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

Cautionary Note Concerning Forward-Looking Statements

The discussion under this caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this Quarterly Report on Form 10-Q includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including statements regarding our expectations for future periods, business and industry prospects or future results of operations or financial position, made in this Quarterly Report on Form 10-Q are forward-looking. Words such as "anticipate," "believe," "considering," "could," "driving," "estimate," "expect," "goal," "intend," "may," "plan," "project," "seek," "should," "will," "would," and similar expressions are intended to further identify any of these forward-looking statements. Forward-looking statements reflect management's current expectations, but they are based on judgments and are inherently uncertain. Furthermore, they are subject to risks, uncertainties and other factors that could cause our actual results, performance or achievements to differ materially from the future results, performance or achievements expressed or implied in those forward-looking statements. Examples of these risks, uncertainties and other factors include, but are not limited to, those discussed in this Quarterly Report on Form 10-Q and, in particular, the risks discussed under the caption "Risk Factors" in Part II, Item 1A herein.

All forward-looking statements made in this Quarterly Report on Form 10-Q speak only as of the date of this filing. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Overview

The discussion and analysis of our financial condition and results of operations is organized to present the following:

• a review of our financial presentation, including discussion of certain operational and financial metrics we utilize to assist us in managing our business;

• a discussion of our results of operations for the quarter and nine months ended September 30, 2022, compared to the same period in 2021; and

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

Critical Accounting Policies and Estimates

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

Seasonality

Our revenues are seasonal based on demand for cruises. Demand has historically been strongest for cruises during the Northern Hemisphere’s summer months and holidays. In order to mitigate the impact of the winter weather in the Northern Hemisphere and to capitalize on the summer season in the Southern Hemisphere, our brands have historically focused on deployment to the Caribbean, Asia and Australia during that period. This seasonal trend was disrupted with the voluntary suspension of our global cruise operations effective March 2020 in response to the COVID-19 outbreak. We resumed our global cruise operations commencing in the second half of 2021, with our full fleet in service by June 2022. Since our full fleet is in service, we expect to return to seasonal trends.

Financial Presentation

Description of Certain Line Items

Revenues

Our revenues are comprised of the following:

• Passenger ticket revenues, which consist of revenue recognized from the sale of passenger tickets and the sale of air transportation to and from our ships; and

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

Cruise Operating Expenses

Our cruise operating expenses are comprised of the following:

• Commissions, transportation and other expenses, which consist of those costs directly associated with passenger ticket revenues, including travel agent commissions, air and other transportation expenses, port costs that vary with passenger head counts and related credit card fees;

• Onboard and other expenses, which consist of the direct costs associated with onboard and other revenues, including the costs of products sold onboard our ships, vacation protection insurance premiums, costs associated with pre- and post-cruise tours and related credit card fees, as well as the minimal costs associated with concession revenues, as the costs are mostly incurred by third-party concessionaires, and costs incurred for the procurement and management related services we perform on behalf of our unconsolidated affiliates;

• Payroll and related expenses, which consist of costs for shipboard personnel (costs associated with our shoreside personnel are included in Marketing, selling and administrative expenses);

*•*Food expenses, which include food costs for both guests and crew;

*•*Fuel expenses, which include fuel and related delivery, storage and emission consumable costs and the financial impact of fuel swap agreements; and

• Other operating expenses, which consist primarily of operating costs such as repairs and maintenance, port costs that do not vary with passenger head counts, vessel related insurance, entertainment and gains and/or losses related to the sale of our ships, if any.

We do not allocate payroll and related expenses, food expenses, fuel expenses or other operating expenses to the expense categories attributable to passenger ticket revenues or onboard and other revenues since they are incurred to provide the total cruise vacation experience.

Selected Operational and Financial Metrics

We utilize a variety of operational and financial metrics which are defined below to evaluate our performance and financial condition. As discussed in more detail herein, certain of these metrics are non-GAAP financial measures. These non-GAAP financial measures are provided along with the related GAAP financial measures as we believe they provide useful information to investors as a supplement to our consolidated financial statements, which are prepared and presented in accordance with GAAP. The presentation of non-GAAP financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

Adjusted EBITDA is a non-GAAP measure that represents EBITDA (as defined below) excluding certain items that we believe adjusting for is meaningful when assessing our profitability on a comparative basis. For the 2022 and 2021 periods presented, these items included (i) other income; (ii) impairment and credit losses (recoveries); (iii) restructuring charges and other initiative expenses; (iv) equity investment asset impairments; (v) net insurance recoveries related to the collapse of the drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas; (vi) Pullmantur reorganization settlement; and (vii) the net gain recognized in 2021 in relation to the sale of the Azamara brand. A reconciliation of Net Income (Loss) to Adjusted EBITDA is provided below under Results of Operations.

