filings.toolsItem 16. Form 10-K Summary
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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) |
February 11, 2026
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on February 11, 2026.
| /s/ JASON T. LIBERTY | ||
| Jason T. Liberty Chairman of the Board 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) | ||
| * | ||
| Richard D. Fain Director | ||
| * | ||
| John F. Brock Director | ||
| * | ||
| Stephen R. Howe Jr. Director | ||
| * | ||
| Michael O. Leavitt Director | ||
| * | ||
| Maritza G. Montiel Director | ||
| * | ||
| Ann S. Moore Director | ||
| * | ||
| Eyal M. Ofer Director | ||
| * | ||
| Vagn O. Sørensen Director | ||
| * | ||
| Donald Thompson Director | ||
| * | ||
| Arne Alexander Wilhelmsen Director | ||
| * | ||
| Amy C. McPherson Director | ||
| * | ||
| Rebecca Yeung Director | ||
| *By: | /s/ NAFTALI HOLTZ | ||||
| Naftali Holtz, as Attorney-in-Fact |
ROYAL CARIBBEAN CRUISES LTD.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
F-1
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, 2025 and 2024, and the related consolidated statements of comprehensive income (loss), of shareholders' equity and of cash flows for each of the three years in the period ended December 31, 2025, 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, 2025, 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, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 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, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
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.
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.
F-2
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates 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 matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Impairment Assessments – Silversea Reporting Unit Goodwill and Trade Name
As described in Notes 2, 4 and 5 to the consolidated financial statements, as of December 31, 2025 the Company’s consolidated goodwill balance was $808 million and the goodwill associated with the Silversea reporting unit was $509 million. The Company’s consolidated indefinite-life intangible assets balance was $321 million, of which $319 million relates to the Silversea trade name. Management reviews goodwill and indefinite-life intangible assets for impairment annually or, when events or circumstances dictate, more frequently. The quantitative impairment assessment consists of a comparison of the fair value of the reporting unit or asset with it’s carrying value. Fair value is estimated by management using a probability weighted discounted cash flow model in combination with market-based valuation approaches for reporting units and a relief-from-royalty method for trade name. Management’s principal assumptions for the impairment assessments consisted of forecasted revenues per available passenger cruise day, occupancy rates from existing vessels, vessel operating expenses, 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 reporting unit goodwill and trade name is a critical audit matter are (i) the significant judgment by management when developing the fair value estimates of the Silversea reporting unit and trade name; (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions related to forecasted revenues per available passenger cruise day and occupancy rates from existing vessels; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s goodwill and indefinite -life intangible asset impairment assessments, including controls over the valuation of the Silversea 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 probability weighted discounted cash flow model and relief-from-royalty methods used by management; (iii) testing the completeness and accuracy of underlying data used in the probability weighted discounted cash flow model and relief-from-royalty methods; and (iv) evaluating the reasonableness of the significant assumptions used by management related to forecasted revenues per available passenger cruise day and occupancy rates from existing vessels. Evaluating management’s assumptions related to forecasted revenues per available passenger cruise day and occupancy rates from existing vessels involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the reporting unit and the Silversea 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 evaluating the appropriateness of the probability weighted discounted cash flow model and the relief-from-royalty methods.
/s/ PricewaterhouseCoopers LLP
Miami, Florida
February 11, 2026
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-3
ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in millions, except per share data)
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Passenger ticket revenues | $ | 12,515 | $ | 11,499 | $ | 9,568 | |||||||||||
| Onboard and other revenues | 5,419 | 4,986 | 4,332 | ||||||||||||||
| Total revenues | 17,935 | 16,484 | 13,900 | ||||||||||||||
| Cruise operating expenses: | |||||||||||||||||
| Commissions, transportation and other | 2,369 | 2,250 | 2,001 | ||||||||||||||
| Onboard and other | 981 | 909 | 809 | ||||||||||||||
| Payroll and related | 1,366 | 1,301 | 1,197 | ||||||||||||||
| Food | 1,019 | 934 | 819 | ||||||||||||||
| Fuel | 1,146 | 1,160 | 1,150 | ||||||||||||||
| Other operating | 2,202 | 2,098 | 1,799 | ||||||||||||||
| Total cruise operating expenses | 9,083 | 8,652 | 7,775 | ||||||||||||||
| Marketing, selling and administrative expenses | 2,223 | 2,125 | 1,792 | ||||||||||||||
| Depreciation and amortization expenses | 1,718 | 1,600 | 1,455 | ||||||||||||||
| Operating Income | 4,910 | 4,106 | 2,878 | ||||||||||||||
| Other income (expense): | |||||||||||||||||
| Interest income | 24 | 16 | 36 | ||||||||||||||
| Interest expense, net of interest capitalized | (992) | (1,590) | (1,402) | ||||||||||||||
| Equity investment income | 414 | 260 | 200 | ||||||||||||||
| Other income (expense) | 17 | 149 | (2) | ||||||||||||||
| Income before income taxes | 4,373 | 2,941 | 1,711 | ||||||||||||||
| Provision for income taxes | (82) | (46) | (6) | ||||||||||||||
| Net Income | 4,291 | 2,896 | 1,704 | ||||||||||||||
| Less: Net Income attributable to noncontrolling interest | 23 | 18 | 7 | ||||||||||||||
| Net Income attributable to Royal Caribbean Cruises Ltd. | $ | 4,268 | $ | 2,877 | $ | 1,697 | |||||||||||
| Earnings per Share: | |||||||||||||||||
| Basic | $ | 15.75 | $ | 11.00 | $ | 6.63 | |||||||||||
| Diluted | $ | 15.61 | $ | 10.94 | $ | 6.31 | |||||||||||
| Comprehensive Income (Loss) | |||||||||||||||||
| Net Income | $ | 4,291 | $ | 2,896 | $ | 1,704 | |||||||||||
| Other comprehensive income (loss): | |||||||||||||||||
| Foreign currency translation adjustments | (26) | 17 | (9) | ||||||||||||||
| Change in defined benefit plans | (4) | 12 | 6 | ||||||||||||||
| Gain (loss) on cash flow derivative hedges | 228 | (157) | (27) | ||||||||||||||
| Total other comprehensive income (loss) | 198 | (128) | (30) | ||||||||||||||
| Comprehensive Income | 4,489 | 2,768 | 1,674 | ||||||||||||||
| Less: Comprehensive Income attributable to noncontrolling interest | 23 | 18 | 7 | ||||||||||||||
| Comprehensive Income attributable to Royal Caribbean Cruises Ltd. | $ | 4,466 | $ | 2,750 | $ | 1,667 |
Certain amounts may not add or calculate due to use of rounded numbers.
The accompanying notes are an integral part of these consolidated financial statements.
F-4
ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED BALANCE SHEETS
(in millions, except share data)
| As of December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 825 | $ | 388 | |||||||
| Trade and other receivables, net | 317 | 371 | |||||||||
| Inventories | 264 | 265 | |||||||||
| Prepaid expenses and other assets | 690 | 670 | |||||||||
| Derivative financial instruments | 115 | 11 | |||||||||
| Total current assets | 2,211 | 1,705 | |||||||||
| Property and equipment, net | 35,696 | 31,831 | |||||||||
| Operating lease right-of-use assets | 620 | 677 | |||||||||
| Goodwill | 808 | 808 | |||||||||
| Other assets | 2,284 | 2,049 | |||||||||
| Total assets | $ | 41,619 | $ | 37,070 | |||||||
| Liabilities and shareholders' equity | |||||||||||
| Current liabilities | |||||||||||
| Current portion of long-term debt | $ | 3,180 | $ | 1,603 | |||||||
| Current portion of operating lease liabilities | 90 | 74 | |||||||||
| Accounts payable | 953 | 919 | |||||||||
| Accrued expenses and other liabilities | 2,026 | 1,635 | |||||||||
| Derivative financial instruments | 67 | 90 | |||||||||
| Customer deposits | 5,739 | 5,496 | |||||||||
| Total current liabilities | 12,055 | 9,817 | |||||||||
| Long-term debt | 18,165 | 18,473 | |||||||||
| Long-term operating lease liabilities | 600 | 670 | |||||||||
| Other long-term liabilities | 554 | 375 | |||||||||
| Total liabilities | 31,374 | 29,335 | |||||||||
| 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; 303,054,848 and 297,368,235 shares issued, December 31, 2025 and December 31, 2024, respectively) | 3 | 3 | |||||||||
| Paid-in capital | 7,964 | 7,831 | |||||||||
| Retained earnings | 5,925 | 2,612 | |||||||||
| Accumulated other comprehensive loss | (604) | (802) | |||||||||
| Treasury stock (32,631,826 and 28,468,430 common shares at cost, December 31, 2025 and December 31, 2024, respectively) | (3,251) | (2,081) | |||||||||
| Total shareholders’ equity attributable to Royal Caribbean Cruises Ltd. | 10,037 | 7,563 | |||||||||
| Noncontrolling Interest | 208 | 172 | |||||||||
| Total shareholders' equity | 10,245 | 7,735 | |||||||||
| Total liabilities and shareholders’ equity | $ | 41,619 | $ | 37,070 |
The accompanying notes are an integral part of these consolidated financial statements.
F-5
ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in millions) | |||||||||||||||||
| Operating Activities | |||||||||||||||||
| Net Income | $ | 4,291 | $ | 2,896 | $ | 1,704 | |||||||||||
| Adjustments: | |||||||||||||||||
| Depreciation and amortization | 1,718 | 1,600 | 1,455 | ||||||||||||||
| Net deferred income tax expense (benefit) | 18 | — | (8) | ||||||||||||||
| (Gain) loss on derivative instruments not designated as hedges | (49) | 77 | (19) | ||||||||||||||
| Share-based compensation expense | 175 | 267 | 126 | ||||||||||||||
| Equity investment income | (414) | (260) | (200) | ||||||||||||||
| Amortization of debt issuance costs, discounts and premiums | 97 | 98 | 109 | ||||||||||||||
| Loss on extinguishment of debt and inducement expense | 16 | 463 | 121 | ||||||||||||||
| Changes in operating assets and liabilities: | |||||||||||||||||
| (Increase) decrease in trade and other receivables | (3) | 52 | 99 | ||||||||||||||
| Increase in inventories, net | — | (17) | (24) | ||||||||||||||
| Increase in prepaid expenses and other assets | (100) | (137) | (184) | ||||||||||||||
| Increase in accounts payable | 27 | 120 | 124 | ||||||||||||||
| Increase in accrued expenses and other liabilities | 216 | — | 13 | ||||||||||||||
| Increase in customer deposits | 243 | 186 | 1,143 | ||||||||||||||
| Dividends received from unconsolidated affiliates | 264 | 29 | 11 | ||||||||||||||
| Other, net | (34) | (109) | 7 | ||||||||||||||
| Net cash provided by operating activities | 6,465 | 5,265 | 4,477 | ||||||||||||||
| Investing Activities | |||||||||||||||||
| Purchases of property and equipment | (5,229) | (3,268) | (3,897) | ||||||||||||||
| Cash received on settlement of derivative financial instruments | 200 | 14 | 35 | ||||||||||||||
| Cash paid on settlement of derivative financial instruments | (24) | (130) | (86) | ||||||||||||||
| Investments in and loans to unconsolidated affiliates | (106) | (67) | (31) | ||||||||||||||
| Cash received on loans to unconsolidated affiliates | 126 | 18 | 40 | ||||||||||||||
| Other, net | 21 | (13) | 16 | ||||||||||||||
| Net cash used in investing activities | (5,012) | (3,446) | (3,923) | ||||||||||||||
| Financing Activities | |||||||||||||||||
| Debt proceeds | 4,671 | 10,318 | 7,641 | ||||||||||||||
| Debt issuance costs | (118) | (133) | (194) | ||||||||||||||
| Repayments of debt | (3,534) | (11,651) | (9,566) | ||||||||||||||
| Premium on repayment of debt | (2) | (292) | (80) | ||||||||||||||
| Repurchase of common stock | (1,159) | — | — | ||||||||||||||
| Dividends paid | (824) | (107) | — | ||||||||||||||
| Proceeds from sale of noncontrolling interest | — | — | 209 | ||||||||||||||
| Other, net | (52) | (57) | (3) | ||||||||||||||
| Net cash used in financing activities | (1,018) | (1,922) | (1,993) | ||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | 2 | (6) | 1 | ||||||||||||||
| Net increase (decrease) in cash and cash equivalents | 437 | (109) | (1,438) | ||||||||||||||
| Cash and cash equivalents at beginning of year | 388 | 497 | 1,935 | ||||||||||||||
| Cash and cash equivalents at end of year | $ | 825 | $ | 388 | $ | 497 |
The accompanying notes are an integral part of these consolidated financial statements.
