
Loss provision for receivables						43,822
Write-offs						$	(29,077)
Balance at December 31, 2021						$	100,192

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 8**. Debt**

Debt consists of the following (in thousands):

																		As of December 31,
						Interest Rate(1)						Maturities Through						2021						2020
Fixed rate debt:
Unsecured senior notes						3.70% - 9.13%						2022 - 2028						$	5,604,498					$	2,464,994
Secured senior notes						10.88% - 11.50%						2023 - 2025						2,354,037						3,895,166
Unsecured term loans						2.53% - 5.41%						2028 - 2032						2,860,567						3,210,161
Convertible notes						2.88% - 4.25%						2023						1,558,780						1,454,488
Total fixed rate debt																		12,377,882						11,024,809
Variable rate debt:
Unsecured revolving credit facilities(2)						1.51% -1.91%						2022 - 2024						2,899,342						3,289,000
Unsecured UK Commercial paper												2021						—						409,319
USD unsecured term loan						0.71% - 3.17%						2022 - 2033						5,018,740						4,002,249
Euro unsecured term loan						1.74% -2.25%						2022 - 2028						685,633						705,064
Total variable rate debt																		8,603,715						8,405,632
Finance lease liabilities																		472,275						213,365
Total debt (3)																		21,453,872						19,643,806
Less: unamortized debt issuance costs																		(363,532)						(314,763)
Total debt, net of unamortized debt issuance costs																		21,090,340						19,329,043
Less—current portion including commercial paper																		(2,243,131)						(1,371,087)
Long-term portion																		$	18,847,209					$	17,957,956

(1)Interest rates based on outstanding loan balance as of December 31, 2021 and, for variable rate debt, includes either LIBOR or EURIBOR plus the applicable margin.

(2)Includes $1.9 billion facility and $1.3 billion facility, the vast majority of which is due in 2024. Our $1.9 billion facility accrues interest at LIBOR plus a maximum interest rate margin of 1.30%, which interest rate was 1.51%, as of December 31, 2021 and is subject to a facility fee of 0.20%. Our $1.3 billion facility accrues interest at LIBOR plus a maximum interest rate margin of 1.70%, which interest was 1.91% as of December 31, 2021 and is subject to a facility fee of a maximum of 0.30%.

(3)At December 31, 2021 and 2020, the weighted average interest rate for total debt was 5.47% and 6.02%, respectively.

In March 2021, we amended our $1.55 billion unsecured revolving credit facility due October 2022 and our $1.0 billion unsecured term loan due April 2022. These amendments, among other things, extend the maturity date or termination date of certain of the advances and commitments, as applicable, under the facilities held by consenting lenders by 18 months and increase the interest rate margin and/or the facility fee, as applicable, with respect to advances and commitments held by such lenders. Consenting lenders also received a prepayment and commitment reduction equal to 20% of their respective outstanding advances and commitments. Following these amendments, the aggregate revolving capacity of the revolving credit facility is approximately $1.3 billion, with approximately $0.2 billion terminating in October 2022 and approximately $1.1 billion terminating in April 2024 and the aggregate principal balance of the term loan is approximately $0.9 billion, with approximately $0.3 billion maturing in April 2022 and approximately $0.6 billion maturing in October 2023.

As of December 31, 2021, our aggregate revolving borrowing capacity was $3.2 billion and was mostly utilized through a combination of amounts drawn and letters of credit issued under the facilities. Certain of our surety agreements with third party providers for the benefit of certain agencies and associations that provide travel related bonds, allow the sureties to request collateral. We also have agreements with our credit card processors relating to customer deposits received by us for future voyages. These agreements allow the credit card processors to require us, under certain circumstances, to maintain a reserve that can be

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

satisfied by posting collateral. As of December 31, 2021, we have posted letters of credit as collateral with our sureties and credit card processors under our revolving credit facilities in the amount of $193.3 million.

Executed amendments are in place for the majority of our credit card processors, waiving reserve requirements tied to breach of our financial covenants through at least September 30, 2022, with modified covenants thereafter, and as such, we do not anticipate any incremental collateral requirements for the processors covered by these waivers in the next 12 months. We have a reserve with a processor where the agreement was amended in the first quarter of 2021, such that proceeds are held in reserve until the sailing takes place or the funds are refunded to the customer. The maximum projected cash exposure with the processor, including amounts currently held and reported in Trade and other receivables, is approximately $285.0 million. The amount and timing are dependent on future factors that are uncertain, such as the pace of resumption of cruise operations, volume of future deposits and whether we transfer our business to other processors. If we require additional waivers on the credit card processing agreements and are not able to obtain them, this could lead to the termination of these agreements or the trigger of reserve requirements.

In March 2021, we took delivery of Odyssey of the Seas. To finance the purchase, we borrowed $994.1 million under a previously committed unsecured term loan which is 95% guaranteed by Euler Hermes Aktiengesellschaft (“Hermes”), the official export credit agency of Germany. The loan amortizes semi-annually over 12 years and bears interest at a floating rate equal to LIBOR plus a margin of 0.96%. Prior to delivery during the first quarter of 2021, we amended the credit agreement to (i) increase the maximum loan amount under the facility to make available to us a maximum amount equal to the US dollar equivalent of 80% of the vessel purchase price plus 100% of the premium payable to Hermes and (ii) defer the payment of all principal payments due between April 2021 and April 2022, which amounts will be repayable semi-annually over a five year period starting in April 2022.

In March 2021, we issued $1.50 billion of senior unsecured notes that mature in 2028, for net proceeds of $1.48 billion. Interest on the senior notes accrues at 5.5% per annum and is payable semi-annually. We used the proceeds from the notes to repay principal payments on debt maturing or required to be paid in 2021 and 2022, and the remaining for general corporate purposes.

In March 2021, we extended our binding commitment from Morgan Stanley Senior Funding Inc. for a $700.0 million term loan facility by one year. The commitment was initially obtained in August 2020, and as amended, we may draw on the facility at any time prior to August 12, 2022. Once drawn, the loan will bear interest at LIBOR plus 3.75% and will mature 364 days from funding. In addition, the facility, once drawn, will be guaranteed by RCI Holdings, LLC, our wholly owned subsidiary that owns the equity interests in subsidiaries that own seven of our vessels. We have the ability to increase the capacity of the facility by an additional $300.0 million from time to time subject to the receipt of additional or increased commitments and the issuance of guarantees from additional subsidiaries.

In June 2021, we issued $650.0 million of senior unsecured notes due in 2026 (the "June Unsecured Notes") for net proceeds of approximately $640.6 million. Interest accrues on the June Unsecured Notes at a fixed rate of 4.25% per annum and is payable semi-annually in arrears. We fully repaid the Silversea Cruises 7.25% senior secured notes due in 2025 (the "Silversea Notes"), in the amount of $619.8 million, with a portion of the proceeds from the June Unsecured Notes. We also funded call premiums, fees and expenses in connection with the redemption of the Silversea Notes with proceeds from the June Unsecured Notes.

Additionally, during the second quarter of 2021, we repaid in full a $130 million term loan.

In August 2021, we issued $1.0 billion of senior notes due in 2026 (the "August Unsecured Notes") for net proceeds of approximately $986.0 million. Interest accrues on the August Unsecured Notes at a fixed rate of 5.50% per annum and is payable semi-annually in arrears. We used the proceeds of the August Unsecured Notes to replenish our capital as a result of the redemption of a portion of the 11.50% senior secured notes due 2025, in the amount of $928.0 million plus accrued interest and premiums. The repayment of the 11.50% senior secured notes due 2025 resulted in a total loss on the extinguishment of debt of $141.9 million, which was recognized within Interest expense, net of interest capitalized within our consolidated statements of comprehensive loss for the year ended December 31, 2021.

In January 2022, we took delivery of Wonder of the Seas. To finance the delivery, we borrowed a total of $1.3 billion under a credit agreement novated to us in July of 2017, resulting in an unsecured term loan which is 100% guaranteed by Bpifrance Assurance Export ("BpiFAE"), the official export credit agency of France. The unsecured loan amortizes semi-annually over 12 years and bears interest at a fixed rate of 3.18%.

In January 2022, we issued $1.0 billion of senior notes (the "January 2022 Unsecured Notes") due in 2027 for net proceeds of approximately $990.0 million. Interest accrues on the January 2022 Unsecured Notes at a fixed rate of 5.375% per annum and is payable semi-annually in arrears. The proceeds from the January 2022 Unsecured Notes will be used to repay principal payments on debt maturing in 2022. Pending such debt maturities, we have temporarily applied the proceeds to repay borrowings under our

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

revolving credit facilities, bringing our undrawn revolving credit facility capacity to $1.1 billion as of the date of the issuance of this report from $0.1 billion as of December 31, 2021.

In February 2022, we entered into certain agreements with Morgan Stanley & Co., LLC (“MS”) where MS agrees to provide backstop committed financing to refinance, repurchase and/or repay in whole or in part our existing and outstanding 10.875% Senior Secured Notes due 2023, 9.125% Priority Guaranteed Notes due 2023, and 4.25% Convertible Notes due 2023. Pursuant to the agreements, we may, at our sole option, issue and sell to MS (subject to the satisfaction of certain conditions) five-year senior unsecured notes with gross proceeds of up to $3.15 billion at any time between April 1, 2023 and June 29, 2023, to refinance the aforementioned notes.

During 2020, we amended all of our export credit facilities, all of our non-export credit facilities and certain of our credit card processing agreements which contain financial covenants to extend the financial covenant waiver through and including the fourth quarter of 2021. During the first quarter of 2021, we amended $4.9 billion of our non-export credit facilities and certain of our credit card processing agreements to extend the waiver of the financial covenants through and including the third quarter of 2022 or, if earlier, that date falling after January 1, 2022 on which we elect to comply with the modified covenants. Pursuant to the amendments, we have modified the manner in which such covenants are calculated (temporarily in certain cases and permanently in others) as well as the levels at which our net debt to capitalization covenant will be tested during the period commencing immediately following the end of the waiver period and continuing through the end of 2023. As of December 31, 2021, the monthly-tested minimum liquidity covenant was $350 million for the duration of the waiver period. As of the date of these financial statements, we were in compliance with the applicable minimum liquidity covenant. Pursuant to these amendments, the restrictions on paying cash dividends and effectuating share repurchases were extended through and including the third quarter of 2022.

During the first quarter of 2021, we also amended $6.3 billion of our export credit facilities to extend the waiver of the financial covenants through and including at least the end of the third quarter of 2022, and during the third quarter of 2021, we entered into a letter agreement to extend the waiver period to the end of the fourth quarter of 2022. During the fourth quarter of 2021, we amended $7.3 billion of outstanding export-credit financing plus committed export-credit facilities to modify financial covenant levels for 2023 and 2024, following the waiver period through and including the fourth quarter of 2022. These amendments deferred $1.15 billion of principal payments due between April 2021 and April 2022. The deferred amounts will be repayable semi-annually over a five-year period starting in April 2022. Pursuant to these amendments, we have agreed to implement the same liquidity covenant that applies in our non-export credit facilities. The amendments also provide for mandatory prepayment of the deferred amounts upon the taking of certain actions. Subject to a number of carve outs, these include, but are not limited to, issuance of dividends, completion of share repurchases, issuances of debt other than for crisis and recovery purposes, the making of loans and the sale of assets other than at arm’s length

In the fourth quarter of 2020 and the first quarter of 2021, we entered into amendments to our outstanding and committed export-credit facilities to provide for the issuance of guarantees in satisfaction of existing obligations under these facilities. Following issuance (which, in the case of the undrawn facilities, will occur once the debt is drawn), the guarantees will be released under certain circumstances as other debt is repaid or refinanced on an unsecured and unguaranteed basis. In connection with and following the issuance of the guarantees, the guarantor subsidiaries are restricted from issuing additional guarantees in favor of lenders (other than those lenders who are party to the ECA facilities), and certain of the guarantor subsidiaries are restricted from incurring additional debt. In addition, the ECA facilities will benefit from guarantees to be issued by intermediary parent companies of subsidiaries that take delivery of any new vessels subject to export-credit backed financing.