Adjusted Earnings (Loss) per Share ("Adjusted EPS") is a non-GAAP measure that represents Adjusted Net Income (Loss) (as defined below) divided by weighted average shares outstanding or by diluted weighted average shares outstanding, as applicable. We believe that this non-GAAP measure is meaningful when assessing our performance on a comparative basis. A reconciliation of Earnings (Loss) per Share to Adjusted Earnings (Loss) per share is provided below under Results of Operations.

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

Available Passenger Cruise Days (“APCD”) is our measurement of capacity and represents double occupancy per cabin multiplied by the number of cruise days for the period, which excludes canceled cruise days and cabins not available for sale. We use this measure to perform capacity and rate analysis to identify our main non-capacity drivers that cause our cruise revenue and expenses to vary.

EBITDA is a non-GAAP measure that represents net income (loss) excluding (i) interest income; (ii) interest expense, net of interest capitalized; (iii) depreciation and amortization expenses; and (iv) income tax benefit or expense. We believe that this non-GAAP measure is meaningful when assessing our operating performance on a comparative basis. A reconciliation of Net Income (Loss) to EBITDA is provided below under Results of Operations.

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

Net Cruise Costs and Net C**ruise Costs Excluding Fuel are non-GAAP measures that represent Gross Cruise Costs excluding commissions, transportation and other expenses and onboard and other expenses and, in the case of Net Cruise Costs Excluding Fuel, fuel expenses (each of which is described above under the Description of Certain Line Items heading). In measuring our ability to control costs in a manner that positively impacts net income, we believe changes in Net Cruise Costs and Net Cruise Costs Excluding Fuel to be the most relevant indicators of our performance. A reconciliation of Gross Cruise Costs to Net Cruise Costs and Net Cruise Costs Excluding Fuel is provided below under Results of Operations. For the 2022 period presented, Net Cruise Costs and Net Cruise Costs Excluding Fuel excludes restructuring and other initiative expenses.

Occupancy ("Load Factor"), in accordance with cruise vacation industry practice, is calculated by dividing Passenger Cruise Days (as defined below) by APCD. A percentage in excess of 100% indicates that three or more passengers occupied some cabins.

Passenger Cruise Days represent the number of passengers carried for the period multiplied by the number of days of their respective cruises.

Although discussed in prior periods, we did not disclose or reconcile in this report our Gross Yields and Net Yields, as defined in our Annual Report on Form 10-K for the year ended December 31, 2019. Historically, we have utilized these financial metrics to measure relevant rate comparisons to other periods. However, our 2022 and 2021 reduction in capacity and revenues, due to the impact of the COVID-19 pandemic on our operations, do not allow for a meaningful analysis and comparison of these metrics and as such these metrics have been excluded from this report.

We have not provided a quantitative reconciliation of projected non-GAAP financial measures to the most comparable GAAP financial measures because preparation of meaningful U.S.GAAP projections would require unreasonable effort. Due to significant uncertainty, we are unable to predict, without unreasonable effort, the future movement of foreign exchange rates, fuel prices and interest rates inclusive of our related hedging programs. In addition, we are unable to determine the future impact of non-core business related gains and losses which may result from strategic initiatives. These items are uncertain and could be material to our results of operations in accordance with U.S GAAP. Due to this uncertainty, we do not believe that reconciling information for such projected figures would be meaningful.

Recent Developments

Continued Fleet Ramp-up

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

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

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

Operating Costs

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

Update on Bookings

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

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

Update on Recent Liquidity Actions and Ongoing Uses of Cash

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

Capital Expenditures

Refer to Future Capital Commitments for discussion on capital expenditures.

Debt Maturities, New Financings and Other Liquidity Actions

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

Expected debt maturities for the remainder of 2022 are $0.6 billion and $4.0 billion for 2023. In October 2022 we addressed $2.0 billion of the 2023 debt maturities as described in Note 7. Debt. We continue to identify and evaluate further actions to enhance our liquidity and support our recovery. These include and are not limited to further reductions in capital expenditures, operating expenses and administrative costs, refinancing opportunities and additional financings.