F-6
ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in millions) | |||||||||||||||||
| Supplemental Disclosures | |||||||||||||||||
| Cash paid during the year for: | |||||||||||||||||
| Interest, net of amount capitalized | $ | 864 | $ | 1,210 | $ | 1,442 | |||||||||||
| Non-Cash Investing Activities | |||||||||||||||||
| Purchases of property and equipment included in accounts payable and accrued expenses and other liabilities | $ | 72 | $ | 47 | $ | 50 | |||||||||||
| Non-Cash Financing Activities | |||||||||||||||||
| Non-cash inducement on convertible notes exchange | $ | 7 | $ | 104 | $ | — |
The accompanying notes are an integral part of these consolidated financial statements.
F-7
ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
| Common Stock | Paid-in Capital | (Accumulated Deficit) Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Noncontrolling Interest | Total Shareholders' Equity | |||||||||||||||||||||||||||||||||||
| (in millions, except share data) | |||||||||||||||||||||||||||||||||||||||||
| Balances at January 1, 2023 | $ | 3 | $ | 7,285 | $ | (1,707) | $ | (644) | $ | (2,068) | $ | — | $ | 2,869 | |||||||||||||||||||||||||||
| Activity related to employee stock plans | — | 130 | — | — | — | — | 130 | ||||||||||||||||||||||||||||||||||
| Convertible notes settlements | — | 13 | — | — | — | — | 13 | ||||||||||||||||||||||||||||||||||
| Changes related to cash flow derivative hedges | — | — | — | (27) | — | — | (27) | ||||||||||||||||||||||||||||||||||
| Change in defined benefit plans | — | — | — | 6 | — | — | 6 | ||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | — | — | — | (9) | — | — | (9) | ||||||||||||||||||||||||||||||||||
| Repurchase of common stock | — | — | — | — | (1) | — | (1) | ||||||||||||||||||||||||||||||||||
| Sale of noncontrolling interests | — | 46 | — | — | — | 174 | 220 | ||||||||||||||||||||||||||||||||||
| Net Income attributable to Noncontrolling interests | — | — | — | — | — | 7 | 7 | ||||||||||||||||||||||||||||||||||
| Dividends from noncontrolling interests | — | — | — | — | — | (6) | (6) | ||||||||||||||||||||||||||||||||||
| Net Income attributable to Royal Caribbean Cruises Ltd. | — | — | 1,697 | — | — | — | 1,697 | ||||||||||||||||||||||||||||||||||
| Balances at December 31, 2023 | $ | 3 | $ | 7,474 | $ | (10) | $ | (674) | $ | (2,069) | $ | 175 | $ | 4,899 | |||||||||||||||||||||||||||
| Activity related to employee stock plans | — | 253 | — | — | — | — | 253 | ||||||||||||||||||||||||||||||||||
| Common stock dividends, $0.95 per share | — | — | (255) | — | — | — | (255) | ||||||||||||||||||||||||||||||||||
| Convertible notes settlements | — | 104 | — | — | — | — | 104 | ||||||||||||||||||||||||||||||||||
| Changes related to cash flow derivative hedges | — | — | — | (157) | — | — | (157) | ||||||||||||||||||||||||||||||||||
| Change in defined benefit plans | — | — | — | 12 | — | — | 12 | ||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | — | — | — | 17 | — | — | 17 | ||||||||||||||||||||||||||||||||||
| Repurchase of common stock | — | — | — | — | (12) | — | (12) | ||||||||||||||||||||||||||||||||||
| Net Income attributable to Noncontrolling interests | — | — | — | — | — | 18 | 18 | ||||||||||||||||||||||||||||||||||
| Other activity attributable to noncontrolling interest | — | — | — | — | — | (21) | (21) | ||||||||||||||||||||||||||||||||||
| Net Income attributable to Royal Caribbean Cruises Ltd. | — | — | 2,877 | — | — | — | 2,877 | ||||||||||||||||||||||||||||||||||
| Balances at December 31, 2024 | $ | 3 | $ | 7,831 | $ | 2,612 | $ | (802) | $ | (2,081) | $ | 172 | $ | 7,735 | |||||||||||||||||||||||||||
| Activity related to employee stock plans | — | 139 | — | — | — | — | 139 | ||||||||||||||||||||||||||||||||||
| Common stock dividends, $3.50 per share | — | — | (955) | — | — | — | (955) | ||||||||||||||||||||||||||||||||||
| Convertible notes settlements | — | (6) | — | — | — | — | (6) | ||||||||||||||||||||||||||||||||||
| Changes related to cash flow derivative hedges | — | — | — | 228 | — | — | 228 | ||||||||||||||||||||||||||||||||||
| Change in defined benefit plans | — | — | — | (4) | — | — | (4) | ||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | — | — | — | (26) | — | — | (26) | ||||||||||||||||||||||||||||||||||
| Repurchase of common stock | — | — | — | — | (1,170) | — | (1,170) | ||||||||||||||||||||||||||||||||||
| Net Income attributable to Noncontrolling interests | — | — | — | — | — | 23 | 23 | ||||||||||||||||||||||||||||||||||
| Other activity attributable to noncontrolling interest | — | — | — | — | — | 13 | 13 | ||||||||||||||||||||||||||||||||||
| Net Income attributable to Royal Caribbean Cruises Ltd. | — | — | 4,268 | — | — | — | 4,268 | ||||||||||||||||||||||||||||||||||
| Balances at December 31, 2025 | $ | 3 | $ | 7,964 | $ | 5,925 | $ | (604) | $ | (3,251) | $ | 208 | $ | 10,245 |
The accompanying notes are an integral part of these consolidated financial statements.
F-8
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, Celebrity Cruises and Silversea (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 fleet of 69 ships as of December 31, 2025. Our ships offer a selection of worldwide itineraries that call on more than 1,000 destinations in over 120 countries on all seven continents.
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. Investments and 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.
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. 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. In addition, we capitalize interest on borrowings during the active construction period of capital projects. Capitalized interest is added to the cost of the assets and depreciated over the estimated useful lives of the assets. The estimated cost and accumulated depreciation of replaced or refurbished ship components are written off and any resulting losses are recognized in 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
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residual value estimates take into consideration the impact of anticipated technological changes, environmental regulations, 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:
| 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, including right-of-use assets for impairment whenever events or changes in circumstances indicate, based on estimated undiscounted future cash flows, that the carrying value of these assets may not be fully recoverable. For purposes of recognition and measurement of an impairment loss, long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The lowest level for which we maintain identifiable cash flows that are independent of the cash flows of other assets and liabilities is at the ship level for our ships. If estimated future cash flows are less than the carrying value of an asset, an impairment charge is recognized to the extent its carrying value exceeds fair value.
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 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 and 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. We may first perform a qualitative assessment to determine whether it is more likely than not that a reporting unit is impaired. When assessing goodwill for impairment, our decision to perform a qualitative assessment for an individual reporting unit is influenced by a number of factors, including the carrying value of the reporting unit's goodwill, the significance of the excess of
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the reporting unit's estimated fair value over carrying value at the last quantitative assessment date, macroeconomic conditions, market conditions and our operating performance.
If we do not perform a qualitative assessment, or if we determine that it is not more likely than not that the fair value of the reporting unit exceeds its carrying amount, we calculate the estimated fair value of the reporting unit using an income approach, which may also include a combination of a market-based valuation approaches. The estimation of fair value utilizing a probability weighted discounted cash flow model includes numerous uncertainties which require our significant judgment when making assumptions of expected revenues, operating costs, interest rates, ship additions and retirements as well as regarding the cruise vacation industry's competitive environment and general economic and business conditions. The principal assumptions used in the probability weighted discounted cash flow model for our 2025 impairment assessment consisted of: (i) forecasted revenues per available passenger cruise day, (ii) occupancy rates from existing vessels, (iii) vessel operating expenses, (iv) terminal growth rate, and (v) weighted average cost of capital (i.e., discount rate). The probability weighted discounted cash flow model uses the most current projected operating results for the upcoming fiscal year as a base. We discount the probability weighted 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 probability weighted 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 probability weighted discounted cash flow model for our 2025 impairment assessment consisted of: (i) forecasted revenues per available passenger cruise day, (ii) occupancy rates from existing vessels, (iii) terminal growth rate; (iv) royalty rate; and (v) weighted average cost of capital (i.e., discount rate). If the carrying value exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. If the fair value exceeds its carrying value, the indefinite-life intangible asset is not considered impaired.
Other intangible assets assigned finite useful lives are amortized on a straight-line basis over their estimated useful lives.
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, including legal costs, when we believe a loss is probable and the amount of loss can be reasonably estimated. Due to the inherent uncertainties related to the eventual outcome of litigation and potential insurance recoveries, it is possible that certain matters may be resolved for amounts materially different from any provisions or disclosures that we have previously made.
Advertising Costs
Advertising costs are expensed as incurred except those costs which result in tangible assets, such as brochures, which are treated as prepaid expenses and charged to expense as consumed. Advertising costs consist of media and online advertising as well as brochure, production and direct mail costs.
Total advertising costs inclusive of media, online advertising, brochure, production and direct mail costs were $693 million, $612 million, and $506 million for the years ended December 31, 2025, 2024 and 2023, 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
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our net investment in our foreign operations and investments. Although certain of our derivative financial instruments do not qualify or are not accounted for under hedge accounting, our objective is not to hold or issue derivative financial instruments for trading or other speculative purposes.
At inception of the hedge relationship, a derivative instrument that hedges the exposure to changes in the fair value of a firm commitment or a recognized asset or liability is designated as a fair value hedge. A derivative instrument that hedges a forecasted transaction or the variability of cash flows related to a recognized asset or liability is designated as a cash flow hedge.
Changes in the fair value of derivatives that are designated as fair value hedges are offset against changes in the fair value of the underlying hedged assets, liabilities or firm commitments. Gains and losses on derivatives that are designated as cash flow hedges are recorded as a component of Accumulated other comprehensive loss until the underlying hedged transactions are recognized in earnings. The foreign currency transaction gain or loss of our non-derivative financial instruments and the changes in the fair value of derivatives designated as hedges of our net investment in foreign operations and investments are recognized as a component of Accumulated other comprehensive loss along with the associated foreign currency translation adjustment of the foreign operation or investment. In certain hedges of our net investment in foreign operations and investments, we exclude forward points from the assessment of hedge effectiveness and 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.
We consider the classification of the underlying hedged item’s cash flows in determining the classification for the designated derivative instrument’s cash flows in our consolidated statements of cash flows. 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 our consolidated statements of cash flows. For example, 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. 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.
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. 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
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relationships with and which have credit risks acceptable to us or where the credit risk is spread out among a large number of counterparties. 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.
Earnings (Loss) Per Share
Basic Earnings (Loss) per share is computed by dividing Net Income (Loss) attributable to Royal Caribbean Cruises Ltd. by the weighted-average number of shares of common stock outstanding during each period. Diluted Earnings (Loss) per share incorporates the incremental shares issuable upon the assumed conversion of potentially dilutive securities. We use the if-converted method to calculate the impact of our convertible notes that may be settled in cash or shares. To the extent dilutive, shares related to our convertible notes are assumed to be converted into common stock at the beginning of the reporting period, and we add back the interest expense to the numerator. If we have a net loss for the period, all potentially dilutive securities will be considered antidilutive, resulting in the same basic and diluted net loss per share amounts for those periods.
Stock-Based Employee Compensation
We measure and recognize compensation expense at the estimated fair value of employee stock awards on the grant date. 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
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 ("CODM"), and is responsible for carrying out the functions of allocating resources and assessing performance. The CODM uses Operating Income (loss) to assess performance and allocate resources. This financial metric is used by the CODM to review operating trends and to monitor budget-to-actual variances in order to make key operating decisions.