Except for the term loans we incurred to acquire Celebrity Flora and Silver Moon, all of our unsecured ship financing term loans are guaranteed by the export credit agency in the respective country in which the ship is constructed. For the majority of the loans as of December 31, 2021, we pay to the applicable export credit agency, depending on the financing agreement, an upfront fee of 2.35% to 5.48% of the maximum loan amount in consideration for these guarantees. We amortize the fees that are paid upfront over the life of the loan. We classify these fees within Amortization of debt issuance costs in our consolidated statements of cash flows. Prior to the loan being drawn, we present these fees within Other assets in our consolidated balance sheets. Once the loan is drawn, such fees are classified as a discount to the related loan, or contra-liability account, within Current portion of long-term debt or long-term debt.

In March 2020, we increased the capacity of our $1.7 billion and $1.2 billion unsecured revolving credit facilities due in 2024 and 2022, by $200 million and $400 million, respectively, utilizing their respective accordion features. As of December 31, 2020, our aggregate revolving borrowing capacity was $3.5 billion and was fully utilized through a combination of amounts drawn and letters of credit issued under the facilities. Certain of our surety agreements with third party providers for the benefit of certain

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

agencies and associations that provide travel related bonds allow the surety to request collateral in the form of cash or letters of credit. As of December 31, 2020, we posted collateral in the amount of approximately $91 million.

In March 2020, we took delivery of Celebrity Apex. To finance the purchase, we borrowed $722.2 million under a previously committed unsecured term loan which is 100% guaranteed by BpiFrance Assurance Export, the official export credit agency of France. The loan amortizes semi-annually over 12 years and bears interest at a fixed rate of 3.23% per annum. In the second quarter of 2020 and the first quarter of 2021, we amended the agreement to defer the payment of all principal payments due between April 2020 and March 2022. The deferred amounts will be repayable starting in 2022 over a five year period.

In March 2020, we borrowed $2.2 billion pursuant to a 364-day senior secured term loan agreement. In May 2020, this secured term loan was increased by an additional $150 million through the exercise of the accordion feature. The increased secured term loan balance was repaid with proceeds from the $3.32 billion Secured Notes (as described below) issued in May 2020. This secured term loan would have matured 364 days after funding and could have been extended at our option for an additional 364 days subject to customary conditions, including the payment of a 1.00% extension fee. Interest accrued at LIBOR plus a margin of 2.25% which would have increased to 2.50% and 2.75% at 180 days and 365 days, respectively, after funding. We would have also been required to pay a duration fee in an amount equal to 0.25% of the aggregate loan principal amount every 60 days. Additionally, two of our board members each purchased a participation interest equal to $100 million. The repayment of this secured term loan in May 2020 resulted in a total loss on the extinguishment of debt of $41.1 million, which was recognized within Interest expense, net of interest capitalized within our consolidated statements of comprehensive income (loss).

In May 2020, we issued $3.32 billion of senior secured notes (the "Secured Notes") for net proceeds of approximately $3.2 billion. We repaid the $2.35 billion, 364-day senior secured term loan in its entirety with a portion of the proceeds of the Secured Notes. $1.0 billion of the notes accrue interest at 10.875% and mature in June of 2023 (the "2023 Secured Notes"). The remaining $2.32 billion of the Secured Notes accrue interest at 11.5% and mature in June of 2025 (the "2025 Secured Notes"). The Secured Notes are fully and unconditionally guaranteed by Celebrity Cruises Holdings Inc., Celebrity Cruises Inc., and certain of our wholly-owned vessel-owning subsidiaries. $1.66 billion of the obligations under the Secured Notes and the related guarantees are secured by first priority security interests in the collateral (which generally includes certain of our material intellectual property, a pledge of 100% of the equity interests of certain of our vessel-owning subsidiaries, the collateral account established pursuant to the indenture governing the Secured Notes (the "Secured Notes Indenture"), mortgages on the 28 vessels owned by such subsidiaries, and an assignment of insurance and earnings in respect of such vessels, subject to permitted liens and certain exclusions and release provisions), subject to certain adjustments after the date of issuance based on our debt rating as of the date of issuance and our lien basket amount in certain of our credit facilities. Prior to March 1, 2023, we may, at our option, redeem some or all of the 2023 Secured Notes at 100% of the principal amount thereof plus accrued and unpaid interest plus the applicable “make-whole premium” described in the Secured Notes Indenture. On or after March 1, 2023, we may, at our option, redeem some or all of the 2023 Secured Notes at a redemption price equal to 100% of the principal amount of the 2023 Secured Notes to be redeemed plus accrued and unpaid interest, if any, to, but excluding, the redemption date. Prior to June 1, 2022, we may, at our option, redeem some or all of the 2025 Secured Notes at 100% of the principal amount plus accrued and unpaid interest plus the applicable “make-whole premium” described in the Secured Notes Indenture. On or after June 1, 2022, we may, at our option, redeem some or all of the 2025 Secured Notes at the applicable redemption prices set forth in the Secured Notes Indenture. In addition, on or prior to June 1, 2022, we may, at our option, redeem up to 40% of the 2025 Secured Notes with the proceeds from certain equity offerings at the redemption price listed in the Secured Notes Indenture. In addition, we may redeem all, but not part, of the Secured Notes upon the occurrence of specified tax events set forth in the Secured Notes Indenture.

In June 2020, we issued $1.0 billion of senior unsecured notes which accrue interest at 9.125% and mature in June of 2023. The notes are fully and unconditionally guaranteed by RCI Holdings LLC, which owns 100% of the equity interests in certain of our wholly-owned vessel-owning subsidiaries.

In June 2020, RCL Cruises Ltd., our subsidiary that operates and manages our business in the United Kingdom, established a commercial paper facility for the purpose of issuing short-term, unsecured Sterling-denominated notes that are eligible for purchase under the Joint HM Treasury and Bank of England’s COVID Corporate Financing Facility commercial paper program in an aggregate principal amount up to £300.0 million. The maturities of the commercial paper notes can vary by note, but cannot exceed 364 days from the date of issuance. As of December 31, 2020, we had £300.0 million, or approximately $409.9 million, based on the exchange rate at December 31, 2020, of commercial paper notes outstanding under this program. During the first quarter of 2021, we repaid in full the £300.0 million notes issued under the Joint HM Treasury and Bank of England’s COVID Corporate Financing Facility.

In June 2020, we issued $1.15 billion of convertible notes which accrue interest at 4.25% and mature in June of 2023. If note holders elect to convert, the notes will be converted into our shares of common stock, cash, or a combination of common stock and

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

cash, at our discretion. The initial conversion rate per $1,000 principal amount of the convertible notes is 13.8672 shares of our common stock, which is equivalent to an initial conversion price of approximately $72.11 per share, subject to adjustment in certain circumstances. Prior to March 15, 2023, the convertible notes will be convertible at the option of holders during certain periods, and only under the following conditions:

• during any calendar quarter after September 30, 2020, if the last reported sale price per share of our common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

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

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

• upon the occurrence of specified corporate events.

On or after March 15, 2023, the convertible notes will be convertible at any time until the close of business on the second scheduled trading day immediately preceding their maturity date.

Holders of the convertible notes may require us, upon the occurrence of certain events that constitute a fundamental change under the indenture, to offer to repurchase the convertible notes at a repurchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest.

We allocated $907.9 million of the convertible notes' proceeds, net of debt issue costs, to Long-term debt and $209.0 million to Paid-in-capital on our Consolidated Balance Sheet. We recognized the equity component by ascribing the difference between the proceeds and the fair value of the convertible notes' debt component to Paid-in-capital and the corresponding debt discount will be amortized to interest expense over the term of the convertible notes using the straight-line method, which approximates the effective interest method. The fair value of the convertible notes' debt component was determined utilizing a present value calculation. Debt issuance costs on the convertible notes were allocated to the debt and equity components in proportion to the allocation of proceeds to those components. We incurred total debt issue costs of $33.1 million on the issuance of the debt and allocated $6.2 million to Paid-in-capital. Debt issuance costs attributable to debt will be amortized to interest expense over the term of the convertible notes.

In October 2020, we issued $575 million of senior convertible notes which accrue interest at 2.875% and mature in November of 2023. If note holders elect to convert, the notes will be converted into our shares of common stock, cash, or a combination of common stock and cash, at our discretion. The initial conversion rate per $1,000 principal amount of the convertible notes is 12.1212 shares of our common stock, which is equivalent to an initial conversion price of approximately $82.50 per share, subject to adjustment in certain circumstances. Prior to August 15, 2023, the convertible notes will be convertible at the option of holders during certain periods, and only under the following conditions:

• during any calendar quarter after December 31, 2020, if the last reported sale price per share of our common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

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

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

• upon the occurrence of specified corporate events.

On or after August 15, 2023, the convertible notes will be convertible at any time until the close of business on the second scheduled trading day immediately preceding their maturity date.

Holders of the convertible notes may require us, upon the occurrence of certain events that constitute a fundamental change under the indenture, to offer to repurchase the convertible notes at a repurchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We allocated $463.0 million of the convertible notes' proceeds, net of debt issue costs, to Long-term debt and $101.9 million to Paid-in-capital on our Consolidated Balance Sheet. We recognized the equity component by ascribing the difference between the proceeds and the fair value of the convertible notes' debt component to Paid-in-capital and the corresponding debt discount will be amortized to interest expense over the term of the convertible notes using the straight-line method, which approximates the effective interest method. The fair value of the convertible notes' debt component was determined utilizing a present value calculation. Debt issuance costs on the convertible notes were allocated to the debt and equity components in proportion to the allocation of proceeds to those components. We incurred total debt issue costs of $10.1 million on the issuance of the debt and allocated $1.8 million to Paid-in-capital. Debt issuance costs attributable to debt will be amortized to interest expense over the term of the convertible notes.

The net carrying value of the liability component of the convertible notes was as follows:

(in thousands)			As of December 31, 2021						As of December 31,2020
Principal			$	1,725,000					1,725,000
Less: Unamortized debt discount and transaction costs			188,764						312,117
			$	1,536,236					$	1,412,883

The interest expense recognized related to the convertible notes was as follows:

(in thousands)			As of December 31, 2021						As of December 31, 2020
Contractual interest expense			$	65,406					30,832
Amortization of debt discount and transaction costs			118,566						52,518
			$	183,972					$	83,350

In October 2020, we took delivery of Silver Moon. To finance the purchase, Silversea Cruise Holding Ltd., our wholly owned subsidiary, borrowed $300 million under a previously committed unsecured term loan facility, guaranteed by us, to pay a portion of the ship's contract price. The loan is due and payable at maturity in June 2028, provided however, that each lender may elect to cause us to repay the outstanding amount of any advances held by such lender on June 2026 upon 90 days advance notice. The loan amortizes semi-annually starting six months after funding, with 1/24th of the outstanding principal payable every six months and the balance payable upon maturity. Interest on the loan currently accrues at LIBOR plus 2.00%.

During 2020, we amended certain export-credit backed ship debt facilities to benefit from a 12-month debt amortization deferral (the "Debt Deferral"). Under the Debt Deferral, deferred debt amortization of approximately $0.9 billion will be paid over a period of 4 years after the 12-month deferral period. The Debt Deferral was offered by certain export credit agencies as a result of the current impact to cruise-line borrowers as a result of COVID-19. During the first quarter of 2021, we further amended our export-credit backed ship debt facilities and deferred an additional $0.8 billion of principal payments due under these export facilities between April 2021 and March 2022. The new amounts being deferred are scheduled to be repaid over a five year period starting in April 2022.