Results of Operations

Summary

Net Income and Adjusted Net Income for the third quarter of 2022 were $33.0 million and $65.8 million, or $0.13 and $0.26 per share on a diluted basis, respectively, reflecting our return to full operations, compared to Net (Loss) and Adjusted Net (Loss) of $(1.4) billion and $(1.2) billion, or $(5.59) and $(4.91) per share on a diluted basis, respectively, for the third quarter of 2021.

Net (Loss) and Adjusted Net (Loss) for the nine months ended September 30, 2022 were $(1.7) billion and $(1.6) billion, or $(6.49) and $(6.39) per share on a diluted basis, respectively, compared to Net (Loss) and Adjusted Net (Loss) of $(3.9) billion and $(3.6) billion, or $(15.56) and $(14.41) per share on a diluted basis, respectively, for the nine months ended September 30, 2021.

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

• Total revenues, excluding the effect of changes in foreign currency exchange rates, increased $2.6 billion and $5.8 billion, respectively, for the quarter and nine months ended September 30, 2022 as compared to the same period in 2021. The increase reflects our full return to operations by June 2022 compared to 2021 when the suspension of our global cruise operations was in effect for a substantial portion of our fleet. APCDs for the third quarter and nine months ended September 30, 2022 were 11,564,662 and 29,553,564, respectively, compared to 4,112,256 and 4,967,078, respectively, in the same period in 2021.

• The effect of changes in foreign currency exchange rates related to our passenger ticket and onboard and other revenue transactions denominated in currencies other than the United States dollar, resulted in a decrease in total revenues of $74.4 million and $107.2 million, respectively for the quarter and nine months ended September 30, 2022, respectively, compared to the same periods in 2021.

• Total cruise operating expenses, excluding the effect of changes in foreign currency exchange rates, increased $1.2 billion and $3.4 billion, respectively, for the quarter and nine months ended September 30, 2022 as compared to the same period in 2021. The increase reflects our return to operations in 2022 compared to 2021 when the suspension of our global cruise operations was in effect for the substantial portion of our fleet.

• The effect of changes in foreign currency exchange rates related to our cruise operating expenses, denominated in currencies other than the United States dollar resulted, in a decrease in total operating expenses of $34.9 million and $59.2 million for the quarter and nine months ended September 30, 2022, respectively, compared to the same periods in 2021.

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

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

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

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

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

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

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

For further information regarding the debt transactions discussed above, refer to Note 7*. Debt* to our consolidated financial statements under Part I. Item 1. Financial Statements.

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

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

			Nine Months Ended September 30,
			2022												2021
									% of Total Revenues												% of Total Revenues
Passenger ticket revenues			$	4,091,035					65.6		%				$	323,782					58.9		%
Onboard and other revenues			2,145,513						34.4		%				226,104						41.1		%
Total revenues			6,236,548						100.0		%				549,886						100.0		%
Cruise operating expenses:
Commissions, transportation and other			964,256						15.5		%				72,917						13.3		%
Onboard and other			450,225						7.2		%				55,782						10.1		%
Payroll and related			981,128						15.7		%				530,250						96.4		%
Food			450,376						7.2		%				74,618						13.6		%
Fuel			779,873						12.5		%				219,058						39.8		%
Other operating			1,206,036						19.3		%				569,383						103.5		%
Total cruise operating expenses			4,831,894						77.5		%				1,522,008						276.8		%
Marketing, selling and administrative expenses			1,138,571						18.3		%				867,021						157.7		%
Depreciation and amortization expenses			1,046,094						16.8		%				959,512						174.5		%
Impairment and credit losses (recoveries)			(584)						—		%				39,934						7.3		%
Operating Loss			(779,427)						(12.5)		%				(2,838,589)						(516.2)		%
Other income (expense):
Interest income			21,765						0.3		%				13,317						2.4		%
Interest expense, net of interest capitalized			(932,552)						(15.0)		%				(1,007,986)						(183.3)		%
Equity investment income (loss)			29,759						0.5		%				(137,044)						(24.9)		%
Other income			4,699						0.1		%				66,771						12.1		%
			(876,329)						(14.1)		%				(1,064,942)						(193.7)		%
Net Loss			$	(1,655,756)					(26.5)		%				$	(3,903,531)					(709.9)		%
Diluted Loss per Share			$	(6.49)											$	(15.56)