Adoption of Accounting Pronouncements
In August 2023, the FASB issued ASU No. 2023-05, Business Combinations - Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement. This ASU provides guidance requiring a joint venture to initially measure all contributions received upon its formation at fair value. The guidance is intended to provide users of joint venture financial statements with more decision-useful information. This ASU is effective for joint venture entities with a formation date on or after January 1, 2025 on a prospective basis. Early adoption is permitted, and joint ventures formed prior to the adoption date may elect to apply the new guidance retrospectively back to their original formation date. We adopted the new guidance effective for the fiscal year beginning January 1, 2025. The adoption of this guidance did not have a material impact to our consolidated financial statements or disclosures.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The new guidance is intended to enhance the transparency and decision usefulness of income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. This ASU is effective for annual periods beginning after December 15, 2024 on a prospective basis with the option to apply retrospectively. We adopted the new guidance for the fiscal year beginning January 1, 2025 on a prospective basis. For further information on taxes, refer to Note 14*. Income Taxes.*
Recent Accounting Pronouncements
In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosures about certain categories of expenses (including purchases of inventory, employee compensation, depreciation and intangible asset amortization) that are included in the expense captions presented on the face of the income statement, as well as
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disclosures about selling expenses. This new guidance is intended to provide investors with more detailed expense information in order to better understand an entity's cost structure and forecast future cash flows. This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027 on a prospective basis. Early adoption and retrospective application is permitted. We are evaluating the impact of the new guidance on disclosures to our consolidated financial statements.
In September 2025, the FASB issued ASU No. 2025-06, Intangibles - Goodwill and Other - Internal - Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal - Use Software. This new guidance is intended to eliminate the use of project stages and introduces a principles-based framework for recognizing and capitalizing internal-use software costs. The ASU is effective for annual periods beginning after December 15, 2027, including interim periods within those annual periods. Early adoption is permitted. We are evaluating the impact of the new guidance on our consolidated financial statements and related disclosures.
In November 2025, the FASB issued ASU No. 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements, which amends certain aspects of the hedge accounting guidance to more closely align hedge accounting with the economics of an entity’s risk management activities. This new guidance is intended to enable entities to achieve and maintain hedge accounting for a broader population of highly effective economic hedges while reducing cost and complexity. This ASU is effective for annual reporting periods beginning after December 15, 2026, including interim reporting periods within those annual periods. Early adoption is permitted. The amendments require adoption on a prospective basis. We are evaluating the impact of the new guidance on our consolidated financial statements and related disclosures.
Reclassifications
For the year ended December 31, 2025, we separately presented Provision for income taxes in our consolidated statements of comprehensive income (loss). As a result, prior year amounts were reclassified from Other income (expense) to conform to the current year presentation.
For the year ended December 31, 2025, we separately presented Dividends received from unconsolidated affiliates in our consolidated statements of cash flows. As a result, prior year amounts were reclassified from Other, net within Operating Activities to conform to the current year presentation.
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 receive payment before we satisfy this performance obligation and recognize revenue over the duration of each cruise, which generally ranges from three to 14 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 $1.3 billion, $1.1 billion and $896 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Our total revenues also include Onboard and other revenues, which consist primarily of revenues from the sale of goods and services onboard our ships that are not included in passenger ticket prices. We receive payment before or concurrently with the transfer of these goods and services to cruise passengers and recognize revenue over the duration of the related cruise.
As a practical expedient, we have omitted disclosures on our remaining performance obligations as the duration of our contracts with customers is less than a year.
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Disaggregated Revenues
The following table disaggregates our total revenues by geographic regions where we provide cruise itineraries (in millions):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Revenues by itinerary | |||||||||||||||||
| North America (1) | $ | 11,542 | $ | 10,594 | $ | 8,707 | |||||||||||
| Asia/Pacific | 1,716 | 1,380 | 993 | ||||||||||||||
| Europe | 2,951 | 2,697 | 2,685 | ||||||||||||||
| Other Regions (2) | 862 | 1,025 | 847 | ||||||||||||||
| Total revenues by itinerary | 17,071 | 15,696 | 13,232 | ||||||||||||||
| Other revenues (3) | 864 | 788 | 668 | ||||||||||||||
| Total revenues | $ | 17,935 | $ | 16,484 | $ | 13,900 |
(1) Includes the United States, Canada, Mexico, and the Caribbean.
(2) Includes seasonality impacted itineraries primarily in South American countries, and Antarctica.
(3) Includes revenues primarily related to cancellation fees, vacation protection insurance, pre- and post-cruise tours and fees for operating certain port facilities. Amounts also include revenues related to procurement and management related services we perform on behalf of our unconsolidated affiliates. Refer to Note 7. Investments and 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, 2025, 2024 and 2023, our guests were sourced from the following areas:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Passenger ticket revenues: | |||||||||||||||||
| United States | 74 | % | 75 | % | 74 | % | |||||||||||
| All other countries (1) | 26 | % | 25 | % | 26 | % |
(1) No other individual country's revenue exceeded 10% for the years ended December 31, 2025, 2024 and 2023.
Customer Deposits and Contract Liabilities
Our payment terms generally require an upfront deposit to confirm a reservation, with the balance due prior to the cruise. Deposits received on sales of passenger cruises are initially recorded as Customer deposits in our consolidated balance sheets and subsequently recognized as passenger ticket revenues or onboard revenues during the duration of the cruise. ASC 606, Revenues from Contracts with Customers, defines a “contract liability” as an entity’s obligation to transfer goods or services to a customer for which the entity has received consideration from the customer. We do not consider customer deposits to be a contract liability until the customer no longer retains the unilateral right, resulting from the passage of time, to cancel such customer's reservation and receive a full refund. Customer deposits presented in our consolidated balance sheets include contract liabilities of $3.1 billion and $2.8 billion as of December 31, 2025 and December 31, 2024, respectively.
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.
Our credit card processing agreements require us, under certain circumstances, to maintain a reserve that can be satisfied by posting collateral. As of December 31, 2025, none of our credit card processors required us to maintain a reserve.
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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, 2025 and 2024, our contract assets were $187 million and $161 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 and prepaid credit and debit card fees are an incremental cost of obtaining contracts with customers that we recognize as an asset and include within Prepaid expenses and other assets in our consolidated balance sheets. Prepaid travel advisor commissions and prepaid credit and debit card fees were $245 million and $252 million as of December 31, 2025 and 2024, respectively. Our prepaid travel advisor commissions and prepaid credit and debit card fees are recognized at the time of revenue recognition or at the time of voyage cancellation, and are reported primarily within Commissions, transportation and other in our consolidated statements of comprehensive income (loss).
Note 4**. Goodwill**
As of November 30, 2025, we performed our annual goodwill impairment review and determined there was no impairment of goodwill for the Silversea and Royal Caribbean reporting units.
In respect to the Silversea reporting unit, we determined the fair value of the Silversea reporting unit exceeded its carrying value by approximately 98%, as of November 30, 2025. We used a probability weighted discounted cash flow model in combination with a market-based valuation approach for the Silversea reporting unit. This requires the use of assumptions that are subject to risk and uncertainties. Refer to Note 2*. Summary of Significant Accounting Policies* for more information on related authoritative guidance on the valuation approach and assumptions used.
For the Royal Caribbean Reporting unit, we performed a qualitative assessment to determine whether it was more-likely-than not that our Royal Caribbean reporting unit's fair value was less than its carrying amount. The qualitative analysis included assessing the impact of certain factors such as general economic conditions, limitations on accessing capital, changes in forecasted operating results, changes in fuel prices and fluctuations in foreign exchange rates. Based on our qualitative assessment, we concluded that it was more-likely-than-not that the estimated fair value of the Royal Caribbean reporting unit exceeded its carrying value.
The carrying value of goodwill attributable to our Royal Caribbean, Celebrity Cruises, and Silversea reporting units during the years ended December 31, 2025 and 2024 were as follows (in millions):
| Royal Caribbean | Celebrity Cruises | Silversea | Total | ||||||||||||||||||||
| Balance at December 31, 2024 | $ | 296 | $ | 3 | $ | 509 | $ | 808 | |||||||||||||||
| Balance at December 31, 2025 | $ | 296 | $ | 3 | $ | 509 | $ | 808 |
Accumulated impairment losses to the carrying value of goodwill attributable to our Silversea reporting unit was $576 million as of December 31, 2025 and December 31, 2024.
Note 5. Intangible Assets
Intangible assets consist of finite and indefinite-life assets and are reported within Other assets in our consolidated balance sheets.
As of November 30, 2025, we performed our annual trade name impairment review and determined no impairment losses existed at the date of this annual assessment for this indefinite-life intangible asset. We determined the fair value of the Silversea trade name exceeded its carrying value by approximately 90% at the date of this annual assessment.
The determination of our trade name fair values using a probability weighted discounted cash flow model and various valuation methods depending on the nature of the intangible asset, such as the relief-from-royalty method, requires the use of assumptions that are subject to risk and uncertainties. Refer to Note 2*. Summary of Significant Accounting Policies* for more information on related authoritative guidance on the valuation approach and assumptions used.
The following is a summary of our intangible assets as of December 31, 2025 (in millions, except weighted average amortization period):
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| As of December 31, 2025 | ||||||||||||||||||||||||||||||||
| Remaining Weighted Average Amortization Period (Years) | Gross Carrying Value | Accumulated Amortization | Accumulated Impairment Losses | Net Carrying Value | ||||||||||||||||||||||||||||
| Finite-life intangible assets: | ||||||||||||||||||||||||||||||||
| Customer relationships | 7.6 | $ | 97 | $ | 48 | $ | — | $ | 49 | |||||||||||||||||||||||
| Galapagos operating license | 18.6 | 34 | 14 | — | 20 | |||||||||||||||||||||||||||
| Total finite-life intangible assets | 131 | 62 | — | 69 | ||||||||||||||||||||||||||||
| Indefinite-life intangible assets (1) | 352 | — | 31 | 321 | ||||||||||||||||||||||||||||
| Total intangible assets, net | $ | 483 | $ | 62 | $ | 31 | $ | 390 |
(1) Majority relates to the Silversea trade name representing approximately $319 million.
The following is a summary of our intangible assets as of December 31, 2024 (in millions, except weighted average amortization period):
| As of December 31, 2024 | ||||||||||||||||||||||||||||||||
| Remaining Weighted Average Amortization Period (Years) | Gross Carrying Value | Accumulated Amortization | Accumulated Impairment Losses | Net Carrying Value | ||||||||||||||||||||||||||||
| Finite-life intangible assets: | ||||||||||||||||||||||||||||||||
| Customer relationships | 8.6 | $ | 97 | $ | 42 | $ | — | $ | 55 | |||||||||||||||||||||||
| Galapagos operating license | 19.6 | 41 | 13 | — | 28 | |||||||||||||||||||||||||||
| Total finite-life intangible assets | 138 | 55 | — | 83 | ||||||||||||||||||||||||||||
| Indefinite-life intangible assets (1) | 352 | — | 31 | 321 | ||||||||||||||||||||||||||||
| Total intangible assets, net | $ | 490 | $ | 55 | $ | 31 | $ | 404 |
(1) Majority relates to the Silversea trade name representing approximately $319 million.
The estimated future amortization for finite-life intangible assets for each of the next five years is $7.6 million.
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Note 6**. Property and Equipment**
Property and equipment consists of the following (in millions):
| As of December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Ships | $ | 45,108 | $ | 41,046 | |||||||
| Ship improvements | 2,663 | 2,491 | |||||||||
| Ships under construction | 1,312 | 1,048 | |||||||||
| Land, buildings and improvements, including leasehold improvements and port facilities | 1,519 | 887 | |||||||||
| Computer hardware and software, transportation equipment and other | 2,070 | 1,668 | |||||||||
| Total property and equipment | 52,672 | 47,140 | |||||||||
| Less—accumulated depreciation and amortization | (16,976) | (15,309) | |||||||||
| $ | 35,696 | $ | 31,831 |
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 $85 million, $63 million, and $99 million for the years ended December 31, 2025, 2024 and 2023, respectively.
In October 2025, we took delivery of Celebrity Xcel. In July 2025, we took delivery of Star of the Seas. In June 2024, we took delivery of Utopia of the Seas. In May 2024, we took delivery of Silver Ray. Refer to Note 8*. Debt* for further information.
In July 2025, we closed on our acquisition of the Port of Costa Maya and adjacent land in Mahahual, Mexico. The final purchase price was $294 million. The Company accounted for this acquisition as an asset acquisition, whereby the final purchase price was allocated to the net assets acquired on the basis of their estimated fair values on the acquisition date. The primary asset acquired is land that will be developed into another destination in our Perfect Day Collection, Perfect Day Mexico, which is expected to open in 2027.
In our consolidated statements of cash flows for the years ended December 31, 2025 and 2024, respectively, the acceptance of the ships and satisfaction of our obligations under the shipbuilding contract were classified as outflows and constructive disbursements within Investing Activities while the amounts novated and effectively advanced from our lenders under our previously committed financing arrangements were classified as inflows and constructive receipts within Financing Activities.