Under certain of our agreements, the contractual interest rate, facility fee and/or export credit agency fee vary with our debt rating. On February 25, 2021, S&P Global downgraded our senior unsecured rating from B+ to B, which had no financial impact, and downgraded our 10.875% senior secured notes due 2023 and our 11.50% senior secured notes due 2025 (collectively, "the "Secured Notes") and our Silversea Notes which were fully repaid in June 2021 with proceeds from the $650 million June Unsecured Notes, from BB to BB-. This downgrade had no impact on the terms of the notes.

Following is a schedule of annual maturities on our total debt net of debt issuance costs and including finance leases, as of December 31, 2021 for each of the next five years (in thousands):

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Year
2022			$	2,243,131
2023			5,376,305
2024			4,026,746
2025			2,293,638
2026			2,533,027
Thereafter			4,617,493
			$	21,090,340

Note 9**. Leases**

Operating leases

Our operating leases primarily relate to preferred berthing arrangements, real estate and shipboard equipment and are included within Operating lease right-of-use assets, and Long-term operating lease liabilities with the current portion of the liability included within Current portion of operating lease liabilities in our consolidated balance sheet as of December 31, 2021. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet. We recognize lease expense for these leases on a straight-line basis over the lease term. Our operating leases include Silver Explorer, operated by Silversea Cruises. The operating lease for Silver Explorer will expire in 2023.

For some of our real estate leases and berthing agreements, we do have the option to extend our current lease term. For those lease agreements with renewal options, the renewal periods for real estate leases range from one to 10 years and the renewal periods for berthing agreements range from one year to 20 years. Generally, we do not include renewal options as a component of our present value calculation for berthing agreements. However, for certain real estate leases, we include them.

In June of 2021, we exercised our option under our operating lease with SMBC Leasing and Finance, Inc (the "Lessor") to purchase Terminal A at PortMiami in July 2021 for the pre-agreed purchase price of $220.0 million. Upon purchase of the terminal lease in July 2021, the underlying asset was recorded as a leasehold improvement within Property and equipment, net. Our July 2021 purchase of the Port of Miami terminal eliminated the residual value guarantee and a requirement under the lease to post $181.1 million of cash collateral.

Additionally, we remeasured the ground lease related to the Terminal A lease based on a reassessed lease term resulting from our purchase option exercise. We determined that the ground lease should remain as an operating lease with adjustments to the operating lease liability and the related right-of-use asset in our Consolidated Balance Sheet.

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate in determining the present value of lease payments. We estimate our incremental borrowing rates based on LIBOR and U.S. Treasury note rates corresponding to lease terms increased by the Company’s credit risk spread and reduced by the estimated impact of collateral. In addition, we have lease agreements with lease and non-lease components, which are generally accounted for separately. However, for berthing agreements, we account for the lease and non-lease components as a single lease component.

Commencing in 2016 when we sold our 51% interest in the Pullmantur brand to Pullmantur Holdings, and continuing through the quarter ended June 30, 2020, we bareboat chartered to Pullmantur Holdings the vessels operated by the Pullmantur brand. On June 22, 2020, Pullmantur S.A., a subsidiary of Pullmantur Holdings, filed for reorganization in Spain, at which time we terminated these bareboat charters. See Note 7. Other Assets for further discussion of Pullmantur Holdings. We accounted for the bareboat charters of these vessels as operating leases for which we were the lessor.

Finance Leases

Silversea Cruises operates the Silver Dawn under a finance lease. We received delivery of the Silver Dawn in November of 2021 under a sale-leaseback agreement with a bargain purchase option at the end of the 15 year lease term. Due to the bargain purchase option at the end of the lease term, whereby Silversea Cruises is reasonably certain of obtaining ownership of the ship, Silver Dawn is accounted for as a finance lease. The lease includes other purchase options beginning in year three, none of which are reasonably certain of being exercised at this time.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The carrying amount of the ship is reported within Property and Equipment, net in our Consolidated Balance Sheet as of December 31, 2021. The ship has a useful life and residual value of 30 years and 15%, respectively. The total aggregate amount of finance lease liabilities recorded for this ship are $283.7 million and are reflected in Current portion of long-term debt and Long-term debt in our Consolidated Balance Sheet as of December 31, 2021.

Silversea Cruises operates Silver Whisper under a finance lease. In May 2021, the finance lease for the Silver Whisper expiring in 2022 was amended to extend its expiration by 12 months and will now expire in 2023, subject to an option to purchase the ship. Additionally, certain scheduled payments have been deferred and are reflected in Long-term debt in our Consolidated Balance Sheet as of December 31, 2021. The total aggregate amount of finance lease liabilities recorded for this ship was $24.1 million and $31.5 million at December 31, 2021 and December 31, 2020, respectively. The lease payments on the Silver Whisper are subject to adjustments based on the LIBOR rate.

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

			As of December 31, 2021			As of December 31, 2020
Lease assets:
Finance lease right-of-use assets, net:
Property and equipment, gross			$	737,444		$	364,910
Accumulated depreciation			(94,729)			(71,288)
Property and equipment, net			642,715			293,622
Operating lease right-of-use assets			542,128			599,985
Total lease assets			$	1,184,843		$	893,607
Lease liabilities:
Finance lease liabilities:
Current portion of debt			$	51,470		$	51,856
Long-term debt			420,805			161,509
Total finance lease liabilities			472,275			213,365
Operating lease liabilities:
Current portion of operating lease liabilities			68,922			102,677
Long-term operating lease liabilities			534,726			563,876
Total operating lease liabilities			603,648			666,553
Total lease liabilities			$	1,075,923		$	879,918

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

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

			Consolidated Statement of Comprehensive Income (Loss) Classification			Year ended December 31, 2021			Year ended December 31, 2020			Year ended December 31, 2019
Lease costs:
Operating lease costs			Commission, transportation and other			$	18,860		$	38,349		$	76,226
Operating lease costs			Other operating expenses			23,261			30,955			27,868
Operating lease costs			Marketing, selling and administrative expenses			18,027			21,971			18,837
Finance lease costs:
Amortization of right-of-use-assets			Depreciation and amortization expenses			16,814			6,901			22,044
Interest on lease liabilities			Interest expense, net of interest capitalized			2,593			4,429			8,355
Total lease costs						$	79,555		$	102,605		$	153,330

In addition, certain of our berth agreements include variable lease costs based on the number of passengers berthed. During the twelve months ended December 31, 2021, we had no variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive income (loss).

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

			As of December 31, 2021			As of December 31, 2020
Weighted average of the remaining lease term
Operating leases			18.18			7.8
Finance leases			23.96			41.2
Weighted average discount rate
Operating leases			6.52		%	4.59		%
Finance leases			5.54		%	6.89		%

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

			Year ended December 31, 2021			Year ended December 31, 2020			Year ended December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases			$	42,759		$	89,179		$	125,307
Operating cash flows from finance leases			$	2,593		$	4,429		$	8,355
Financing cash flows from finance leases			$	23,522		$	19,778		$	32,090

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of December 31, 2021, maturities related to lease liabilities were as follows (in thousands):

Years			Operating Leases			Finance Leases
2022			$	101,445		$	72,076
2023			104,585			52,340
2024			85,463			43,497
2025			80,182			43,089
2026			74,626			37,900
Thereafter			826,226			632,709
Total lease payments			1,272,527			881,611
Less: Interest			(668,879)			(409,336)
Present value of lease liabilities			$	603,648		$	472,275

Operating lease payments do not include any costs related to options to extend lease terms as none are reasonably certain of being exercised.

Right-of-use assets impairments

During the year ended December 31, 2020, we identified that the undiscounted cash flows for certain right-of-use assets were less than their carrying values due to the negative impact of COVID-19. We evaluated these assets pursuant to our long-lived asset impairment test, resulting in an impairment charge of $65.9 million to write down these assets to their estimated fair values during the year ended December 31, 2020. For the year ended December 31, 2021, there were no impairments to right-of-use assets.

Note 10**. Shareholders' Equity**

Common Stock Issued

During March 2021, we issued 16.9 million shares of common stock, par value $0.01 per share, at a price of $91.00 per share. We received net proceeds of $1.5 billion from the sale of our common stock, after deducting the estimated offering expenses payable by us.

During October 2020, we issued 9.6 million shares of common stock, par value $0.01 per share, at a price of $60.00 per share. We received net proceeds of $557.4 million from the sale of our common stock, after deducting the underwriters’ discount and the estimated offering expenses payable by us.

During December 2020, we issued 13.0 million shares of common stock, par value $0.01 per share, at an average price of $76.65 per share. We received net proceeds of $994.6 million after deducting the underwriters’ discount and the estimated offering expenses payable by us. Of the total proceeds, $868.6 million was received as of December 31, 2020 and the remainder was received in January of 2021.

Dividends Declared

During the first quarter of 2020 we declared a cash dividend on our common stock of $0.78 per share which was paid in the second quarter of 2020. During the first quarter of 2020, we also paid a cash dividend on our common stock of $0.78 per share, which was declared during the fourth quarter of 2019.

During the second quarter of 2020, we agreed with certain of our lenders not to pay dividends or engage in common stock repurchases for so long as our debt covenant waivers are in effect. In addition, in the event we declare a dividend or engage in share repurchases, we will need to repay the amounts deferred under our export credit facilities. Accordingly, we did not declare a dividend from the second quarter of 2020. Pursuant to amendments made to these agreements during the first quarter of 2021, the restrictions on paying cash dividends and effectuating share repurchases were extended through and including the third quarter of 2022.

Common Stock Repurchase Program

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

During the quarter ended on June 30, 2020, the 24-month common stock repurchase program authorized by our board of directors on May 9, 2018 had expired. In connection with our debt covenant waivers, we agreed with our lenders not to engage in stock repurchases for so long as our debt covenant waivers are in effect. Effective in the first quarter of 2021, the agreement with our lenders to suspend stock repurchases is extended through the third quarter of 2022.

Note 11**. Stock-Based Employee Compensation**

We currently have awards outstanding under one stock-based compensation plan, our 2008 Equity Plan, which provides for awards to our officers, directors and key employees. The 2008 Equity Plan, as amended, provides for the issuance of up to 14,000,000 shares of our common stock pursuant to grants of (i) incentive and non-qualified stock options, (ii) stock appreciation rights, (iii) stock awards (including time-based and/or performance-based stock awards) and (iv) restricted stock units (including time-based and performance-based restricted stock units). During any calendar year, no one individual (other than non-employee members of our board of directors) may be granted awards of more than 500,000 shares and no non-employee member of our board of directors may be granted awards with a value in excess of $500,000 at the grant date. Options and restricted stock units outstanding as of December 31, 2021, generally vest in equal installments over four years from the date of grant. In addition, performance shares and performance share units generally vest in three years. With certain limited exceptions, awards are forfeited if the recipient ceases to be an employee before the shares vest.

Prior to 2012, our officers received a combination of stock options and restricted stock units. Beginning in 2012, our officers instead receive their long-term incentive awards through a combination of performance share units and restricted stock units. Each performance share unit award is expressed as a target number of performance share units based upon the fair market value of our common stock on the date the award is issued. The actual number of shares underlying each award (not to exceed 200% of the target number of performance share units) will be determined based upon the Company's achievement of a specified performance target range. In 2021, we issued a target number of 296,798 performance share units, which will vest approximately three years following the award issue date. The performance payout of these grants will be based on return on the Company's invested capital ("ROIC"), earnings per share ("EPS") and leverage for the year ended December 31, 2023, as may be adjusted by the Talent and Compensation Committee of our board of directors in early 2024 for events that are outside of management's control.