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

			Quarter Ended September 30,												Nine Months Ended September 30,
			2022						2021						2022						2021
Net Income (Loss)			$	32,968					$	(1,424,554)					$	(1,655,756)					$	(3,903,531)
Impairment and credit losses (recoveries) (1)			10,186						(237)						(584)						39,934
Restructuring charges and other initiatives expense			4,573						74						6,448						1,721
Amortization of Silversea Cruises intangible assets related to Silversea Cruises acquisition			1,623						1,623						4,870						4,869
Loss on extinguishment of debt (2)			16,449						141,915						16,449						138,759
Convertible debt amortization of debt discount (3)			—						26,073						—						78,219
Pullmantur reorganization settlement (4)			—						5,242						—						10,242
Equity investment impairment (5)			—						—						—						26,042
Oasis of the Seas incident (6)			—						—						—						(6,584)
Net gain related to the sale of the Azamara brand			—						163						—						(4,773)
Adjusted Net Income (Loss)			$	65,799					$	(1,249,701)					$	(1,628,573)					$	(3,615,102)
Basic:
Earnings (Loss) per Share			$	0.13					$	(5.59)					$	(6.49)					$	(15.56)
Adjusted Earnings (Loss) per Share			$	0.26					$	(4.91)					$	(6.39)					$	(14.41)
Diluted:
Earnings (Loss) per Share			$	0.13					$	(5.59)					$	(6.49)					$	(15.56)
Adjusted Earnings (Loss) per Share			$	0.26					$	(4.91)					$	(6.39)					$	(14.41)
Weighted-Average Shares Outstanding:
Basic			255,071						254,713						254,953						250,808
Diluted			255,378						254,713						254,953						250,808

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

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

(3)Represents the amortization of non-cash debt discount on our convertible notes. For further information regarding the adoption of ASU 2020-06 as of January 1, 2022, which impacts the accounting of the non-cash debt discount on convertible notes, refer to Note 2*. Summary of Significant Accounting Policies* to our consolidated financial statements.

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

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

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

Selected statistical information is shown in the following table:

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

(1)Due to the elimination of the Silversea Cruises three-month reporting lag in October 2021, we included Silversea Cruises' metrics from July 1, 2022 through September 30, 2022 in the quarter ended September 30, 2022 and from January 1, 2022 through September 30, 2022 in the nine months ended September 30, 2022.

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

EBITDA and Adjusted EBITDA were calculated as follows (in thousands):

						Quarter Ended September 30,												Nine Months Ended September 30,
						2022						2021						2022						2021
Net Income (Loss)						$	32,968					$	(1,424,554)					$	(1,655,756)					$	(3,903,531)
Interest income						(11,953)						(3,786)						(21,765)						(13,317)
Interest expense, net of interest capitalized						352,187						430,661						932,552						1,007,986
Depreciation and amortization expenses						355,085						325,907						1,046,094						959,512
Income tax (benefit) expense (1)						(38)						(26,252)						4,515						(36,257)
EBITDA						728,249						(698,024)						305,640						(1,985,607)
Other income (2)						(742)						(10,978)						(9,214)						(30,514)
Impairment and credit losses (recoveries) (3)						10,186						(237)						(584)						39,934
Restructuring charges and other initiatives expense						4,573						74						6,448						1,721
Equity investment impairment (4)						—						—						—						26,042
Oasis of the Seas incident (5)						—						—						—						(6,584)
Pullmantur reorganization settlement						—						5,242						—						5,242
Net gain related to the sale of the Azamara brand						—						163						—						(4,773)
Adjusted EBITDA						$	742,266					$	(703,760)					$	302,290					$	(1,954,539)

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

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

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

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

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

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

			Quarter Ended September 30,						Nine Months Ended September 30,
			2022						2022
Total cruise operating expenses			$	1,956,263					$	4,831,894
Marketing, selling and administrative expenses			373,116						1,138,571
Gross Cruise Costs			2,329,379						5,970,465
Less:
Commissions, transportation and other			484,054						964,256
Onboard and other			220,216						450,225
Net Cruise Costs Including Other Costs			1,625,109						4,555,984
Less:
Restructuring charges and other initiatives expense (1)			4,573						6,448
Net Cruise Costs			$	1,620,536					$	4,549,536
Less:
Fuel			316,214						779,873
Net Cruise Costs Excluding Fuel			$	1,304,322					$	3,769,663
APCD			11,564,662						29,553,564
Gross Cruise Costs per APCD			$	201.42					$	202.02
Net Cruise Costs per APCD			$	140.13					$	153.94
Net Cruise Costs Excluding Fuel per APCD			$	112.79					$	127.55

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

Quarter Ended September 30, 2022 Compared to Quarter Ended September 30, 2021

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

Revenues

Total revenues for 2022 increased $2.5 billion to $3.0 billion from $457.0 million in 2021.