Long-lived Assets impairments
During the years ended December 31, 2025, 2024, and 2023, there were no material impairment charges recognized. Any impairment charges recognized on Long-lived Assets used in our operations are generally reported within Other operating in our consolidated statements of comprehensive income (loss).
Note 7**. Investments and Other Assets**
A Variable Interest Entity ("VIE") is an entity in which the equity investors have not provided enough equity to finance the entity's activities or the equity investors (1) cannot directly or indirectly make decisions about the entity's activities through their voting rights or similar rights; (2) do not have the obligation to absorb the expected losses of the entity; (3) do not have the right to receive the expected residual returns of the entity; or (4) have voting rights that are not proportionate to their economic interests and the entity's activities involve or are conducted on behalf of an investor with a disproportionately small voting interest. We hold equity interests in ventures related to our cruise operations. We account for the majority of these investments as either an equity method investment or a controlled subsidiary. The equity method investments are included within Other assets in our consolidated balance sheets.
Our partnership with iCON Infrastructure Partners VI, L.P. ("iCON"), owns, develops, and manages cruise terminal facilities and infrastructure in key ports of call, initially including several development projects in Italy and Spain. We have a 10% noncontrolling interest in the holding company of the partnership, and the entity is a VIE. The partnership continues to pursue additional port infrastructure developments, including future plans to own, develop, and manage an infrastructure project in the U.S. Virgin Islands. Some of these ports are accounted for as consolidated investments ("controlled subsidiaries") and some are accounted for as equity method investments.
F-18
ROYAL CARIBBEAN CRUISES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Unconsolidated investments ("equity method investments")
We have determined that TUI Cruises GmbH ("TUIC"), our 50%-owned joint venture, which operates the brands Mein Schiff and Hapag-Lloyd Cruises, is a VIE. We have determined that we are not the primary beneficiary of TUIC. We believe that the power to direct the activities that most significantly impact TUIC’s economic performance is shared between ourselves and TUI AG, our joint venture partner. All the significant operating and financial decisions of TUIC require the consent of both parties, which we believe creates shared power over TUIC. Accordingly, we do not consolidate this entity and account for this investment under the equity method of accounting.
As of December 31, 2025, the net book value of our investment in TUIC was $990 million, primarily consisting of equity. As of December 31, 2024 , the net book value of our investment in TUIC was $814 million, primarily consisting of $749 million in equity and a loan of €55 million, or approximately $57 million, based on the exchange rate at December 31, 2024. In September 2025, the loan, which was made in connection with the sale of Splendour of the Seas in April 2016, was fully repaid.
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 is substantially our maximum exposure to loss in connection with our investment in TUIC.
We have determined that Grand Bahama Shipyard Ltd. ("Grand Bahama"), a ship repair and maintenance facility in which we have a 33% 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. We have determined that we are not the primary beneficiary of this facility, as we do not have the power to direct the activities that most significantly impact the facility's economic performance. Accordingly, we do not consolidate this entity and account for this investment under the equity method of accounting.
Floating Docks S. DE RL. (“Floating Docks”), our approximately 33%-owned joint venture with the other shareholders of Grand Bahama has constructed two floating drydocks, the first was delivered in June 2025 and the second was delivered in February 2026. These floating docks will be novated to Grand Bahama and allow it to service our cruise ships in operation and under construction, as well as much of the world’s commercial shipping fleet. We and our joint venture partners have each guaranteed 33% of certain installment payments payable by Floating Docks under the drydock and related construction contracts, which have been and continue to be contingent on the achievement of the remaining construction milestones. Our remaining payment guarantees are immaterial as of December 31, 2025. Our investment in Floating Docks, including loans, is $128 million as of December 31, 2025.
We have determined that Floating Docks is a VIE. We have determined that we are not the primary beneficiary of Floating Docks since we believe that the power to direct the activities that most significantly impact Floating Docks' economic performance is shared between ourselves and our joint venture partners. All the significant operating and financial decisions of Floating Docks require the consent of both parties which we believe creates shared power over Floating Docks. Accordingly, we do not consolidate this entity and account for this investment under the equity method of accounting.
In June 2025, we sold one-third of our ownership interests in both Grand Bahama and Floating Docks to a third party. Our noncontrolling interests in Grand Bahama and Floating Docks were reduced from 49% and 50%, respectively, at March 31, 2025 to approximately 33% of each as of June 30, 2025. The sale did not have a material impact to our consolidated financial statements.
The following tables set forth information regarding our investments accounted for under the equity method of accounting, including the entities discussed above (in millions):
| Year ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Share of equity income from investments | $ | 414 | $ | 260 | $ | 200 | ||||||||||||||
| Dividends received (1) | $ | 264 | $ | 30 | $ | 11 | ||||||||||||||
(1) During the year ended December 31, 2025, TUI Cruises paid us dividends totaling $258 million, The amounts included in the table above are net of tax withholdings.
F-19
ROYAL CARIBBEAN CRUISES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Total notes receivable due from equity investments | $ | 128 | $ | 138 | ||||||||||
| Less-current portion (1) | — | 17 | ||||||||||||
| Long-term portion (2) | $ | 128 | $ | 121 |
(1) Included within Trade and other receivables, net in our consolidated balance sheets.
(2) Included within Other assets in our consolidated balance sheets.
Summarized financial information for our affiliates accounted for under the equity method of accounting was as follows (in millions):
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Current assets | $ | 757 | $ | 589 | ||||||||||
| Non-current assets | 7,950 | 5,997 | ||||||||||||
| Total assets | $ | 8,707 | $ | 6,586 | ||||||||||
| Current liabilities | $ | 2,534 | $ | 1,470 | ||||||||||
| Non-current liabilities | 3,846 | 3,299 | ||||||||||||
| Total liabilities | $ | 6,380 | $ | 4,769 | ||||||||||
| Year ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Total revenues | $ | 3,295 | $ | 2,524 | $ | 2,328 | ||||||||||||||
| Total expenses | (2,490) | (1,978) | (1,857) | |||||||||||||||||
| Net income | $ | 805 | $ | 546 | $ | 471 |
F-20
ROYAL CARIBBEAN CRUISES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 8**. Debt**
Debt consists of the following (in millions):
| As of December 31, | ||||||||||||||||||||||||||
| Weighted Average Rate(1) | Maturities Through | 2025 | 2024 | |||||||||||||||||||||||
| Fixed rate debt: | ||||||||||||||||||||||||||
| Unsecured senior notes | 5.56% | 2026 - 2036 | $ | 11,197 | $ | 9,699 | ||||||||||||||||||||
| Unsecured term loans | 3.32% | 2026 - 2037 | 8,024 | 7,687 | ||||||||||||||||||||||
| Convertible notes | —% | 2025 | — | 322 | ||||||||||||||||||||||
| Total fixed rate debt | 19,221 | 17,708 | ||||||||||||||||||||||||
| Variable rate debt: | ||||||||||||||||||||||||||
| Unsecured revolving credit facilities(2) | —% | 2028 / 2030 | — | 340 | ||||||||||||||||||||||
| USD unsecured term loans | 5.36% | 2026 - 2037 | 2,328 | 2,227 | ||||||||||||||||||||||
| Euro unsecured term loans | 3.46% | 2028 - 2042 | 194 | 212 | ||||||||||||||||||||||
| Total variable rate debt | 2,522 | 2,779 | ||||||||||||||||||||||||
| Finance lease liabilities | 159 | 117 | ||||||||||||||||||||||||
| Total debt (3) | 21,902 | 20,604 | ||||||||||||||||||||||||
| Less: unamortized debt issuance costs | (557) | (528) | ||||||||||||||||||||||||
| Total debt, net of unamortized debt issuance costs | 21,345 | 20,076 | ||||||||||||||||||||||||
| Less—current portion | (3,180) | (1,603) | ||||||||||||||||||||||||
| Long-term portion | $ | 18,165 | $ | 18,473 |
(1)Weighted average interest rates are based on outstanding loan balance as of December 31, 2025, and for variable rate debt include either EURIBOR or Term SOFR plus the applicable margin.
(2)Advances under our unsecured revolving credit facilities accrue interest at Term SOFR plus an interest rate margin of 1.10% as of December 31, 2025. Based on applicable Term SOFR rates, as of December 31, 2025, the interest rate under the unsecured credit facilities was 4.79%. We also pay a facility fee of 0.15% of the total commitments under such facility.
(3)At December 31, 2025 and 2024, the weighted average interest rate for total debt was 4.69% and 4.76%, respectively.
Unsecured Revolving Credit Facilities
During the year ended December 31, 2025, we amended our two revolving credit facilities, bringing our aggregate revolving credit capacity to $6.4 billion, and extended the termination date of one of the revolving credit facilities from October 2026 to October 2030. The commitments are split evenly between the two facilities and are scheduled to mature in October 2028 and October 2030. As of December 31, 2025, our unsecured revolving credit facilities were undrawn.
Convertible Notes due 2025
In March 2025, we completed a privately negotiated exchange with a limited number of holders of the 6.00% Convertible Senior Notes 2025. The holders exchanged approximately $213 million in aggregate principal amount for approximately 3 million shares of common stock and $214 million in cash, including accrued interest. The convertible notes exchange resulted in immaterial induced conversion expense.
In August 2025, the remaining $106 million of our 6.0% Convertible Senior Notes matured. The notes and accrued interest were settled using a combination of $109 million in cash, and the issuance of approximately 1.8 million shares of common stock.
In August 2024, we completed a privately negotiated exchange with a limited number of holders of the 6.00% Convertible Senior Notes due 2025. The holders exchanged approximately $827 million in aggregate principal amount for approximately 11.4 million shares of common stock and $827 million in cash, plus accrued and unpaid interest. The convertible notes
F-21
ROYAL CARIBBEAN CRUISES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
exchange resulted in an induced conversion expense of $119 million that was recognized within Interest expense, net of interest capitalized within our consolidated statements of comprehensive income (loss) for the year ended December 31, 2024.
2025 Debt financing transaction
In October 2025, we issued $1.5 billion of senior unsecured notes due in 2036 for net proceeds of approximately $1.49 billion. Interest accrues on the notes at a fixed rate of 5.375% per annum and is payable semi-annually in arrears. The proceeds from this notes issuance were primarily used to finance the delivery of Celebrity Xcel in lieu of utilizing its existing committed export credit agency facility, with the remaining proceeds used to pay down other debt.
2024 Debt financing transactions
In March 2024, we issued $1.25 billion of senior unsecured notes due in 2032 for net proceeds of approximately $1.24 billion. Interest accrues on the notes at a fixed rate of 6.25% per annum and is payable semi-annually in arrears. The proceeds from this notes issuance, together with cash on hand, were used to redeem all of the outstanding $1.25 billion aggregate principal amount of 11.625% Senior Notes due 2027. The repayment resulted in a loss on extinguishment of debt of $116 million that was recognized within Interest expense, net of interest capitalized within our consolidated statements of comprehensive income (loss) for the year ended December 31, 2024.
In August 2024, we issued $2.0 billion of senior unsecured notes due in 2033 for net proceeds of approximately $1.98 billion. Interest accrues on the notes at a fixed rate of 6.00% per annum and is payable semi-annually in arrears. The proceeds from this notes issuance were used to redeem all of our outstanding $1.0 billion aggregate principal of 9.250% Senior Notes due 2029 and all of our outstanding $1.0 billion aggregate principal amount of 8.250% Senior secured notes due 2029. The repayment resulted in a loss on extinguishment of debt of $142 million that was recognized within Interest expense, net of interest capitalized within our consolidated statements of comprehensive income (loss) for the year ended December 31, 2024.
In September 2024, we issued $1.5 billion of senior unsecured notes due in 2031 for net proceeds of approximately $1.49 billion. Interest accrues on the notes at a fixed rate 5.63% per annum and is a payable semi-annually in arrears. The proceeds from this notes issuance were used to redeem all of our outstanding $700 million aggregate principal amount of the 7.25% Senior Notes due 2030. The repayment resulted in a loss on extinguishment of debt of $61 million that was recognized within Interest expense, net of interest capitalized within our consolidated statements of comprehensive income (loss) for the year ended December 31, 2024.
During the fourth quarter of 2024, we repaid the remaining $138 million of the Silver Moon term loan due 2028, which resulted in an immaterial loss on extinguishment of debt that was recognized within Interest expense, net of interest capitalized within our consolidated statements of comprehensive income (loss) for the year ended December 31, 2024.