Beginning in 2016, our senior officers meeting certain minimum age and service criteria receive their long-term incentive awards through a combination of restricted stock awards and restricted stock units. The restricted stock awards are subject to both performance and time-based vesting criteria while the restricted stock units are subject only to time-based vesting criteria. Each restricted stock award is issued in an amount equal to 200% of the target number of shares underlying the award based upon the fair market value of our common stock on the date the award is issued. Declared dividends accrue (but do not get paid) on the restricted stock awards during the vesting period, with the accrued amounts to be paid out following vesting only on the number of shares underlying the award which actually vest based on satisfaction of the performance criteria. The actual number of shares that vest (not to exceed 200% of the shares) will be determined based upon the Company's achievement of a specified performance target range. In 2021, we issued 350,996 restricted stock awards, representing 200% of the target number of shares underlying the award, all of which are considered issued and outstanding from the date of issuance, however; grantees will only retain those shares earned as the result of the Company achieving the performance goals during the measurement period. The performance payout of the 2021 awards will be based on the Company's ROIC, EPS and leverage for the year ended December 31, 2023, as may be adjusted by the Talent and Compensation Committee of our board of directors in early 2024 for events that are outside of management's control.

On January 24, 2018, the Company issued a one-time bonus award for all non-officer employees. These awards vested, in equal installments, over the 3 years following the award issue date. For shoreside eligible employees, awards were issued as equity-settled restricted stock units. As of December 31, 2020, these awards have fully vested.

We also provide an Employee Stock Purchase Plan ("ESPP") to facilitate the purchase by employees of up to 2,800,000 shares of common stock in the aggregate. Offerings to employees are made on a quarterly basis. Subject to certain limitations, the purchase price for each share of common stock is equal to 85% of the average of the market prices of the common stock as reported on the New York Stock Exchange on the first business day of the purchase period and the last business day of each month of the purchase period. During the years ended December 31, 2021, 2020 and 2019, 136,480, 184,936 and 91,586 shares of our common stock were purchased under the ESPP at a weighted-average price of $70.95, $48.08 and $98.20, respectively.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Total compensation expense recognized for employee stock-based compensation for the years ended December 31, 2021, 2020 and 2019 was as follows (in thousands):

			Employee Stock-Based Compensation
Classification of expense			2021						2020						2019
Marketing, selling and administrative expenses			$	63,638					$	39,780					$	75,930
Total compensation expense			$	63,638					$	39,780					$	75,930

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model. The estimated fair value of stock options, less estimated forfeitures, is amortized over the vesting period using the graded-vesting method. We did not issue any stock options during the years ended December 31, 2021, 2020 and 2019.

Stock option activity and information about stock options outstanding are summarized in the following table:

Stock Option Activity			Number of Options						Weighted- Average Exercise Price						Weighted- Average Remaining Contractual Term						Aggregate Intrinsic Value**(1)**
															(years)						(in thousands)
Outstanding at January 1, 2021			49,647						$	46.18					0.11						$	1,355
Granted			—						—						—						—
Exercised			(49,647)						$	46.18					—						—
Canceled			—						$	—					—						—
Outstanding at December 31, 2021			—						$	—					—						$	—
Vested at December 31, 2021			—						$	—					—						$	—
Options Exercisable at December 31, 2021			—						$	—					—						$	—

---

(1)The intrinsic value represents the amount by which the fair value of stock exceeds the option exercise price.

The total intrinsic value of stock options exercised during the years ended December 31, 2021, 2020 and 2019 was $1.3 million, $1.5 million and $8.1 million, respectively. As of December 31, 2021, there was no unrecognized compensation cost, net of estimated forfeitures, related to stock options granted under our stock incentive plan. Additionally, there were no stock options outstanding as of December 31, 2021.

Restricted stock units are converted into shares of common stock upon vesting or, if applicable, are settled on a one-for-one basis. The cost of these awards is determined using the fair value of our common stock on the date of the grant, and compensation expense is recognized over the vesting period. Restricted stock activity is summarized in the following table:

Restricted Stock Units Activity			Number of Awards						Weighted- Average Grant Date Fair Value
Non-vested share units as of January 1, 2021			972,592						$	91.26
Granted			568,107						$	85.08
Vested			(448,469)						$	90.90
Canceled			(97,192)						$	89.73
Non-vested share units as of December 31, 2021			995,038						$	88.19

The weighted-average estimated fair value of restricted stock units granted during the years ended December 31, 2020 and 2019 was $78.51 and $112.13, respectively. The total fair value of shares released on the vesting of restricted stock units during the years ended December 31, 2021, 2020 and 2019 was $36.1 million, $31.2 million, and $30.8 million, respectively. As of December 31, 2021, we had $42.3 million of total unrecognized compensation expense, net of estimated forfeitures, related to restricted stock unit grants, which will be recognized over the weighted-average period of 1.16 years.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Performance share units are converted into shares of common stock upon vesting on a one-for-one basis. We estimate the fair value of each performance share when the grant is authorized and the related service period has commenced. We remeasure the fair value of our performance shares in each subsequent reporting period until the grant date has occurred, which is the date when the performance conditions are satisfied. We recognize compensation cost over the vesting period based on the probability of the service and performance conditions being achieved adjusted for each subsequent fair value measurement until the grant date. If the specified service and performance conditions are not met, compensation expense will not be recognized and any previously recognized compensation expense will be reversed. Performance share units activity is summarized in the following table:

Performance Share Units Activity			Number of Awards						Weighted- Average Grant Date Fair Value
Non-vested share units as of January 1, 2021			267,722						$	109.34
Granted			296,798						$	84.83
Vested			(66,377)						$	123.49
Canceled			(31,791)						$	98.78
Non-vested share units as of December 31, 2021			466,352						$	92.45

The weighted-average estimated fair value of performance share units granted during the years ended December 31, 2020 and 2019 was $95.81 and $87.39 respectively. The total fair value of shares released on the vesting of performance share units during the years ended December 31, 2021, 2020 and 2019 was $5.6 million, $24.6 million and $23.0 million, respectively. As of December 31, 2021, we had $14.8 million of total unrecognized compensation expense, net of estimated forfeitures, related to performance share unit grants, which will be recognized over the weighted-average period of 1.51 year.

The shares underlying our restricted stock awards to age and service eligible senior officers are issued as of the grant date in an amount equal to 200% of the target number of shares. Following the vesting date, the restrictions will lift with respect to the number of shares for which the performance criteria was met and any excess shares will be canceled. Dividends will accrue on the issued restricted shares during the vesting period, but will not be paid to the recipient until the awards vest and the final number of shares underlying the award is determined, at which point, the dividends will be paid in cash only on the earned shares. We estimate the fair value of each restricted stock award when the grant is authorized and the related service period has commenced. We remeasure the fair value of these restricted stock awards in each subsequent reporting period until the grant date has occurred, which is the date when the performance conditions are satisfied. We recognize compensation cost over the vesting period based on the probability of the service and performance conditions being achieved adjusted for each subsequent fair value measurement until the grant date. If the specified service and performance conditions are not met, compensation expense will not be recognized, any previously recognized compensation expense will be reversed, and any unearned shares will be returned to the Company. Restricted stock awards activity is summarized in the following table:

Restricted Stock Awards Activity			Number of Awards						Weighted- Average Grant Date Fair Value
Non-vested share units as of January 1, 2021			575,432						$	116.83
Granted			350,996						$	84.83
Vested			(60,011)						$	129.23
Canceled			(69,205)						$	123.33
Non-vested share units as of December 31, 2021			797,212						$	101.25

The weighted-average estimated fair value of restricted stock awards granted during the years ended December 31, 2020 and 2019 was $110.21 and $118.08, respectively. As of December 31, 2021, we had $3.3 million of total unrecognized compensation expense, net of estimated forfeitures, related to restricted stock award grants, which will be recognized over the weighted-average period of 1.36 years.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 12**. (Loss) Earnings Per Share**

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

			Year Ended December 31,
			2021						2020						2019
Net (Loss) Income attributable to Royal Caribbean Cruises Ltd. for basic and diluted (loss) earnings per share			$	(5,260,499)					$	(5,797,462)					$	1,878,887
Weighted-average common shares outstanding			251,812						214,335						209,405
Dilutive effect of stock-based awards			—						—						525
Diluted weighted-average shares outstanding			251,812						214,335						209,930
Basic (loss) earnings per share			$	(20.89)					$	(27.05)					$	8.97
Diluted (loss) earnings per share			$	(20.89)					$	(27.05)					$	8.95

There were approximately 504,250 and 282,118 antidilutive shares for the years ended December 31, 2021 and 2020, respectively. There were no antidilutive shares for the year ended December 31, 2019.

While the criteria for conversion of our convertible notes has not been met, the shares that would be issued upon conversion of the notes would be antidilutive for the year ended December 31, 2021.

Note 13**. Retirement Plan**

We maintain a defined contribution plan covering shoreside employees. Effective January 1, 2016, we commenced annual, non-elective contributions to the plan on behalf of all eligible participants equal to 3% of participants' eligible earnings. Additional annual contributions to the plan are discretionary and are based on fixed percentages of participants' salaries and years of service, not to exceed certain maximums. Contribution expenses were $17.9 million, $18.4 million and $21.2 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Note 14**. Income Taxes**

We are subject to corporate income taxes in countries where we have operations or subsidiaries. We and the majority of our ship-operating and vessel-owning subsidiaries are currently exempt from U.S. corporate income tax on U.S. source income from the international operation of ships pursuant to Section 883 of the Internal Revenue Code. Regulations under Section 883 have limited the activities that are considered the international operation of a ship or incidental thereto. Accordingly, our provision for U.S. federal and state income taxes includes taxes on certain activities not considered incidental to the international operation of our ships.

Additionally, one of our ship-operating subsidiaries is subject to tax under the tonnage tax regime of the United Kingdom. Under this regime, income from qualifying activities is subject to corporate income tax, but the tax is computed by reference to the tonnage of the ship or ships registered under the relevant provisions of the tax regimes (the "relevant shipping profits"), which replaces the regular taxable income base. Income from activities not considered qualifying activities, which we do not consider significant, remains subject to United-Kingdom corporate income tax.

For the year ended December 31, 2021, we had an income tax benefit of approximately $45.2 million primarily driven by items not qualifying under Section 883. For the year ended December 31, 2020 we had an income tax benefit of approximately $15.0 million and for year ended December 31, 2019 income tax expense was $32.6 million, for items not qualifying under Section 883, tonnage tax and income taxes for the remainder of our subsidiaries. Income taxes are recorded within Other income (expense). In addition, all interest expense and penalties related to income tax liabilities are classified as income tax expense within Other income (expense).

For a majority of our subsidiaries, we do not expect to incur income taxes on future distributions of undistributed earnings. Accordingly, no deferred income taxes have been provided for the distribution of these earnings. Where we do expect to incur income taxes on future distributions of undistributed earnings, we have provided for deferred taxes, which we do not consider significant to our operations.

As of December 31, 2021, the Company had deferred tax assets for U.S. and foreign net operating losses (“NOLs”) of approximately $56.4 million. We have provided a valuation allowance for approximately $20.8 million of these NOLs. $11.6 million of the NOLs are subject to expire between 2022 and 2033.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Our deferred tax assets and deferred tax liabilities and corresponding valuation allowances related to our operations were not material as of December 31, 2021 and 2020.