2025 Export credit facilities and agency guarantees
In July 2025, we took delivery of the Star of the Seas. To finance the delivery, we used a combination of cash and borrowed a total of $1.6 billion under the committed financing agreement, resulting in an unsecured term loan which is 95% guaranteed by Finnvera plc. The unsecured term loan amortizes semi-annually over 12 years. The majority of the loan bears interest at a fixed rate of 3.76% per annum and a portion of the loan bears interest at a floating rate equal to Term SOFR plus a margin of 0.90% - 1.63%. Based on applicable Term SOFR rates, as of December 31, 2025, the unsecured term loan weighted average interest rate was 4.28%.
2024 Export credit facilities and agency guarantees
In May 2024, we took delivery of Silver Ray. To finance the delivery, we borrowed $507 million under the committed financing agreement, resulting in an unsecured term loan which is 95% guaranteed by Euler Hermes. The unsecured loan amortizes semi-annually over 12 years and bears interest at a fixed rate of 4.33% per annum.
In June 2024, we took delivery of Utopia of the Seas. To finance the delivery, we borrowed a total of $1.5 billion under the committed financing agreement, resulting in an unsecured term loan which is 100% guaranteed by BpiFrance Assurance Export. The unsecured term loan amortizes semi-annually over 12 years and bears interest primarily at a fixed rate of 3.00% per annum.
During the second quarter of 2024, we repaid $839 million of outstanding deferred amounts under our export credit facilities, which eliminated the restriction on dividends and share repurchases. These repayments included both scheduled payments and an early repayment of the amortization deferral obtained on our export credit facilities in 2020 and 2021, which
F-22
ROYAL CARIBBEAN CRUISES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
resulted in an immaterial loss on extinguishment of debt that was recognized within Interest expense, net of interest capitalized within our consolidated statements of comprehensive income (loss) for the year ended December 31, 2024.
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, 2025, 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 through Interest expense, net of interest capitalized. We classify these fees within Amortization of debt issuance costs, discounts and premiums 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.
Debt covenants
Our revolving credit facilities, the majority of our term loans, and certain of our credit card processing agreements, contain covenants that require us, among other things, to maintain a fixed charge coverage ratio, and limit our net debt-to-capital ratio. In July 2024, we amended all of our export credit facilities to eliminate the contractual requirement for us to maintain a minimum level of stockholders' equity. As of December 31, 2025, we were in compliance with our debt covenants and we estimate we will be in compliance for the next twelve months.
Annual maturities
The following is a schedule of annual maturities on our total debt including finance leases, as of December 31, 2025 for each of the next five years (in millions):
| Year | As of December 31, 2025 (1) | ||||
| 2026 | $ | 3,187 | |||
| 2027 | 2,627 | ||||
| 2028 | 3,218 | ||||
| 2029 | 1,139 | ||||
| 2030 | 1,089 | ||||
| Thereafter | 10,642 | ||||
| $ | 21,902 |
(1) Debt denominated in other currencies is calculated based on the applicable exchange rate at December 31, 2025.
Note 9**. Leases**
Operating leases
Our operating leases primarily relate to preferred berthing arrangements, real estate, and shipboard equipment which are included within Operating lease right-of-use assets and Long-term operating lease liabilities, with the current portion of the liability included within Current portion of operating lease liabilities in our consolidated balance sheets as of December 31, 2025 and 2024. 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.
The company's preferred berthing agreement with Miami-Dade County ("County") includes the development plans for the County to finance the construction of a new and improved cruise Terminal G at PortMiami. The aggregate amount of the operating lease liabilities recorded for this berthing agreement was $168 million as of December 31, 2025 and December 31, 2024, respectively. There will be future remeasurements of the operating lease as the County completes several construction milestones throughout the term of the extended lease, including an expected remeasurement in 2027 or later, when the County satisfies substantial completion of Terminal G, as the minimum lease payments will increase at such time to approximately $55 million per year, with expected 3% annual increases thereafter.
F-23
ROYAL CARIBBEAN CRUISES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 primarily range from one to 10 years and the renewal periods for berthing agreements primarily range from one to 20 years. Generally, we do not include renewal options as a component of our present value calculation for berthing agreements. However, for certain real estate leases, we include them.
As most of our leases do not provide an implicit rate, we use our incremental borrowing rate in determining the present value of lease payments. We estimate our incremental borrowing rates based on Term SOFR and U.S. Treasury note rates corresponding to lease terms increased by the Company’s credit risk spread and reduced by the estimated impact of collateral. In addition, we have lease agreements with lease and non-lease components, which are generally accounted for separately. However, for berthing agreements, we account for the lease and non-lease components as a single lease component.
Finance leases
Our finance leases primarily relate to buildings and surrounding land located at our Miami headquarters. Finance leases are included within Property, and Equipment, net, and Long-term debt with the current portion of the liability included within Current portion of long-term debt in our consolidated balance sheets as of December 31, 2025 and 2024.
The Company's master lease agreement (“Master Lease”) with the County related to the buildings and surrounding land located at our Miami headquarters is classified as a finance lease in accordance with ASC 842, Leases. The Master Lease, including two five-year options to extend, which we are reasonably certain to exercise, expires in 2077. The agreement with the County includes financing plans to finalize the development of the buildings and land. The total aggregate amount of the finance lease liabilities recorded for this Master Lease was $108 million and $106 million as of December 31, 2025 and December 31, 2024, respectively. The development of the new campus buildings are expected to be completed in 2026, and the lease components will be recorded within our consolidated financial statements upon commencement.
In 2024, we executed the bargain purchase option and paid in full all of the outstanding aggregate principal amount of the Silver Dawn finance lease for approximately $227 million, which resulted in an immaterial loss on extinguishment of debt.
Supplemental balance sheet information for leases was as follows (in millions):
| As of December 31, 2025 | As of December 31, 2024 | ||||||||||
| Lease assets: | |||||||||||
| Finance lease right-of-use assets, net: | |||||||||||
| Property and equipment, gross | $ | 195 | $ | 146 | |||||||
| Accumulated depreciation | (54) | (50) | |||||||||
| Property and equipment, net | 141 | 96 | |||||||||
| Operating lease right-of-use assets | 620 | 677 | |||||||||
| Total lease assets | $ | 761 | $ | 773 | |||||||
| Lease liabilities: | |||||||||||
| Finance lease liabilities: | |||||||||||
| Current portion of debt | $ | 4 | $ | 7 | |||||||
| Long-term debt | 155 | 110 | |||||||||
| Total finance lease liabilities | 159 | 117 | |||||||||
| Operating lease liabilities: | |||||||||||
| Current portion of operating lease liabilities | 90 | 74 | |||||||||
| Long-term operating lease liabilities | 600 | 670 | |||||||||
| Total operating lease liabilities | 690 | 744 | |||||||||
| Total lease liabilities | $ | 849 | $ | 861 |
F-24
ROYAL CARIBBEAN CRUISES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The components of lease expense were as follows (in millions):
| Consolidated Statement of Comprehensive Income (Loss) Classification | Year Ended December 31, 2025 | Year Ended December 31, 2024 | Year Ended December 31, 2023 | ||||||||||||||||||||
| Lease costs: | |||||||||||||||||||||||
| Operating lease costs | Commission, transportation and other | $ | 212 | $ | 208 | $ | 183 | ||||||||||||||||
| Operating lease costs | Other operating expenses | 14 | 14 | 22 | |||||||||||||||||||
| Operating lease costs | Marketing, selling and administrative expenses | 20 | 19 | 21 | |||||||||||||||||||
| Finance lease costs: | |||||||||||||||||||||||
| Amortization of right-of-use-assets | Depreciation and amortization expenses | 3 | 13 | 22 | |||||||||||||||||||
| Interest on lease liabilities | Interest expense, net of interest capitalized | 8 | 30 | 30 | |||||||||||||||||||
| Total lease costs | $ | 257 | $ | 284 | $ | 278 |
In addition, certain of our berthing agreements include variable lease costs based on the number of passengers berthed. During the twelve months ended December 31, 2025, 2024, and 2023, we had $135 million, $115 million, and $85 million, of variable lease costs recorded within Commission, transportation and other in our consolidated statements of comprehensive income (loss), respectively. These variable lease costs are included within the balances presented above.
The weighted average of the remaining lease terms and weighted average discount rates are as follows:
| As of December 31, 2025 | As of December 31, 2024 | ||||||||||
| Weighted average of the remaining lease term in years | |||||||||||
| Operating leases | 18.26 | 17.96 | |||||||||
| Finance leases | 43.77 | 47.54 | |||||||||
| Weighted average discount rate | |||||||||||
| Operating leases | 7.09 | % | 7.23 | % | |||||||
| Finance leases | 6.69 | % | 6.90 | % |
Supplemental cash flow information related to leases is as follows (in millions):
| Year Ended December 31, 2025 | Year Ended December 31, 2024 | Year Ended December 31, 2023 | |||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||||||||
| Operating cash flows from operating leases | $ | 237 | $ | 232 | $ | 178 | |||||||||||
| Operating cash flows from finance leases | 8 | 30 | 30 | ||||||||||||||
| Financing cash flows from finance leases | $ | 6 | $ | 252 | $ | 31 |
F-25
ROYAL CARIBBEAN CRUISES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of December 31, 2025, maturities related to lease liabilities were as follows (in millions):
| Years | Operating Leases | Finance Leases | |||||||||
| 2026 | $ | 134 | $ | 15 | |||||||
| 2027 | 118 | 14 | |||||||||
| 2028 | 106 | 14 | |||||||||
| 2029 | 57 | 14 | |||||||||
| 2030 | 47 | 13 | |||||||||
| Thereafter | 973 | 574 | |||||||||
| Total lease payments | 1,435 | 644 | |||||||||
| Less: Interest | (745) | (485) | |||||||||
| Present value of lease liabilities | $ | 690 | $ | 159 |
Note 10**. Shareholders' Equity**
Dividends
During the fourth and third quarters of 2025, our Board declared dividends of $1.00 per share, which were paid in January 2026 and October 2025, respectively. During the second and first quarters of 2025 the Board declared dividends of $0.75 per share which were paid in July 2025 and April 2025, respectively.
During the fourth and third quarters of 2024, the Board declared dividends of $0.55 and $0.40 per share which were paid in January 2025 and October 2024, respectively. During the second quarter of 2024, we repaid the principal amounts deferred under our export credit facilities, which eliminated the restriction on dividends and share repurchases. Refer to Note 8*. Debt* for further information on the transaction.
We did not declare any dividends during the year ended December 31, 2023.
In February 2026, our Board declared a dividend of $1.50 per share, payable in April 2026.
Common Stock Repurchase Program
In February 2025, our Board authorized a 12-month common stock repurchase program for up to $1.0 billion that was completed in November 2025. During the year ended December 31, 2025, we repurchased 3.5 million shares of our common stock under this program, for a total of $1.0 billion in open market transactions that were recorded in Treasury Stock in our consolidated balance sheets.
In December 2025, our Board authorized a common stock repurchase program for up to $2.0 billion. The timing and number of shares to be repurchased will depend on a variety of factors including price and market conditions. Repurchases under the program may be made at management's discretion from time to time on the open market or through privately negotiated transactions. During the year ended December 31, 2025, we repurchased 0.6 million shares of our common stock under this program, for a total of $159 million in open market transactions that were recorded in Treasury Stock in our consolidated balance sheets. As of December 31, 2025, we have $1.8 billion that remains available for future stock repurchase transactions under our Board authorized program.
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 10,083,570 shares of our common stock pursuant to grants of (i) incentive and non-qualified stock options, (ii) stock appreciation rights, (iii) stock awards (including time-based and/or performance-based stock awards) and (iv) restricted stock units (including time-based and performance-based restricted stock units). During any calendar year, no one individual (other than non-employee members of our Board) may be granted awards of more than 500,000 shares and no non-employee member
F-26
ROYAL CARIBBEAN CRUISES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
of our Board may be granted awards with a value, measured as of the grant date, which together with cash compensation paid to such director for such calendar year, would exceed $750,000. Restricted stock units outstanding as of December 31, 2025, generally vest in equal installments over three or 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.
Our officers 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 (generally 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 2025, we issued a target number of 189,685 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"), adjusted earnings per share ("Adjusted EPS"), and Carbon Intensity Reduction for the years ended December 31, 2025 to December 31, 2027, as may be adjusted by the Talent and Compensation Committee of our Board in early 2028 for events that are outside of management's control.
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 (generally not to exceed 200% of the shares) will be determined based upon the Company's achievement of a specified performance target range.