We regularly review deferred tax assets for recoverability based on our history of earnings, expectations of future earnings, and tax planning strategies. Realization of deferred tax assets ultimately depends on the existence of sufficient taxable income to support the amount of deferred taxes. A valuation allowance is recorded in those circumstances in which we conclude it is not more-likely-than-not we will recover the deferred tax assets prior to their expiration.

Note 15**. Changes in Accumulated Other Comprehensive Income (Loss)**

The following table presents the changes in accumulated other comprehensive loss by component for the years ended December 31, 2021, 2020 and 2019 (in thousands):

						Changes related to cash flow derivative hedges						Changes in defined benefit plans						Foreign currency translation adjustments						Accumulated other comprehensive (loss) income
Accumulated comprehensive loss at January 1, 2019						$	(537,216)					$	(26,023)					$	(64,495)					$	(627,734)
Other comprehensive income (loss) before reclassifications						(146,108)						(20,314)						869						(165,553)
Amounts reclassified from accumulated other comprehensive loss						(5,205)						779						—						(4,426)
Net current-period other comprehensive income (loss)						(151,313)						(19,535)						869						(169,979)
Accumulated comprehensive loss at January 1, 2020						(688,529)						(45,558)						(63,626)						(797,713)
Other comprehensive income (loss) before reclassifications						(41,109)						(22,051)						(28,698)						(91,858)
Amounts reclassified from accumulated other comprehensive loss						79,119						2,067						69,044						150,230
Net current-period other comprehensive (loss) income						38,010						(19,984)						40,346						58,372
Accumulated comprehensive loss at January 1, 2021						(650,519)						(65,542)						(23,280)						(739,341)
Other comprehensive (loss) income before reclassifications						(16,667)						4,790						15,703						3,826
Amounts reclassified from accumulated other comprehensive loss						20,713						3,917						—						24,630
Net current-period other comprehensive (loss) income						4,046						8,707						15,703						28,456
Accumulated comprehensive loss at December 31, 2021						$	(646,473)					$	(56,835)					$	(7,577)					$	(710,885)

The following table presents reclassifications out of accumulated other comprehensive loss for the years ended December 31, 2021, 2020 and 2019 (in thousands):

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

						Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into (Loss) Income
Details about Accumulated Other Comprehensive Loss Components						Year Ended December 31, 2021						Year Ended December 31, 2020						Year Ended December 31, 2019						Affected Line Item in Statements of Comprehensive Income (Loss)
Gain (loss) on cash flow derivative hedges:
Interest rate swaps						(43,185)						(25,267)						(4,289)						Interest expense, net of interest capitalized
Foreign currency forward contracts						(15,359)						(14,679)						(14,063)						Depreciation and amortization expenses
Foreign currency forward contracts						(2,797)						(7,315)						(5,080)						Other income (expense)
Fuel swaps						(409)						3,549						(1,292)						Other income (expense)
Fuel swaps						41,037						(35,407)						29,929						Fuel
						(20,713)						(79,119)						5,205
Amortization of defined benefit plans:
Actuarial loss						(3,917)						(2,067)						(779)						Payroll and related
						(3,917)						(2,067)						(779)
Release of foreign cumulative translation due to sale or liquidation of businesses:
Foreign cumulative translation						—						(69,044)						—						Other operating
Total reclassifications for the period						$	(24,630)					$	(150,230)					$	4,426

During the year ended December 31, 2020, a $69.0 million net loss was recorded within Other expense in our consolidated statements of comprehensive (loss) income, consisting of a $92.6 million loss resulting from the recognition of a currency translation adjustment, partially offset by the recognition of a deferred $23.6 million foreign exchange gain related to the Pullmantur net investment hedge. In connection with the Pullmantur reorganization in 2020, we no longer have significant involvement in the Pullmantur operations and these amounts previously deferred in Accumulated other comprehensive loss were recognized in earnings.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 16. Fair Value Measurements and Derivative Instruments

Fair Value Measurements

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

			Fair Value Measurements at December 31, 2021																														Fair Value Measurements at December 31, 2020
Description			Total Carrying Amount						Total Fair Value						Level 1**(1)**						Level 2**(2)**						Level 3**(3)**						Total Carrying Amount						Total Fair Value						Level 1**(1)**						Level 2**(2)**						Level 3**(3)**
Assets:
Cash and cash equivalents(4)			$	2,701,770					$	2,701,770					$	2,701,770					—						—						$	3,684,474					$	3,684,474					$	3,684,474					—						—
Total Assets			$	2,701,770					$	2,701,770					$	2,701,770					$	—					$	—					$	3,684,474					$	3,684,474					$	3,684,474					$	—					$	—
Liabilities:
Long-term debt (including current portion of long-term debt)(5)			$	20,618,065					$	22,376,480					—						$	22,376,480					—						$	18,706,359					$	20,981,040					—						$	20,981,040					—
Total Liabilities			$	20,618,065					$	22,376,480					$	—					$	22,376,480					$	—					$	18,706,359					$	20,981,040					$	—					$	20,981,040					$	—

---

(1)Inputs based on quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Valuation of these items does not entail a significant amount of judgment.

(2)Inputs other than quoted prices included within Level 1 that are observable for the liability, either directly or indirectly. For unsecured revolving credit facilities and unsecured term loans, fair value is determined utilizing the income valuation approach. This valuation model takes into account the contract terms of our debt such as the debt maturity and the interest rate on the debt. The valuation model also takes into account the creditworthiness of the Company.

(3)Inputs that are unobservable. The Company did not use any Level 3 inputs as of December 31, 2021 and 2020.

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

(5)Consists of unsecured revolving credit facilities, senior notes, term loans and convertible notes. These amounts do not include our finance lease obligations or commercial paper.

Other Financial Instruments

The carrying amounts of accounts receivable, accounts payable, accrued interest, accrued expenses and commercial paper approximate fair value as of December 31, 2021 and 2020.

Assets and liabilities that are recorded at fair value have been categorized based upon the fair value hierarchy. The following table presents information about the Company's financial instruments recorded at fair value on a recurring basis (in thousands):

			Fair Value Measurements at December 31, 2021																								Fair Value Measurements at December 31, 2020
Description			Total Fair Value						Level 1**(1)**						Level 2**(2)**						Level 3**(3)**						Total Fair Value						Level 1**(1)**						Level 2**(2)**						Level 3**(3)**
Assets:
Derivative financial instruments(4)			$	69,808					$	—					$	69,808					$	—					$	108,539					$	—					$	108,539					$	—
Total Assets			$	69,808					$	—					$	69,808					$	—					$	108,539					$	—					$	108,539					$	—
Liabilities:
Derivative financial instruments(5)			$	200,541					$	—					$	200,541					$	—					$	259,705					$	—					$	259,705					$	—
Total Liabilities			$	200,541					$	—					$	200,541					$	—					$	259,705					$	—					$	259,705					$	—

---

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ROYAL CARIBBEAN CRUISES LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(1)Inputs based on quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Valuation of these items does not entail a significant amount of judgment.

(2)Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. For foreign currency forward contracts, interest rate swaps and fuel swaps, fair value is derived using valuation models that utilize the income valuation approach. These valuation models take into account the contract terms, such as maturity as well as other inputs, such as foreign exchange rates and curves, fuel types, fuel curves and interest rate yield curves. Derivative instrument fair values take into account the creditworthiness of the counterparty and the Company.

(3)Inputs that are unobservable. No Level 3 inputs were used in fair value measurements of Other financial instruments as of December 31, 2021 and December 31, 2020

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

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

The reported fair values are based on a variety of factors and assumptions. Accordingly, the fair values may not represent actual values of the financial instruments that could have been realized as of December 31, 2021 or 2020, or that will be realized in the future, and do not include expenses that could be incurred in an actual sale or settlement.

Nonfinancial Instruments Recorded at Fair Value on a Nonrecurring Basis

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

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

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

			Fair Value Measurement at December 31, 2020
Description			Total Carrying Amount			Total Fair Value			Level 3			Total Impairment for the year ended December 31, 2020
Silversea Goodwill(1)			508,578			508,578			508,578			576,208
Indefinite-life intangible asset(2)			318,700			318,700			318,700			30,800
Long-lived assets(3)			577,193			577,193			577,193			727,063
Right-of-use assets(4)			67,265			67,265			67,265			65,909
Equity-method investments(5)			—			—			—			39,735
Total			1,471,736			1,471,736			1,471,736			1,439,715

___________________________________________________________________________________________________

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(1) We estimated the fair value of the Silversea Cruises reporting unit using a probability-weighted discounted cash flow model in combination with a market-based valuation approach. The principal assumptions used in the discounted cash flow model were (i) forecasted net revenues, primarily the timing of returning to normalized operations, occupancy rates from existing and expected ship deliveries, and terminal growth rate; and (ii) weighted average cost of capital (i.e., discount rate). The probability-weighted discounted cash flow model used our most current projected operating results for the upcoming fiscal year as a base. To that base we added future years’ cash flows through 2030 assuming multiple revenue and expense scenarios that reflect the impact of different global economic environments for this period on the Silversea Cruises' reporting unit. We assigned a probability to each revenue and expense scenario. We discounted the projected cash flows using rates specific to the Silversea Cruises' reporting unit based on its weighted-average cost of capital, which was determined to be 12.75%. The fair value of Silversea Cruises’ goodwill was estimated as of March 31, 2020, the date the asset was last impaired.

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

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

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

(5) We estimated the fair value of our other than temporarily impaired equity-method investments using a discounted cash flow model. A significant input in performing the fair value assessments for these assets was forecasted operating results for these investments. The fair value of these equity-method investments was estimated as of March 31, 2020, the date these assets were last impaired. For further information on our equity method investments, refer to Note 7*. Other Assets.*

Master Netting Agreements

We have master International Swaps and Derivatives Association (“ISDA”) agreements in place with our derivative instrument counterparties. These ISDA agreements generally provide for final close out netting with our counterparties for all positions in the case of default or termination of the ISDA agreement. We have determined that our ISDA agreements provide us with rights of setoff on the fair value of derivative instruments in a gain position and those in a loss position with the same counterparty. We have elected not to offset such derivative instrument fair values in our consolidated balance sheets.

See Credit Related Contingent Features for further discussion on contingent collateral requirements for our derivative instruments.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

						Gross Amounts not Offset in the Consolidated Balance Sheet that are Subject to Master Netting Agreements
						As of December 31, 2021																								As of December 31, 2020
						Gross Amount of Derivative Assets Presented in the Consolidated Balance Sheet						Gross Amount of Eligible Offsetting Recognized Derivative Liabilities						Cash Collateral Received						Net Amount of Derivative Assets						Gross Amount of Derivative Assets Presented in the Consolidated Balance Sheet						Gross Amount of Eligible Offsetting Recognized Derivative Liabilities						Cash Collateral Received						Net Amount of Derivative Assets
Derivatives subject to master netting agreements						$	69,808					$	(67,995)					$	—					$	1,813					$	108,539					$	(80,743)					$	—					$	27,796
Total						$	69,808					$	(67,995)					$	—					$	1,813					$	108,539					$	(80,743)					$	—					$	27,796

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

						Gross Amounts not Offset in the Consolidated Balance Sheet that are Subject to Master Netting Agreements
						As of December 31, 2021																								As of December 31, 2020
						Gross Amount of Derivative Liabilities Presented in the Consolidated Balance Sheet						Gross Amount of Eligible Offsetting Recognized Derivative Assets						Cash Collateral Pledged						Net Amount of Derivative Liabilities						Gross Amount of Derivative Liabilities Presented in the Consolidated Balance Sheet						Gross Amount of Eligible Offsetting Recognized Derivative Assets						Cash Collateral Pledged						Net Amount of Derivative Liabilities
Derivatives subject to master netting agreements						$	(200,541)					$	67,995					$	44,411					$	(88,135)					$	(259,705)					$	80,743					$	57,273					$	(121,689)
Total						$	(200,541)					$	67,995					$	44,411					$	(88,135)					$	(259,705)					$	80,743					$	57,273					$	(121,689)

Concentrations of Credit Risk

We monitor our credit risk associated with financial and other institutions with which we conduct significant business and, to minimize these risks, we select counterparties with credit risks acceptable to us and we seek to limit our exposure to an individual counterparty. Credit risk, including but not limited to counterparty nonperformance under derivative instruments, our credit facilities and new ship progress payment guarantees, is not considered significant, as we primarily conduct business with large, well-established financial institutions, insurance companies and export credit agencies many of which we have long-term relationships with and which have credit risks acceptable to us or where the credit risk is spread out among a large number of counterparties. As of December 31, 2021, we had counterparty credit risk exposure under our derivative instruments of $1.9 million, which was limited to the cost of replacing the contracts in the event of non-performance by the counterparties to the contracts, the majority of which are currently our lending banks. We do not anticipate nonperformance by any of our significant counterparties. In addition, we have established guidelines we follow regarding credit ratings and instrument maturities to maintain safety and liquidity. We do not normally require collateral or other security to support credit relationships; however, in certain circumstances this option is available to us.

Derivative Instruments

We are exposed to market risk attributable to changes in interest rates, foreign currency exchange rates and fuel prices. We try to mitigate these risks through a combination of our normal operating and financing activities and through the use of derivative financial instruments pursuant to our hedging practices and policies. The financial impact of these hedging instruments is primarily offset by corresponding changes in the underlying exposures being hedged. We achieve this by closely matching the notional amount, term and conditions of the derivative instrument with the underlying risk being hedged. Although certain of our derivative

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

financial instruments do not qualify or are not accounted for under hedge accounting, our objective is not to hold or issue derivative financial instruments for trading or other speculative purposes.

We enter into various forward, swap and option contracts to manage our interest rate exposure and to limit our exposure to fluctuations in foreign currency exchange rates and fuel prices. These instruments are recorded on the balance sheet at their fair value and the vast majority are designated as hedges. We also use non-derivative financial instruments designated as hedges of our net investment in our foreign operations and investments.

At inception of the hedge relationship, a derivative instrument that hedges the exposure to changes in the fair value of a firm commitment or a recognized asset or liability is designated as a fair value hedge. A derivative instrument that hedges a forecasted transaction or the variability of cash flows related to a recognized asset or liability is designated as a cash flow hedge.

Changes in the fair value of derivatives that are designated as fair value hedges are offset against changes in the fair value of the underlying hedged assets, liabilities or firm commitments. Gains and losses on derivatives that are designated as cash flow hedges are recorded as a component of Accumulated other comprehensive loss until the underlying hedged transactions are recognized in earnings. The foreign currency transaction gain or loss of our non-derivative financial instruments and the changes in the fair value of derivatives designated as hedges of our net investment in foreign operations and investments are recognized as a component of Accumulated other comprehensive loss along with the associated foreign currency translation adjustment of the foreign operation or investment. In certain hedges of our net investment in foreign operations and investments, we exclude forward points from the assessment of hedge effectiveness and we amortize the related amounts directly into earnings.

On an ongoing basis, we assess whether derivatives used in hedging transactions are "highly effective" in offsetting changes in the fair value or cash flow of hedged items. For our net investment hedges, we use the dollar offset method to measure effectiveness. For all other hedging programs, we use the long-haul method to assess hedge effectiveness using regression analysis for each hedge relationship. The methodology for assessing hedge effectiveness is applied on a consistent basis for each one of our hedging programs (i.e., interest rate, foreign currency ship construction, foreign currency net investment and fuel). For our regression analyses, we use an observation period of up to three years, utilizing market data relevant to the hedge horizon of each hedge relationship. High effectiveness is achieved when a statistically valid relationship reflects a high degree of offset and correlation between the changes in the fair values of the derivative instrument and the hedged item. If it is determined that a derivative is not highly effective as a hedge or hedge accounting is discontinued, any change in fair value of the derivative since the last date at which it was determined to be effective is recognized in earnings.

Cash flows from derivative instruments that are designated as fair value or cash flow hedges are classified in the same category as the cash flows from the underlying hedged items. In the event that hedge accounting is discontinued, cash flows subsequent to the date of discontinuance are classified within investing activities. Cash flows from derivative instruments not designated as hedging instruments are classified as investing activities.

We consider the classification of the underlying hedged item’s cash flows in determining the classification for the designated derivative instrument’s cash flows. We classify derivative instrument cash flows from hedges of benchmark interest rate or hedges of fuel expense as operating activities due to the nature of the hedged item. Likewise, we classify derivative instrument cash flows from hedges of foreign currency risk on our newbuild ship payments as investing activities.

Interest Rate Risk

Our exposure to market risk for changes in interest rates primarily relates to our debt obligations including future interest payments. At December 31, 2021 and 2020, approximately 65.7% and 64.5%, respectively, of our debt was effectively fixed. We use interest rate swap agreements to modify our exposure to interest rate movements and to manage our interest expense.

Market risk associated with our fixed rate debt is the potential increase in fair value resulting from a decrease in interest rates. We use interest rate swap agreements that effectively convert a portion of our fixed-rate debt to a floating-rate basis to manage this risk. At December 31, 2021, we maintained interest rate swap agreements on the following fixed-rate debt instruments:

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

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

These interest rate swap agreements are accounted for as fair value hedges.

Market risk associated with our long-term floating rate debt is the potential increase in interest expense from an increase in interest rates. We use interest rate swap agreements that effectively convert a portion of our floating-rate debt to a fixed-rate basis to manage this risk. At December 31, 2021, we maintained interest rate swap agreements on the following floating-rate debt instruments:

Debt Instrument			Swap Notional as of December 31, 2021 (In thousands)			Maturity			Debt Floating Rate						All-in Swap Fixed Rate
Celebrity Reflection term loan			$	163,625		October 2024			LIBOR plus			0.40%			2.85%
Quantum of the Seas term loan			306,250			October 2026			LIBOR plus			1.30%			3.74%
Anthem of the Seas term loan			332,292			April 2027			LIBOR plus			1.30%			3.86%
Ovation of the Seas term loan			449,583			April 2028			LIBOR plus			1.00%			3.16%
Harmony of the Seas term loan (1)			427,142			May 2028			EURIBOR plus			1.15%			2.26%
Odyssey of the Seas term loan(2)			421,667			October 2032			LIBOR plus			0.96%			3.21%
Odyssey of the Seas term loan*(2)*			191,667			October 2032			LIBOR plus			0.96%			2.84%
			$	2,292,226

---

(1) Interest rate swap agreements hedging the Euro-denominated term loan for Harmony of the Seas include EURIBOR zero-floors matching the hedged debt EURIBOR zero-floor. Amount presented is based on the exchange rate as of December 31, 2021.

(2) Interest rate swap agreements hedging the term loan of Odyssey of the Seas include LIBOR zero-floors matching the debt LIBOR zero-floor. The effective dates of the $421.7 million and $191.7 million interest rate swap agreements are October 2020 and October 2022, respectively. The unsecured term loan for the financing of Odyssey of the Seas was drawn on March 2021.

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

The notional amount of interest rate swap agreements related to outstanding debt and our current unfunded financing arrangements as of December 31, 2021 and 2020 was $2.9 billion and $3.4 billion, respectively.

Foreign Currency Exchange Rate Risk

Derivative Instruments

Our primary exposure to foreign currency exchange rate risk relates to our ship construction contracts denominated in Euros, our foreign currency denominated debt and our international business operations. We enter into foreign currency forward contracts to manage portions of the exposure to movements in foreign currency exchange rates. As of December 31, 2021, the aggregate cost of our ships on order, was $12.4 billion, of which we had deposited $800.2 million as of such date. These amounts do not include any ships placed on order that are contingent upon completion of conditions precedent and/or financing, any ships on order by our Partner Brands. Refer to Note 17. Commitments and Contingencies, for further information on our ships on order. At December 31, 2021 and 2020, approximately 59.0% and 66.3%, respectively, of the aggregate cost of the ships under construction was exposed to fluctuations in the Euro exchange rate. Our foreign currency forward contract agreements are accounted for as cash flow or net investment hedges depending on the designation of the related hedge.

On a regular basis, we enter into foreign currency forward contracts and, from time to time, we utilize cross-currency swap agreements and collar options to minimize the volatility resulting from the remeasurement of net monetary assets and liabilities denominated in a currency other than our functional currency or the functional currencies of our foreign subsidiaries. During the year ended December 31, 2021, we maintained an average of approximately $483.2 million of these foreign currency forward contracts. These instruments are not designated as hedging instruments. For the years ended December 31, 2021, 2020 and 2019, changes in the fair value of the foreign currency forward contracts resulted in gains (losses) of $(30.9) million, $(19.0) million and $1.4 million, respectively, which offset gains (losses) arising from the remeasurement of monetary assets and liabilities denominated in foreign currencies in those same years of $24.3 million, $(1.5) million and $0.4 million, respectively. These amounts were recognized in earnings within Other income (expense) in our consolidated statements of comprehensive income (loss).

We consider our investments in our foreign operations to be denominated in relatively stable currencies and of a long-term nature. As of December 31, 2021, we maintained a foreign currency forward contract and designated it as a hedge of a portion of our

F-49

ROYAL CARIBBEAN CRUISES LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

net investments in TUI Cruises of €245.0 million, or approximately $278.6 million based on the exchange rate at December 31, 2021. This forward currency contract matures in April 2022.

The notional amount of outstanding foreign exchange contracts, excluding the forward contracts entered into to minimize remeasurement volatility, as of December 31, 2021 and 2020 was $3.4 billion and $3.1 billion, respectively.

Non-Derivative Instruments

We also address the exposure of our investments in foreign operations by denominating a portion of our debt in our subsidiaries' and investments' functional currencies and designating it as a hedge of these subsidiaries and investments. We had designated debt as a hedge of our net investments primarily in TUI Cruises of €97.0 million, or approximately $110.3 million, as of December 31, 2021. As of December 31, 2020, we had designated debt as a hedge of our net investments primarily in TUI Cruises of €215.0 million, or approximately $263.0 million.

Fuel Price Risk

Our exposure to market risk for changes in fuel prices relates primarily to the consumption of fuel on our ships. We use fuel swap agreements to mitigate the financial impact of fluctuations in fuel prices.

Our fuel swap agreements are generally accounted for as cash flow hedges. In the case that our hedged forecasted fuel consumption is not probable of occurring, hedge accounting will be discontinued and the related accumulated other comprehensive gain or loss will be reclassified to Other income (expense) immediately. For hedged forecasted fuel consumption that remains possible of occurring, hedge accounting will be discontinued and the related accumulated other comprehensive gain or loss will remain in accumulated other comprehensive gain or loss until the underlying hedged transactions are recognized in earnings or the related hedged forecasted fuel consumption is deemed probable of not occurring.

The prior suspension of our cruise operations due to the COVID-19 pandemic and our gradual resumption of cruise operations has resulted in reductions to our forecasted fuel purchases. During the year ended December 31, 2021, we discontinued cash flow hedge accounting on 0.2 million metric tons of our fuel swap agreements maturing in 2021 and 2022, which resulted in the reclassification of a net $0.7 million loss from Accumulated other comprehensive loss to Other income (expense). During the year ended December 31, 2020, we discontinued cash flow hedge accounting on 0.6 million metric tons of our fuel swap agreements maturing in 2020 and 2021, which resulted in the reclassification of a net $104.4 million loss from Accumulated other comprehensive loss to Other income (expense). Changes in the fair value of fuel swaps for which cash flow hedge accounting was discontinued are currently recognized in Other income (expense) each reporting period through the maturity dates of the fuel swaps.