In 2025, we issued 46,358 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 2025 awards will be based on the Company's ROIC, Adjusted EPS, and Carbon Intensity Reduction for the years ended December 31, 2025 to December 31, 2027, as may be adjusted by the Talent and Compensation Committee of our Board in early 2028 for events that are outside of management's control.
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, 2025, 2024 and 2023, 61,027, 102,796 and 151,989 shares of our common stock were purchased under the ESPP at a weighted-average price of $229.47, $135.55 and $71.23, respectively.
Total compensation expense recognized for employee stock-based compensation for the years ended December 31, 2025, 2024 and 2023 was as follows (in millions):
| Employee Stock-Based Compensation | |||||||||||||||||
| Classification of expense | 2025 | 2024 | 2023 | ||||||||||||||
| Marketing, selling and administrative expenses | $ | 175 | $ | 267 | $ | 126 | |||||||||||
| Total compensation expense | $ | 175 | $ | 267 | $ | 126 |
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:
F-27
ROYAL CARIBBEAN CRUISES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
| Restricted Stock Units Activity | Number of Awards | Weighted- Average Grant Date Fair Value | |||||||||
| Non-vested share units as of January 1, 2025 | 884,582 | $ | 96.27 | ||||||||
| Granted | 203,589 | 256.94 | |||||||||
| Vested | (453,527) | 93.75 | |||||||||
| Canceled | (43,453) | 130.21 | |||||||||
| Non-vested share units as of December 31, 2025 | 591,191 | $ | 151.04 |
The weighted-average estimated fair value of restricted stock units granted during the years ended December 31, 2024 and 2023 was $121.97 and $75.26, respectively. The total fair value of shares released on the vesting of restricted stock units during the years ended December 31, 2025, 2024 and 2023 was $119 million, $72 million, and $33 million, respectively. As of December 31, 2025, we had $44 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 0.60 years.
Performance share units are converted into shares of common stock upon vesting on a one-for-one basis. We estimate the cost of each performance share when the grant is authorized and the related service period has commenced using the fair value of our common stock on the date of grant. We would only remeasure the fair value of our performance shares in the event the award was modified during the vesting period. We recognize compensation cost over the vesting period based on the probability of the service and performance conditions being achieved until the vesting date, which is the date the performance conditions are satisfied. 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, 2025 | 665,153 | $ | 90.64 | ||||||||
| Granted | 189,685 | 200.92 | |||||||||
| Vested | (227,543) | 79.80 | |||||||||
| Canceled | (19,099) | 130.08 | |||||||||
| Non-vested share units as of December 31, 2025 | 608,196 | $ | 127.85 |
The weighted-average estimated fair value of performance share units granted during the years ended December 31, 2024 and 2023 was $114.70 and $73.96, respectively. The total fair value of shares released on the vesting of performance share units during the years ended December 31, 2025, 2024 and 2023 was $59 million, $32 million and $7 million, respectively. As of December 31, 2025, we had $58 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 0.87 years.
We estimate the fair value of each restricted stock award when the grant is authorized and the related service period has commenced. We would only remeasure the fair value of these restricted stock awards in the event an award was modified during the vesting period. We recognize compensation cost over the vesting period based on the probability of the service and performance conditions being achieved 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:
F-28
ROYAL CARIBBEAN CRUISES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
| Restricted Stock Awards Activity | Number of Awards | Weighted- Average Grant Date Fair Value | |||||||||
| Non-vested share units as of January 1, 2025 | 613,999 | $ | 82.68 | ||||||||
| Granted | 46,358 | 257.34 | |||||||||
| Vested | (116,449) | 79.80 | |||||||||
| Canceled | (55,180) | 81.05 | |||||||||
| Non-vested share units as of December 31, 2025 | 488,728 | $ | 100.12 |
The weighted-average estimated fair value of restricted stock awards granted during the years ended December 31, 2024 and 2023 was $120.94 and $74.59, respectively. As of December 31, 2025, we had $1 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 0.48 years.
Note 12**. Earnings Per Share**
A reconciliation between basic and diluted earnings per share is as follows (in millions, except per share data):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Net Income attributable to Royal Caribbean Cruises Ltd. for basic earnings per share | $ | 4,268 | $ | 2,877 | $ | 1,697 | |||||||||||
| Add convertible notes interest and inducement expense | 16 | 175 | 88 | ||||||||||||||
| Net Income attributable to Royal Caribbean Cruises Ltd. for diluted earnings per share | $ | 4,284 | $ | 3,052 | $ | 1,785 | |||||||||||
| Weighted-average common shares outstanding | 271 | 261 | 256 | ||||||||||||||
| Dilutive effect of stock-based awards | 1 | 1 | 1 | ||||||||||||||
| Dilutive effect of convertible notes | 2 | 17 | 26 | ||||||||||||||
| Diluted weighted-average shares outstanding | 274 | 279 | 283 | ||||||||||||||
| Basic earnings per share (1) | $ | 15.75 | $ | 11.00 | $ | 6.63 | |||||||||||
| Diluted earnings per share (1) | $ | 15.61 | $ | 10.94 | $ | 6.31 |
(1) Per share amounts may not calculate due to the use of rounded numbers.
There were no antidilutive shares for years ended December 31, 2025, 2024 and 2023, respectively.
Note 13**. Retirement Plan**
We maintain a defined contribution plan covering shoreside employees. We make 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 $25 million, $23 million, and $21 million, for the years ended December 31, 2025, 2024 and 2023, respectively.
F-29
ROYAL CARIBBEAN CRUISES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 14**. Income Taxes**
Income before income taxes by domestic and foreign subsidiaries (in millions):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Liberia | $ | 3,411 | $ | 2,417 | $ | 1,432 | |||||||||||
| Foreign subsidiaries | 962 | 524 | 279 | ||||||||||||||
| Income before income taxes | $ | 4,373 | $ | 2,941 | $ | 1,711 |
For the year ended December 31, 2025, we adopted ASU No. 2023-09, Income Taxes (Topic 740), on a prospective basis.
Provision for Income Taxes: Current and Deferred:
For the year ended December 31, 2025, current tax expense was $64 million and deferred tax expense (benefit) was $18 million. Our income tax expense relates entirely to the operations of foreign subsidiaries
For the years ending December 31, 2024 and 2023, our income tax expense was approximately $46 million and $6 million, respectively. These amounts mainly resulted from taxes on our non-US operations, certain items not qualifying under Section 883, tonnage taxes, and other subsidiary income taxes, none of which were considered significant.
For the year ended December 31, 2025, there were no individual jurisdictions with material cash taxes paid.
Reconciliation of income tax expense, computed by applying the Liberia statutory rate (in millions):
| Year Ended December 31, | |||||||||||
| 2025 | |||||||||||
| Income before income taxes | $ | 4,373 | |||||||||
| Less: Equity investment income | 414 | ||||||||||
| Income before income taxes, excluding equity investment income | 3,959 | ||||||||||
| Tax at Liberia statutory rate of 25% | 990 | 25 | % | ||||||||
| Nontaxable or nondeductible items | |||||||||||
| Liberia international shipping income exemption | (850) | (21) | % | ||||||||
| Foreign tax effects | |||||||||||
| United States | |||||||||||
| US source shipping income not exempt under Section 883 of the Internal Revenue Code 1 | 37 | 1 | % | ||||||||
| United Kingdom | |||||||||||
| Profits exempt under tonnage tax | (94) | (2) | % | ||||||||
| Other | (1) | — | % | ||||||||
| Total | $ | 82 | 2 | % |
(1) The tax benefit associated with US source shipping income exempt under Section 883 of the Internal Revenue Code was approximately $200 million.
We are subject to corporate income taxes in countries where we have operations or subsidiaries. For the years ended December 31, 2025, 2024 and 2023, we and the majority of our ship-operating and vessel-owning subsidiaries were 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 to be the international
F-30
ROYAL CARIBBEAN CRUISES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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, for the years ended December 31, 2025, 2024 and 2023, one of our ship-operating subsidiaries was 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 net 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..
Deferred Tax Assets and Liabilities:
As of December 31, 2025, our deferred tax liabilities total $153 million and primarily relate to $137 million of timing differences on property and equipment which arose on the acquisition of the Port of Costa Maya and adjacent land in Mahahual, Mexico. As of December 31, 2024, our deferred tax liabilities were $13 million and primarily related to investments in foreign subsidiaries.
As of December 31, 2025, our gross deferred tax assets total $53 million and primarily relate to U.S. and foreign net operating losses (“NOLs”) of approximately $25 million and deferred tax assets for U.S. and foreign tax credits of approximately $15 million.
As of December 31, 2024, our gross deferred tax assets total $63 million and primarily relate to U.S. and foreign NOLs of approximately $32 million and deferred tax assets for U.S. and foreign tax credits of approximately $19 million.
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.
As of December 31, 2025, we have provided a valuation allowance for approximately $25 million, of which $20 million relates to deferred tax assets for NOLs and tax credits. As of December 31, 2024, we provided a valuation allowance for approximately $21 million, of which $15 million relates to deferred tax assets for NOLs and tax credits.
As of December 31, 2025, $9 million of the NOLs deferred tax assets relate to NOLs which are subject to expire between 2026 and 2042 and $14 million of the tax credits deferred tax assets relate to credits which are subject to expire between 2037 and 2039.
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.
Unrecognized tax benefits:
As of and for the years ended December 31, 2025, 2024 and 2023, the company had no material unrecognized tax benefits and no material changes in unrecognized tax benefits. Any interest expense and penalties related to income tax liabilities are recorded as income tax expense.
F-31
ROYAL CARIBBEAN CRUISES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 15**. Changes in Accumulated Other Comprehensive Loss**
The following table presents the changes in accumulated other comprehensive loss by component for the years ended December 31, 2025, 2024 and 2023 (in millions):
| 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, 2023 | $ | (639) | $ | (8) | $ | 3 | $ | (644) | ||||||||||||||||||
| Other comprehensive income (loss) income before reclassifications | 3 | 6 | (9) | — | ||||||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | (30) | — | — | (30) | ||||||||||||||||||||||
| Net current-period other comprehensive (loss) income | (27) | 6 | (9) | (30) | ||||||||||||||||||||||
| Accumulated comprehensive loss at January 1, 2024 | (666) | (2) | (6) | (674) | ||||||||||||||||||||||
| Other comprehensive (loss) income before reclassifications | (120) | 12 | 19 | (89) | ||||||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | (37) | — | (2) | (39) | ||||||||||||||||||||||
| Net current-period other comprehensive (loss) income | (157) | 12 | 17 | (128) | ||||||||||||||||||||||
| Accumulated comprehensive loss at January 1, 2025 | (823) | 10 | 11 | (802) | ||||||||||||||||||||||
| Other comprehensive income (loss) before reclassifications | 216 | (4) | (24) | 188 | ||||||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | 12 | — | (2) | 10 | ||||||||||||||||||||||
| Net current-period other comprehensive income (loss) | 228 | (4) | (26) | 198 | ||||||||||||||||||||||
| Accumulated comprehensive loss at December 31, 2025 | $ | (595) | $ | 6 | $ | (15) | $ | (604) |
F-32
ROYAL CARIBBEAN CRUISES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table presents reclassifications out of accumulated other comprehensive loss for the years ended December 31, 2025, 2024 and 2023 (in millions):
| Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into (Loss) Income | ||||||||||||||||||||||||||
| Details about Accumulated Other Comprehensive Loss Components | Year Ended December 31, 2025 | Year Ended December 31, 2024 | Year Ended December 31, 2023 | Affected Line Item in Statements of Comprehensive Income (Loss) | ||||||||||||||||||||||
| Gain (loss) on cash flow derivative hedges: | ||||||||||||||||||||||||||
| Interest rate swaps | $ | 22 | $ | 45 | $ | 49 | Interest expense, net of interest capitalized | |||||||||||||||||||
| Foreign currency forward contracts | (22) | (23) | (18) | Depreciation and amortization expenses | ||||||||||||||||||||||
| Foreign currency forward contracts | — | — | (10) | Other income (expense) | ||||||||||||||||||||||
| Fuel swaps | (12) | 15 | 9 | Fuel | ||||||||||||||||||||||
| (12) | 37 | 30 | ||||||||||||||||||||||||
| Release of foreign cumulative translation due to sale or liquidation of businesses: | ||||||||||||||||||||||||||
| Foreign cumulative translation | 2 | 2 | — | Other operating | ||||||||||||||||||||||
| Total reclassifications for the period | $ | (10) | $ | 39 | $ | 30 |
F-33
ROYAL CARIBBEAN CRUISES LTD.
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 millions):
| Fair Value Measurements at December 31, 2025 | Fair Value Measurements at December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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) | $ | 825 | $ | 825 | $ | 825 | $ | — | $ | — | $ | 388 | $ | 388 | $ | 388 | $ | — | $ | — | |||||||||||||||||||||||||||||||||||||||
| Total Assets | $ | 825 | $ | 825 | $ | 825 | $ | — | $ | — | $ | 388 | $ | 388 | $ | 388 | $ | — | $ | — | |||||||||||||||||||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Long-term debt (including current portion of long-term debt)(5) | $ | 21,186 | $ | 21,877 | $ | — | $ | 21,877 | $ | — | $ | 19,959 | $ | 21,325 | $ | — | $ | 21,325 | $ | — | |||||||||||||||||||||||||||||||||||||||
| Total Liabilities | $ | 21,186 | $ | 21,877 | $ | — | $ | 21,877 | $ | — | $ | 19,959 | $ | 21,325 | $ | — | $ | 21,325 | $ | — |
(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. We valued our senior notes and convertible notes using a quoted market price, which is considered a Level 2 input as it is observable in the market; however, these instruments have a limited trading volume and as such this fair value estimate is not necessarily indicative of the value at which the instruments could be retired or transferred.
(3)Inputs that are unobservable. The Company did not use any Level 3 inputs as of December 31, 2025 and 2024.
(4)Consists of cash and marketable securities with original maturities of less than 90 days.
(5)Consists of unsecured revolving credit facilities, senior notes, convertible notes, and term loans. These amounts do not include our finance lease obligations.
Other Financial Instruments
The carrying amounts of accounts receivable, accounts payable, and accrued expenses approximate fair value as of December 31, 2025 and 2024.
Assets and liabilities that are recorded at fair value have been categorized based upon the fair value hierarchy. The following table presents information about the Company's financial instruments recorded at fair value on a recurring basis (in millions):
| Fair Value Measurements at December 31, 2025 | Fair Value Measurements at December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| 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) | $ | 144 | $ | — | $ | 144 | $ | — | $ | 71 | $ | — | $ | 71 | $ | — | |||||||||||||||||||||||||||||||
| Total Assets | $ | 144 | $ | — | $ | 144 | $ | — | $ | 71 | $ | — | $ | 71 | $ | — | |||||||||||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||
| Derivative financial instruments(4) | $ | 124 | $ | — | $ | 124 | $ | — | $ | 139 | $ | — | $ | 139 | $ | — | |||||||||||||||||||||||||||||||
| Total Liabilities | $ | 124 | $ | — | $ | 124 | $ | — | $ | 139 | $ | — | $ | 139 | $ | — |
F-34
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. No Level 1 inputs were used in fair value measurements of other financial instruments as of December 31, 2025 and 2024.
(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, 2025 and 2024.
(4)Consists of foreign currency forward contracts, interest rate 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, 2025 or 2024, or that will be realized in the future, and do not include expenses that could be incurred in an actual sale or settlement.
Nonfinancial Instruments Recorded at Fair Value on a Nonrecurring Basis
Nonfinancial instruments include items such as goodwill, indefinite-lived intangible assets, long-lived assets, right-of-use assets and equity method investments that are measured at fair value on a nonrecurring basis when events and circumstances indicate the carrying value is not recoverable. There were no material nonfinancial instruments recorded at fair value as of December 31, 2025 and December 31, 2024.
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.
F-35
ROYAL CARIBBEAN CRUISES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table presents information about the Company’s offsetting of financial assets and liabilities under master netting agreements with derivative counterparties (in millions):
| Gross Amounts not Offset in the Consolidated Balance Sheet that are Subject to Master Netting Agreements | ||||||||||||||||||||||||||||||||||||||||||||||||||
| As of December 31, 2025 | As of December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | $ | 144 | $ | (59) | $ | — | $ | 85 | $ | 71 | $ | (52) | $ | — | $ | 19 | ||||||||||||||||||||||||||||||||||
| Total | $ | 144 | $ | (59) | $ | — | $ | 85 | $ | 71 | $ | (52) | $ | — | $ | 19 | ||||||||||||||||||||||||||||||||||
| 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 | $ | (124) | $ | 59 | $ | — | $ | (65) | $ | (139) | $ | 52 | $ | — | $ | (87) | ||||||||||||||||||||||||||||||||||
| Total | $ | (124) | $ | 59 | $ | — | $ | (65) | $ | (139) | $ | 52 | $ | — | $ | (87) |
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, 2025 and December 31, 2024, we had counterparty credit risk exposure under our derivative instruments of $87 million and $21 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.
Derivative Instruments
We are exposed to market risk attributable to changes in interest rates, foreign currency exchange rates and fuel prices. We try to mitigate these risks through a combination of our normal operating and financing activities and through the use of derivative financial instruments pursuant to our hedging practices and policies. The financial impact of these hedging instruments is primarily offset by corresponding changes in the underlying exposures being hedged. We achieve this by closely matching the notional amount, term and conditions of the derivative instrument with the underlying risk being hedged. Although certain of our derivative financial instruments do not qualify or are not accounted for under hedge accounting, our objective is not to hold or issue derivative financial instruments for trading or other speculative purposes.
We enter into various forward, swap and option contracts to manage our interest rate exposure and to limit our exposure to fluctuations in foreign currency exchange rates and fuel prices. These instruments are recorded on the balance sheet at their fair value and the vast majority are designated as hedges. We also use non-derivative financial instruments designated as hedges of our net investment in our foreign operations and investments.
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ROYAL CARIBBEAN CRUISES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 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 highly effective is recognized in earnings.
We consider the classification of the underlying hedged item’s cash flows in determining the classification for the designated derivative instrument’s cash flows. 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. For example, 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, 2025 and 2024, approximately 93% and 92%, respectively, of our debt was effectively fixed-rate debt, which is net of our interest rate swap agreements. We use interest rate swap agreements to modify our exposure to interest rate movements and to manage our interest expense.
Market risk associated with our fixed-rate debt is the potential increase in fair value resulting from a decrease in interest rates. At December 31, 2025, there were no interest rate swap agreements for fixed-rate debt instruments.
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ROYAL CARIBBEAN CRUISES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
We use interest rate swap agreements that effectively convert a portion of our floating-rate debt to a fixed-rate basis to manage the risk of increasing interest rates. At December 31, 2025, we maintained interest rate swap agreements on the following floating-rate debt instruments:
| Debt Instrument | Swap Notional as of December 31, 2025 (In millions) | Maturity | Debt Floating Rate | Spread | All-in Fixed Rate | |||||||||||||||||||||||||||
| Quantum of the Seas term loan | 61 | October 2026 | Term SOFR plus | 1.30% | 3.78% | |||||||||||||||||||||||||||
| Anthem of the Seas term loan | 91 | April 2027 | Term SOFR plus | 1.30% | 3.9% | |||||||||||||||||||||||||||
| Ovation of the Seas term loan | 173 | April 2028 | Term SOFR plus | 1.00% | 3.20% | |||||||||||||||||||||||||||
| Harmony of the Seas term loan (1) | 170 | May 2028 | EURIBOR plus | 1.15% | 2.26% | |||||||||||||||||||||||||||
| Odyssey of the Seas term loan(2) | 268 | October 2032 | Term SOFR plus | 0.96% | 3.28% | |||||||||||||||||||||||||||
| Odyssey of the Seas term loan*(2)* | 134 | October 2032 | Term SOFR plus | 0.96% | 2.91% | |||||||||||||||||||||||||||
| $ | 897 |
(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, 2025.
(2) Interest rate swap agreements hedging the term loan of Odyssey of the Seas include Term SOFR zero-floors, Term SOFR with no floors, and Overnight SOFR.
The notional amount of interest rate swap agreements related to outstanding debt as of December 31, 2025 and 2024 was $0.9 billion and $1.2 billion, respectively. These interest rate swap agreements are accounted for as cash flow hedges.
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, 2025, the aggregate cost of our ships on order was $11.3 billion, of which we had deposited $1.0 billion as of such date. These amounts do not include any ships placed on order that are contingent upon completion of conditions precedent and/or financing 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, 2025 and 2024, approximately 64.1% and 43.4%, 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, 2025 and 2024 the average notional amount of foreign currency forward contracts was approximately $1.2 billion and $1.1 billion, respectively. These instruments are not designated as hedging instruments. For the years ended December 31, 2025, 2024 and 2023, changes in the fair value of the foreign currency forward contracts resulted in gain (losses) of $49 million, $(77) million, and $19 million, respectively, which offset (losses) gains arising from the remeasurement of monetary assets and liabilities denominated in foreign currencies in those same years of $(63) million, $65 million and $(43) million, respectively. These amounts were recognized in earnings within Other income (expense) in our consolidated statements of comprehensive income (loss).
The notional amount of outstanding foreign exchange contracts, excluding the forward contracts entered into to minimize remeasurement volatility, as of December 31, 2025 and 2024 was $2.0 billion and $2.7 billion, respectively.
Non-Derivative Instruments
We consider our investments in our foreign operations to be denominated in relatively stable currencies and to be of a long-term nature. We address the exposure of our investments in foreign operations by denominating a portion of our debt in our subsidiaries' and investments' functional currencies and designating it as a hedge of these subsidiaries and investments. We had designated debt as
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ROYAL CARIBBEAN CRUISES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
a hedge of our net investments in TUI Cruises of €631 million, or approximately $740 million, as of December 31, 2025. As of December 31, 2024, we had designated debt as a hedge of our net investments primarily in TUI Cruises of €889 million, or approximately $921 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.
Changes in the fair value of fuel swaps for which cash flow hedge accounting was discontinued are currently recognized in Other income (expense) for each reporting period through the maturity dates of the fuel swaps. During the year ended December 31, 2025, we did not discontinue cash flow hedge accounting on any material amount of our fuel swap agreements. During the year ended December 31, 2024, we did not discontinued cash flow hedge accounting on any of our fuel swap agreements.
At December 31, 2025, we have hedged the variability in future cash flows for certain forecasted fuel transactions occurring through 2028. As of December 31, 2025 and December 31, 2024, we had the following outstanding fuel swap agreements:
| Fuel Swap Agreements | |||||||||||
| As of December 31, 2025 | As of December 31, 2024 | ||||||||||
| (metric tons) | |||||||||||
| Designated as hedges: | |||||||||||
| 2026 | 1,065,500 | 786,750 | |||||||||
| 2027 | 819,048 | 364,048 | |||||||||
| 2028 | 465,699 | — |
| Fuel Swap Agreements | |||||||||||
| As of December 31, 2025 | As of December 31, 2024 | ||||||||||
| (% hedged) | |||||||||||
| Designated hedges as a % of projected fuel purchases: | |||||||||||
| 2026 | 60 | % | 44 | % | |||||||
| 2027 | 47 | % | 20 | % | |||||||
| 2028 | 26 | % | — | % |
At December 31, 2025, there was $66 million of estimated unrealized net loss associated with our cash flow hedges pertaining to fuel swap agreements that is expected to be reclassified to earnings from Accumulated other comprehensive loss within the next twelve months when compared to $9 million of estimated unrealized net loss at December 31, 2024. Reclassification is expected to occur as the result of fuel consumption associated with our hedged forecasted fuel purchases.
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ROYAL CARIBBEAN CRUISES LTD.
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 millions):
| Fair Value of Derivative Instruments | |||||||||||||||||||||||||||||||||||
| Asset Derivatives | Liability Derivatives | ||||||||||||||||||||||||||||||||||
| Balance Sheet Location | As of December 31, 2025 | As of December 31, 2024 | Balance Sheet Location | As of December 31, 2025 | As of December 31, 2024 | ||||||||||||||||||||||||||||||
| Fair Value | Fair Value | Fair Value | Fair Value | ||||||||||||||||||||||||||||||||
| Derivatives designated as hedging instruments under ASC 815-20**(1)** | |||||||||||||||||||||||||||||||||||
| Interest rate swaps | Derivative financial instruments | $ | 1 | $ | — | Derivative financial instruments | $ | — | $ | — | |||||||||||||||||||||||||
| Interest rate swaps | Other assets | 29 | 58 | Other long-term liabilities | 1 | — | |||||||||||||||||||||||||||||
| Foreign currency forward contracts | Derivative financial instruments | 114 | — | Derivative financial instruments | — | 71 | |||||||||||||||||||||||||||||
| Foreign currency forward contracts | Other assets | — | — | Other long-term liabilities | — | 22 | |||||||||||||||||||||||||||||
| Fuel swaps | Derivative financial instruments | — | 10 | Derivative financial instruments | 67 | 19 | |||||||||||||||||||||||||||||
| Fuel swaps | Other assets | — | 3 | Other long-term liabilities | 56 | 27 | |||||||||||||||||||||||||||||
| Total derivatives designated as hedging instruments under ASC 815-20 | $ | 144 | $ | 71 | $ | 124 | $ | 139 | |||||||||||||||||||||||||||
(1)Subtopic 815-20 “Hedging-General” under ASC 815.