Future suspension of our operations or modifications to our itineraries may affect our expected forecasted fuel purchases which could result in further discontinuance of fuel swap cash flow hedge accounting and the reclassification of deferred gains or losses from Accumulated other comprehensive loss into earnings*.* Refer to Risk Factors in Part 1, Item 1A. for further discussion on risks related to the COVID-19 pandemic.

At December 31, 2021, we have hedged the variability in future cash flows for certain forecasted fuel transactions occurring through 2023. As of December 31, 2021 and December 31, 2020, we had the following outstanding fuel swap agreements

			Fuel Swap Agreements
			As of December 31, 2021						As of December 31, 2020
			(metric tons)
Designated as hedges:
2022			821,850						389,650
2023			249,050						82,400

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

			Fuel Swap Agreements
			As of December 31, 2021						As of December 31, 2020
			(% hedged)
Designated hedges as a % of projected fuel purchases:
2022			54		%				23		%
2023			15		%				5		%

			Fuel Swap Agreements
			As of December 31, 2021						As of December 31, 2020
			(metric tons)
Not designated as hedges:
2022(1)			231,900						14,650

(1) As of December 31, 2021, 115,950 metric tons relate to fuel swap agreements with discontinued hedge accounting, in which we effectively pay fixed prices for our fuel purchases and receive floating prices from the counterparty. The remaining 115,950 tons relate to fuel swap agreements that were not designated as hedges since inception, in which we effectively pay floating prices for our fuel purchases and receive fixed prices from the counterparty.

At December 31, 2021 there was $23.8 million of estimated unrealized net gain associated with our cash flow hedges pertaining to fuel swap agreements to be reclassified to earnings from Accumulated other comprehensive loss within the next twelve months when compared to $13.1 million of estimated unrealized net loss at December 31, 2020. Reclassification is expected to occur as the result of fuel consumption associated with our hedged forecasted fuel purchases.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

			Fair Value of Derivative Instruments
			Asset Derivatives																		Liability Derivatives
			Balance Sheet Location						As of December 31, 2021						As of December 31, 2020						Balance Sheet Location						As of December 31, 2021						As of December 31, 2020
						Fair Value						Fair Value									Fair Value						Fair Value
Derivatives designated as hedging instruments under ASC 815-20**(1)**
Interest rate swaps			Other assets						$	—					$	17,271					Other long-term liabilities						$	62,080					$	144,653
Interest rate swaps			Derivative financial instruments						6,478						261						Derivative Financial Instruments						—						—
Foreign currency forward contracts			Derivative financial instruments						7,357						63,894						Derivative financial instruments						116,027						13,294
Foreign currency forward contracts			Other assets						2,070						20,836						Other long-term liabilities						8,813						7,306
Fuel swaps			Derivative financial instruments						31,919						5,093						Derivative financial instruments						7,944						25,203
Fuel swaps			Other assets						13,452						350						Other long-term liabilities						1,202						50,117
Total derivatives designated as hedging instruments under ASC 815-20									61,276						107,705												196,066						240,573
Derivatives not designated as hedging instruments under ASC 815-20
Foreign currency forward contracts			Derivative financial Instruments						—						—						Derivative financial instruments						—						160
Foreign currency forward contracts			Other assets						—						—						Other long-term liabilities						—						—
Fuel swaps			Derivative financial instruments						8,430						834						Derivative financial instruments						3,264						18,028
Fuel swaps			Other assets						102						—						Other long-term liabilities						1,211						944
Total derivatives not designated as hedging instruments under ASC 815-20									8,532						834												4,475						19,132
Total derivatives									$	69,808					$	108,539											$	200,541					$	259,705

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(1)Accounting Standard Codification 815-20 "Derivatives and Hedging."

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The location and amount of gain or (loss) recognized in income on fair value and cash flow hedging relationships were as follows (in thousands)

																		Year Ended December 31, 2021																														Year Ended December 31, 2020
																		Fuel Expense						Depreciation and Amortization Expenses						Interest Income (Expense)						Other Income (Expense)												Fuel Expense						Depreciation and Amortization Expenses						Interest Income (Expense)						Other Income (Expense)
Total amounts of income and expense line items presented in the statement of financial performance in which the effects of fair value or cash flow hedges are recorded																		$385,322						$1,292,878						$(1,274,980)						$20,284												$371,015						$1,279,254						$(823,202)						$(137,085)
The effects of fair value and cash flow hedging:
			Gain or (loss) on fair value hedging relationships in Subtopic 815-20
						Interest contracts
									Hedged items									n/a						n/a						$11,083						—												n/a						n/a						$(18,813)						$—
									Derivatives designated as hedging instruments									n/a						n/a						$(1,349)						—												n/a						n/a						$23,819						$—
			Gain or (loss) on cash flow hedging relationships in Subtopic 815-20
						Interest contracts
									Amount of gain or (loss) reclassified from accumulated other comprehensive loss into income									n/a						n/a						$(43,185)						n/a												n/a						n/a						$(25,267)						n/a
						Commodity contracts
									Amount of gain or (loss) reclassified from accumulated other comprehensive loss into income									$41,037						n/a						n/a						$(409)												$(35,407)						n/a						n/a						$3,549
						Foreign exchange contracts
									Amount of gain or (loss) reclassified from accumulated other comprehensive loss into income									n/a						$(15,359)						n/a						$(2,797)												n/a						$(14,679)						n/a						$(7,315)

												Year Ended December 31, 2019
												Fuel Expense						Depreciation and Amortization Expenses						Interest Income (Expense)						Other Income (Expense)
Total amounts of income and expense line items presented in the statement of financial performance in which the effects of fair value or cash flow hedges are recorded												$697,962						$1,245,942						$(381,568)						$(24,513)
The effects of fair value and cash flow hedging:
			Gain or (loss) on fair value hedging relationships in Subtopic 815-20
						Interest contracts
									Hedged items			n/a						n/a						$(23,464)						$—
									Derivatives designated as hedging instruments			n/a						n/a						$16,607						$—
			Gain or (loss) on cash flow hedging relationships in Subtopic 815-20
						Interest contracts
									Amount of gain or (loss) reclassified from accumulated other comprehensive loss into income			n/a						n/a						$(4,289)						n/a
						Commodity contracts
									Amount of gain or (loss) reclassified from accumulated other comprehensive loss into income			$29,929						n/a						n/a						$(1,292)
						Foreign exchange contracts
									Amount of gain or (loss) reclassified from accumulated other comprehensive loss into income			n/a						$(14,063)						n/a						$(5,080)

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The carrying value and line item caption of non-derivative instruments designated as hedging instruments recorded within our consolidated balance sheets were as follows (in thousands):

												Carrying Value
Non-derivative instrument designated as hedging instrument under ASC 815-20						Balance Sheet Location						As of December 31, 2021						As of December 31, 2020
Foreign currency debt						Current portion of long-term debt						$	75,518					$	43,696
Foreign currency debt						Long-term debt						34,795						219,335
												$	110,313					$	263,031

The effect of derivative instruments qualifying and designated as hedging instruments and the related hedged items in fair value hedges on the consolidated statements of comprehensive income (loss) was as follows (in thousands):

						Location of Gain (Loss) Recognized in Income on Derivative and Hedged Item						Amount of Gain (Loss) Recognized in Income on Derivative																		Amount of Gain (Loss) Recognized in Income on Hedged Item
Derivatives and related Hedged Items under ASC 815-20 Fair Value Hedging Relationships						Year Ended December 31, 2021						Year Ended December 31, 2020						Year Ended December 31, 2019						Year Ended December 31, 2021						Year Ended December 31, 2020						Year Ended December 31, 2019
Interest rate swaps						Interest expense (income), net of interest capitalized						$	(1,349)					$	23,819					$	16,607					$	11,083					$	(18,813)					$	(23,464)
												$	(1,349)					$	23,819					$	16,607					$	11,083					$	(18,813)					$	(23,464)

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

Line Item in the Statement of Financial Position Where the Hedged Item is Included						Carrying Amount of the Hedged Liabilities												Cumulative amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Liabilities
			As of December 31, 2021						As of December 31, 2020						As of December 31, 2021						As of December 31, 2020
Current portion of long-term debt and Long-term debt						$	655,502					$	700,331					$	6,428					$	17,512
						$	655,502					$	700,331					$	6,428					$	17,512

The effect of derivative instruments qualifying and designated as cash flow hedging instruments on the consolidated financial statements was as follows (in thousands):

						Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) on Derivative																		Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income						Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
Derivatives under ASC 815-20 Cash Flow Hedging Relationships						Year Ended December 31, 2021						Year Ended December 31, 2020						Year Ended December 31, 2019									Year Ended December 31, 2021						Year Ended December 31, 2020						Year Ended December 31, 2019
Interest rate swaps						$	45,572					$	(112,960)					$	(72,732)					Interest expense						$	(43,185)					$	(25,267)					$	(4,289)
Foreign currency forward contracts						(203,129)						130,426						(148,881)						Depreciation and amortization expenses						(15,359)						(14,679)						(14,063)
Foreign currency forward contracts						—						—						—						Other income (expense)						(2,797)						(7,315)						(5,080)
Fuel swaps						—						—						—						Other income (expense)						(409)						3,549						(1,292)
Fuel swaps						140,890						(58,575)						75,505						Fuel						41,037						(35,407)						29,929
						$	(16,667)					$	(41,109)					$	(146,108)											$	(20,713)					$	(79,119)					$	5,205

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Gain (Loss) Recognized in Income (Net Investment Excluded Components)						Year Ended December 31, 2021
Net inception fair value at January 1, 2021						$	(1,916)
Amount of gain recognized in income on derivatives for the year ended December 31, 2021						5,810
Amount of loss remaining to be amortized in accumulated other comprehensive loss as of December 31, 2021						(4,448)
Fair value at December 31, 2021						$	(554)

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

						Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss)
Non-derivative instruments under ASC 815-20 Net Investment Hedging Relationships						Year Ended December 31, 2021						Year Ended December 31, 2020						Year Ended December 31, 2019
Foreign Currency Debt						$	7,837					$	(28,062)					$	6,111
						$	7,837					$	(28,062)					$	6,111

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

												Amount of Gain (Loss) Recognized in Income on Derivative
Derivatives Not Designated as Hedging Instruments under ASC 815-20						Location of Gain (Loss) Recognized in Income on Derivative						Year Ended December 31, 2021						Year Ended December 31, 2020						Year Ended December 31, 2019
Foreign currency forward contracts						Other income (expense)						$	(30,903)					$	(18,961)					$	1,356
Fuel swaps						Fuel						—						—						(37)
Fuel swaps						Other income (expense)						33,720						(102,740)						112
												$	2,817					$	(121,701)					$	1,431

Credit Related Contingent Features

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

The amount of collateral required to be posted will change as, and to the extent, our net liability position increases or decreases by more than the applicable minimum call amount. If our credit rating for our senior unsecured debt is subsequently equal to or above BBB- by Standard & Poor’s or Baa3 by Moody’s, then any collateral posted at such time will be released to us and we will no longer be required to post collateral unless we meet the collateral trigger requirement, generally, at the next fifth-year anniversary.