The carrying value and line item caption of non-derivative instruments designated as hedging instruments recorded within our consolidated balance sheets were as follows (in millions):
| Carrying Value | ||||||||||||||||||||
| Non-derivative instrument designated as hedging instrument under ASC 815-20 | Balance Sheet Location | As of December 31, 2025 | As of December 31, 2024 | |||||||||||||||||
| Foreign currency debt | Current portion of long-term debt | $ | 136 | $ | 60 | |||||||||||||||
| Foreign currency debt | Long-term debt | 605 | 860 | |||||||||||||||||
| $ | 741 | $ | 920 |
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ROYAL CARIBBEAN CRUISES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The effect of derivative instruments qualifying and designated as cash flow hedging instruments on the consolidated financial statements was as follows (in millions):
| Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) on Derivatives | ||||||||||||||||||||
| Derivatives under ASC 815-20 Cash Flow Hedging Relationships | Year Ended December 31, 2025 | Year Ended December 31, 2024 | Year Ended December 31, 2023 | |||||||||||||||||
| Interest rate swaps | $ | (6) | $ | 28 | $ | 11 | ||||||||||||||
| Foreign currency forward contracts | 325 | (175) | 24 | |||||||||||||||||
| Fuel swaps | (103) | 27 | (32) | |||||||||||||||||
| $ | 216 | $ | (120) | $ | 3 |
The effect of non-derivative instruments qualifying and designated as net investment hedging instruments on the consolidated financial statements was as follows (in millions):
| 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, 2025 | Year Ended December 31, 2024 | Year Ended December 31, 2023 | |||||||||||||||||
| Foreign Currency Debt | $ | (109) | $ | 56 | $ | (23) | ||||||||||||||
| $ | (109) | $ | 56 | $ | (23) |
The effect of derivatives not designated as hedging instruments on the consolidated financial statements was as follows (in millions):
| Amount of Gain (Loss) Recognized in Income on Derivatives | ||||||||||||||||||||||||||
| Derivatives Not Designated as Hedging Instruments under ASC 815-20 | Location of Gain (Loss) Recognized in Income on Derivatives | Year Ended December 31, 2025 | Year Ended December 31, 2024 | Year Ended December 31, 2023 | ||||||||||||||||||||||
| Foreign currency forward contracts | Other income (expense) | $ | 49 | $ | (77) | $ | 19 | |||||||||||||||||||
| Fuel swaps | Other income (expense) | 2 | — | 1 | ||||||||||||||||||||||
| $ | 51 | $ | (77) | $ | 20 |
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, 2025, our senior unsecured debt credit rating was BBB- by Standard & Poor's and Baa3 by Moody's. As of December 31, 2025, six of our ship debt interest rate derivative hedges had reached their fifth-year anniversary; however, the net market value for these derivative hedges were in a net asset position, and accordingly, we were not required to post any collateral as of such date. Subsequently, in January 2026, we finalized amendments to remove the collateral requirements from our six interest rate derivative hedges.
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ROYAL CARIBBEAN CRUISES LTD.
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, 2025, we had three Icon-class ships and one Oasis-class ship on order for our Royal Caribbean brand with an aggregate capacity of approximately 22,500 berths. As of December 31, 2025, we had one Edge-class ship and four river cruise ships on order for our Celebrity brand with capacity of approximately 3,930 berths. The following provides further information on recent developments with respect to our ship orders.
In November 2025, we entered into agreements in connection with the 95% Finnvera-backed financing of approximately 80% of the contract price of the fourth Icon-class ship. The maximum loan amount under the financing is not to exceed the United States dollar equivalent of €2.1 billion, or approximately $2.4 billion based on the exchange rate at December 31, 2025. The loan will amortize semi-annually and has an expected final maturity of 12 years from the delivery date. Interest on the loan will accrue at a floating rate equal to Term SOFR + 0.90%. The fourth Icon-class ship will have a capacity of approximately 5,600 berths.
In October 2025, we executed definitive building contracts for the first four ships in the initial order of 10 ships for Celebrity River Cruises which was launched in January 2025.
In June 2025, we entered into a credit agreement for the unsecured financing of the sixth Edge-class ship, Celebrity Xcite, for approximately 80% of the ship’s contract price and our building contract with Chantiers de l'Atlantique became effective. Bpifrance Assurance Export, has agreed to guarantee to the lenders 100% of the financing. The maximum loan amount under the facility is not to exceed the United States dollar equivalent of €1.0 billion, or approximately $1.2 billion based on the exchange rate at December 31, 2025. The loan will amortize semi-annually and will mature 12 years following delivery of the ship. Interest on the loan will accrue at a floating rate equal to Term SOFR plus 0.85% per annum. Celebrity Xcite will have a capacity of approximately 3,250 berths.
In December 2019, we entered into a credit agreement for the unsecured financing of Legend of the Sea, 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 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, 2025. 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 Term SOFR plus 1.28%. The third Icon-class ship will have a capacity of approximately 5,600 berths. In May 2025, we amended the credit agreement for the third Icon-class ship, Legend of the Seas, to increase the maximum loan amount by €334 million or approximately $393 million based on the exchange rate at December 31, 2025. Interest on the incremental portion of the loan will accrue at a floating rate equal to Term SOFR plus 0.90%.
In March 2025, we entered into a credit agreement for the unsecured financing of the seventh Oasis-class ship for approximately 80% of the ship’s contract price and our building contract with Chantiers de l'Atlantique became effective. Bpifrance Assurance Export, the official French export credit agency, has agreed to guarantee to the lenders 100% of the financing. The maximum loan amount under the facility is not to exceed the United States dollar equivalent of €1.7 billion, or approximately $2.0 billion based on the exchange rate at December 31, 2025. The loan will amortize semi-annually and will mature 12 years following delivery of the ship. Interest on the loan will accrue at a floating rate equal to Term SOFR + 0.85%. The seventh Oasis-class ship will have a capacity of approximately 5,700 berths.
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ROYAL CARIBBEAN CRUISES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of December 31, 2025, our Global Brands and our Partner Brands have the following ships on order:
| Ship | Shipyard | Expected Delivery Dates | Approximate Berths | Filter | |||||||||||||||||||
| Royal Caribbean | Show | ||||||||||||||||||||||
| Oasis-class: | Show | ||||||||||||||||||||||
| Unnamed | Chantiers de l'Atlantique | 2nd Quarter 2028 | 5,700 | Show | |||||||||||||||||||
| Icon-class: | Show | ||||||||||||||||||||||
| Legend of the Seas | Meyer Turku Oy | 2nd Quarter 2026 | 5,600 | Show | |||||||||||||||||||
| Unnamed | Meyer Turku Oy | 3rd Quarter 2027 | 5,600 | Show | |||||||||||||||||||
| Unnamed | Meyer Turku Oy | 2nd Quarter 2028 | 5,600 | Show | |||||||||||||||||||
| Celebrity Cruises | Show | ||||||||||||||||||||||
| Edge-Class: | Show | ||||||||||||||||||||||
| Celebrity Xcite | Chantiers de l'Atlantique | 4th Quarter 2028 | 3,250 | Show | |||||||||||||||||||
| Celebrity River Cruises: | Show | ||||||||||||||||||||||
| Celebrity Compass | TeamCo Shipyard | 2nd Quarter 2027 | 170 | Show | |||||||||||||||||||
| Celebrity Seeker | TeamCo Shipyard | 3rd Quarter 2027 | 170 | Show | |||||||||||||||||||
| Unnamed | TeamCo Shipyard | 1st Quarter 2028 | 170 | Show | |||||||||||||||||||
| Unnamed | TeamCo Shipyard | 2nd Quarter 2028 | 170 | Show | |||||||||||||||||||
| Mein Schiff | Show | ||||||||||||||||||||||
| Mein Schiff Flow | Fincantieri | 2nd Quarter 2026 | 4,100 | Show | |||||||||||||||||||
| Unnamed | Fincantieri | 1st Quarter 2031 | 4,100 | Show | |||||||||||||||||||
| Unnamed | Fincantieri | 4th Quarter 2032 | 4,100 | Show | |||||||||||||||||||
| Total Berths | 38,730 | Show |
In December 2025, we signed agreements with Chantiers de l'Atlantique to build two ships of a new generation for Royal Caribbean, known as the Discovery-class, which are expected to enter service in the 2029 and 2032, respectively. These orders are contingent upon completion of conditions precedent, including documentation and financing.
During the quarter ended December 31, 2025, we entered into an agreement with Meyer Turku Oy to build a fifth Icon-class ship for delivery in 2028. The conditions for effectiveness including financing commitments also became effective during the quarter.
In January 2026, Celebrity River Cruises announced a commitment for 10 new ships that will expand its river cruise fleet to 20 vessels.
As of December 31, 2025, the aggregate cost of our ships on order, presented in the table above, not including any ships on order by our Partner Brands, was approximately $11.3 billion, of which we had deposited $1 billion. Refer to Note 16. Fair Value Measurements and Derivative Instruments for further information.
Litigation
As previously reported, a lawsuit was 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, which was expropriated by the Cuban government. The complaint further alleges that we trafficked in the terminal 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.
The Court entered final judgment in December 2022 in favor of the plaintiff and awarded damages and attorneys' fees to the plaintiff in the aggregate amount of approximately $112 million. We then appealed the judgment to the United States Court of Appeals for the 11th Circuit. On October 22, 2024, the 11th Circuit issued an opinion reversing the lower court’s judgment.
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ROYAL CARIBBEAN CRUISES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The plaintiff's petition for a rehearing by the full 11th Circuit was subsequently denied. The plaintiff petitioned the United States Supreme Court for a writ of certiorari, which was granted on October 3, 2025.
During the fourth quarter of 2022, we recorded a charge of approximately $130 million to Other income (expense) within our consolidated statements of comprehensive income (loss) related to the Havana Docks Action, including post-judgment interest and related legal defense costs and bonding fees. Following the 11th Circuit's denial of the rehearing petition, we released approximately $124 million of the previously recorded loss contingency for the year ended December 31, 2024, recognized within Other income (expense) within our consolidated statements of comprehensive income (loss). The outcome of the litigation is inherently unpredictable and subject to significant uncertainties, and there can be no assurances that the final outcome of this case will be favorable.
In addition, we are routinely involved in claims typical within the cruise vacation industry. The majority of these claims are covered by insurance. We believe the outcome of such claims, net of expected insurance recoveries, will not have a material adverse impact on our financial condition or results of operations and cash flows.
Other
Some of the contracts that we enter into include indemnification provisions that obligate us to make payments to the counterparty if certain events occur. These contingencies generally relate to changes in taxes, increased lender capital costs and other similar costs. The indemnification clauses are often standard contractual terms and are entered into in the normal course of business. There are no stated or notional amounts included in the indemnification clauses and we are not able to estimate the maximum potential amount of future payments, if any, under these indemnification clauses. We have not been required to make any payments under such indemnification clauses in the past and, under current circumstances, we do not believe an indemnification in any material amount is probable.
We may be obligated to prepay indebtedness outstanding under our credit facilities if any person acquires ownership of more than 50% of our common stock or, subject to certain exceptions, if during any 24-month period, a majority of our Board is made up of persons who were not (i) members of the Board on the first day of such period, (ii) nominated by persons who were members of the Board on the first day of such period, or (iii) nominated by directors who themselves were nominated under clauses (i) or (ii) above. If prepayment is triggered, we may be unable to replace our credit facilities 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, 2025, we have future commitments to pay for our usage of certain port facilities, marine consumables, services and maintenance contracts as follows (in millions):
| Year | |||||
| 2026 | $ | 416 | |||
| 2027 | 140 | ||||
| 2028 | 97 | ||||
| 2029 | 86 | ||||
| 2030 | 79 | ||||
| Thereafter | 841 | ||||
| $ | 1,659 |
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Previous: Item 15. Exhibits and Financial Statement Schedules