As of December 31, 2021, our senior unsecured debt credit rating was B by Standard & Poor's and B2 by Moody's. As of December 31, 2021, six of our interest rate derivative hedges had a term of at least five years requiring us to post collateral of $44.4 million to satisfy our obligations under our interest rate derivative agreements, taking into account collateral waivers issued by certain banks. We expect that we will not need to provide additional collateral under these agreements in the next twelve months.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 17. Commitments and Contingencies

Ship Purchase Obligations

Our future capital commitments consist primarily of new ship orders. As of December 31, 2021, we had two Oasis-class ships and three ships of a new generation, known as our Icon-class, on order for our Royal Caribbean International brand with an aggregate capacity of approximately 28,200 berths. As of December 31, 2021, we had two Edge-class ships on order for our Celebrity brand with an aggregate capacity of approximately 6,500 berths. Additionally as of December 31, 2021, we had two ships on order with an aggregate capacity of approximately 1,460 berths for our Silversea Cruises brand. The following provides further information on recent developments with respect to our ship orders.

In September 2019, Silversea Cruises entered into two credit agreements, guaranteed by us, for the unsecured financing of the first and second Evolution-class ships for an amount of up to 80% of each ship's contract price through facilities to be guaranteed 95% by Euler Hermes, the official export credit agency of Germany. The maximum loan amount under each facility is not to exceed the United States dollar equivalent of €351.6 million in the case of the first Evolution-class ship and €359.0 million in the case of the second Evolution-class ship, or approximately $399.9 million and $408.3 million, respectively, based on the exchange rate at December 31, 2021. Each loan, once funded, will amortize semi-annually and will mature 12 years following the delivery of each ship. At our election, interest on each loan will accrue either (1) at a fixed rate of 4.14% and 4.18%, respectively (inclusive of the applicable margin) or (2) at a floating rate equal to LIBOR plus 0.79% and 0.83%, respectively. The first and second Evolution-class ships will each have a capacity of approximately 730 berths.

In December 2019, we entered into a credit agreement for the unsecured financing of the sixth Oasis-class ship for up to 80% of the ship’s contract price through a facility to be guaranteed 100% by BpiFrance Assurance Export, the official export credit agency of France. Under the financing arrangement, we have the right, but not the obligation, to satisfy the obligations to be incurred upon delivery and acceptance of the ship under the shipbuilding contract by assuming, at delivery and acceptance, the debt indirectly incurred by the shipbuilder during the construction of the ship. The maximum loan amount under the facility is not to exceed the United States dollar equivalent of €1.3 billion, or approximately $1.5 billion based on the exchange rate at December 31, 2021. The loan will amortize semi-annually and will mature 12 years following delivery of the ship. Interest on the loan will accrue at a fixed rate of 3.00% (inclusive of margin). The sixth Oasis-class ship will have a capacity of approximately 5,700 berths.

In December 2019, we entered into a credit agreement for the unsecured financing of the third Icon-class ship for up to 80% of the ship’s contract price. Finnvera plc, the official export credit agency of Finland, has agreed to guarantee 95% of the substantial majority of the financing, with a smaller portion of the financing to be 95% guaranteed by Euler Hermes, the official German export credit agency. The maximum loan amount under the facility is not to exceed the United States dollar equivalent of €1.4 billion, or approximately $1.6 billion based on the exchange rate at December 31, 2021. The loan, once funded, will amortize semi-annually and will mature 12 years following the delivery of the ship. Approximately 60% of the loan will accrue interest at a fixed rate of 3.29%. The balance of the loan will accrue interest at a floating rate of LIBOR plus 0.85%. The third Icon-class ship will have a capacity of approximately 5,600 berths

During 2017, we entered into credit agreements for the unsecured financing of the two Icon-class ships for up to 80% of each ship’s contract price. For each ship, the official Finnish export credit agency, Finnvera plc, has agreed to guarantee 100% of a substantial majority of the financing to the lenders, with a smaller portion of the financing to be 95% guaranteed by Euler Hermes, the official German export credit agency. The maximum loan amount under each facility is not to exceed €1.4 billion, or approximately $1.6 billion, based on the exchange rate at December 31, 2021. Interest on approximately 75% of each loan will accrue at a fixed rate of 3.56% and 3.76% for the first and the second Icon-class ships, respectively, and the balance will accrue interest at a floating rate ranging from LIBOR plus 1.10% to 1.15% and LIBOR plus 1.15% to 1.20% for the first and the second Icon-class ships, respectively. Each loan will amortize semi-annually and will mature 12 years following delivery of each ship. The first and second Icon-class ships will each have a capacity of approximately 5,600 berths.

During 2017, we entered into credit agreements for the unsecured financing of the third and fourth Edge-class ships and the fifth Oasis-class ship for up to 80% of each ship’s contract price through facilities to be guaranteed 100% by Bpifrance Assurance Export, the official export credit agency of France. Under these financing arrangements, we have the right, but not the obligation, to satisfy the obligations to be incurred upon delivery and acceptance of each ship under the shipbuilding contract by assuming, at delivery and acceptance, the debt indirectly incurred by the shipbuilder during the construction of each ship. The maximum loan amount under each facility is not to exceed €684.2 million in the case of the third Edge-class ship and the United States dollar equivalent of €714.6 million and €1.1 billion in the case of the fourth Edge-class ship and fifth Oasis-class ship, or approximately $812.7 million and $1.3 billion, respectively, based on the exchange rate at December 31, 2021. The loans will amortize semi-annually and will mature 12 years following delivery of each ship. Interest on the loans will

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

accrue at a fixed rate of 1.28% for the third Edge-class ship and at a fixed rate of 3.18% for both, the fourth Edge-class ship and the fifth Oasis-class ship. The third and fourth Edge-class ships, each of which will have a capacity of approximately 3,250 berths. The fifth Oasis-class ship will have a capacity of approximately 5,700 berths.

Our future capital commitments consist primarily of new ship orders. COVID-19 has impacted shipyard operations which have and may continue to result in delays of our previously contracted ship deliveries. As of December 31, 2021, the dates that ships on order by our Global and Partner Brands are expected to be delivered, subject to change in the event of construction delays, and their approximate berths are as follows:

Ship						Shipyard						Expected to be delivered						Approximate Berths
Royal Caribbean International —
Oasis-class:
Wonder of the Seas						Chantiers de l’Atlantique						1st Quarter 2022						5,700
Unnamed						Chantiers de l’Atlantique						2nd Quarter 2024						5,700
Icon-class:
Icon of the Seas						Meyer Turku Oy						3rd Quarter 2023						5,600
Unnamed						Meyer Turku Oy						2nd Quarter 2025						5,600
Unnamed						Meyer Turku Oy						2nd Quarter 2026						5,600
Celebrity Cruises —
Edge-class:
Celebrity Beyond						Chantiers de l’Atlantique						2nd Quarter 2022						3,250
Celebrity Ascent						Chantiers de l’Atlantique						4th Quarter 2023						3,250
Silversea Cruises —
Evolution-class:
Silver Nova						Meyer Werft						2nd Quarter 2023						730
Unnamed						Meyer Werft						2nd Quarter 2024						730
TUI Cruises (50% joint venture) —
Mein Schiff 7						Meyer Turku Oy						2nd Quarter 2024						2,900
Unnamed						Fincantieri						4th Quarter 2024						4,100
Unnamed						Fincantieri						2nd Quarter 2026						4,100
Total Berths																		47,260

We took delivery of Wonder of the Seas in January of 2022. In addition, as of December 31, 2021, we have an agreement in place with Chantiers de l’Atlantique to build an additional Edge-class ship for delivery in 2025, which is contingent upon completion of conditions precedent and financing.

In September 2021, we amended the credit agreements for the first and second Evolution-class ships to increase their maximum loan amounts by €175.6 million on an aggregate basis, or approximately $199.7 million based on the exchange rate at December 31, 2021. The increase in the loan amounts will finance ship design modifications that incorporate innovative sustainability features and additional premium cabins, increasing the capacity for each ship to 730 berths. At our election, interest on incremental portion of each loan will accrue either (1) at a fixed rate of 4.34% and 4.38%, respectively (inclusive of the applicable margin) or (2) at a floating rate equal to LIBOR plus 0.99% and 1.03%, respectively.

As of December 31, 2021, the aggregate cost of our ships on order, presented in the above table, not including any ships on order by our Partner Brands, was approximately $12.4 billion, of which we had deposited $800.2 million as of such date. Approximately 59.0% of the aggregate cost was exposed to fluctuations in the Euro exchange rate at December 31, 2021. Refer to Note 16. Fair Value Measurements and Derivative Instruments for further information.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Litigation

As previously reported, two lawsuits were filed against us in August 2019 in the U.S. District Court for the Southern District of Florida (the "Court") under Title III of the Cuban Liberty and Democratic Solidarity Act, also known as the Helms-Burton Act. The complaint filed by Havana Docks Corporation ("Havana Docks Action") alleges it holds an interest in the Havana Cruise Port Terminal, and the complaint filed by Javier Garcia-Bengochea (the "Port of Santiago Action") alleges that he holds an interest in the Port of Santiago, Cuba, both of which were expropriated by the Cuban government. The complaints further allege that we trafficked in those properties by embarking and disembarking passengers at these facilities. The plaintiffs seek all available statutory remedies, including the value of the expropriated property, plus interest, treble damages, attorneys’ fees and costs. In the Havana Docks Action, we and the plaintiff have filed motions for summary judgment, which were heard by the Court in January 2022. The Havana Docks Action is scheduled for trial on May 23, 2022. The Court dismissed the Port of Santiago Action with prejudice on the basis that the plaintiff lacked standing, and the plaintiff’s appeal of the dismissal is awaiting a decision by the appellate court. We believe we have meritorious defenses to the claims alleged in both the Havana Docks Action and the Port of Santiago Action, and we intend to vigorously defend ourselves against them. The outcome of litigation is inherently unpredictable and subject to significant uncertainties, and there can be no assurances that the final outcome of either case will not be material.

We are routinely involved in claims, typical within the travel and tourism industry. The majority of these claims are covered by insurance. We believe the outcome of such claims, net of expected insurance recoveries, will not have a material adverse impact on our financial condition or results of operations and cash flows.

Other

Some of the contracts that we enter into include indemnification provisions that obligate us to make payments to the counterparty if certain events occur. These contingencies generally relate to changes in taxes, increased lender capital costs and other similar costs. The indemnification clauses are often standard contractual terms and are entered into in the normal course of business. There are no stated or notional amounts included in the indemnification clauses and we are not able to estimate the maximum potential amount of future payments, if any, under these indemnification clauses. We have not been required to make any payments under such indemnification clauses in the past and, under current circumstances, we do not believe an indemnification in any material amount is probable.

If any person acquires ownership of more than 50% of our common stock or, subject to certain exceptions, during any 24-month period, a majority of our board of directors is no longer comprised of individuals who were members of our board of directors on the first day of such period, we may be obligated to prepay indebtedness outstanding under our credit facilities, which we may be unable to replace on similar terms. Our public debt securities also contain change of control provisions that would be triggered by a third-party acquisition of greater than 50% of our common stock coupled with a ratings downgrade. If this were to occur, it would have an adverse impact on our liquidity and operations.

At December 31, 2021, we have future commitments to pay for our usage of certain port facilities, marine consumables, services and maintenance contracts as follows (in thousands):

Year
2022			$	154,552
2023			86,532
2024			75,868
2025			33,981
2026			29,518
Thereafter			154,033
			$	534,484

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 18**. Restructuring Charges**

In April 2020, we reduced our US shoreside workforce by approximately 23% through permanent layoffs. We incurred severance costs of $28.0 million during the year ended December 31, 2020.

The following table summarizes our restructuring costs during the twelve months ended December 31, 2021 as it relates to the April 2020 reduction in our workforce (in thousands):

			Beginning Balance January 1, 2021			Accruals			Payments			Ending Balance December 31, 2021			Cumulative Charges Incurred
Termination benefits			$	4,257		$	682		$	4,626		$	313		$	28,635
Total			$	4,257		$	682		$	4,626		$	313		$	28,635

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