Passenger ticket revenues comprised 67.5% of our 2022 total revenues. Passenger ticket revenues for 2022 increased by $1.7 billion from $280.2 million in 2021, and was partially offset by unfavorable movements in foreign currency exchange rates related to our revenue transactions denominated in currencies other than the United States dollar of $65.5 million

The remaining 32.5% of 2022 total revenues was comprised of Onboard and other revenues, which increased $0.8 billion to $1.0 billion in 2022 from $176.8 million in 2021, and was partially offset by unfavorable movements in foreign currency exchange rates related to our revenue transactions denominated in currencies other than the United States dollar of $8.9 million.

The increase in revenues was due to the return of operations in 2022, in which our full fleet was in service, compared to 2021, when the suspension of our global cruise operations was in effect for a substantial portion of our fleet. Occupancy in 2022 was 96.3% compared to 36.4% in 2021.

Onboard and other revenues included concession revenues of $104.4 million in 2022 and $22.9 million in 2021.

Cruise Operating Expenses

Total Cruise operating expenses for 2022 increased $1.1 billion to $2.0 billion from $0.8 billion in 2021. The increase was primarily due to:

• a $419.3 million increase in Commissions, transportation and other expenses;

•a $198.1 million increase in Fuel expense;

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

• a $163.3 million increase in Other operating expenses;

*•*a $146.0 million increase in Food expense; and

• a $38.4 million increase in Payroll and related.

The increase in operating expenses noted above was driven by the return to operations in 2022, with our full fleet in service compared to 2021, when the suspension of our global cruise operations was in effect for a substantial portion of our fleet. Additionally, as discussed above in Recent Developments, high inflation has impacted our operating costs, especially in fuel and food expense. Our cost of fuel (net of the financial impact of fuel swap agreements) for 2022 increased 56% per metric ton compared to 2021 mainly due to the increase in fuel price.

Marketing, Sellin**g and Administrative Expenses

Marketing, selling and administrative expenses for 2022 increased $49.7 million, or 15.4%, to $373.1 million from $323.4 million in 2021. The increase was primarily due to an increase in payroll and benefits primarily due to an increase in headcount associated with our return to operations. Additionally, having our full fleet in service in 2022 increased overall expenses compared to 2021.

Depreciation and Amortization Expenses

Depreciation and amortization expenses for 2022 increased $29.2 million, or 9.0%, to $355.1 million from $325.9 million in 2021. The increase was primarily due to the addition of Wonder of the Seas to our fleet in January 2022, Celebrity Beyond in April 2022 and Silver Dawn in November 2021.

Other Income (Expense)

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

Equity investment income for 2022 was $74.0 million compared to Equity investment (loss) of $(29.1) million in 2021. The increase in income was primarily due to income from TUI Cruises, one of our equity investments, in 2022 compared to losses in 2021.

Other income decreased $36.5 million, or 97.9%, to $0.8 million from $37.2 million in 2021. The decrease was primarily due to the 2021 recognition of $8.2 million in net gains related to the change in fair value of our fuel swap derivative instruments with no hedge accounting, which did not recur in 2022, and a decrease in tax benefit of $26.2 million in 2022 compared to 2021.

Other Comprehensive (Loss)

Other comprehensive (loss) increased $229.4 million to $241.2 million from $11.9 million in 2021 due to an increase in the Loss on cash flow derivative hedges of $246.7 million in 2022, which was mostly due to a decrease in the fair value of our fuel swaps in 2022 compared to an increase in 2021, and a greater decrease in the fair value of our foreign currency forwards in 2022 compared to 2021.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

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

Revenues

Total revenues for 2022 increased $5.7 billion to $6.2 billion from $0.5 billion in 2021.

Passenger ticket revenues comprised 65.6% of our 2022 total revenues. Passenger ticket revenues for 2022 increased by $3.8 billion to $4.1 billion from $323.8 million in 2021, and was partially offset by unfavorable movements in foreign currency exchange rates related to our revenue transactions denominated in currencies other than the United States dollar of $93.8 million.

The remaining 34.4% of 2022 total revenues was comprised of Onboard and other revenues, which increased $1.9 billion to $2.1 billion in 2022 from $226.1 million in 2021, and was partially offset by unfavorable movements in foreign currency exchange rates related to our revenue transactions denominated in currencies other than the United States dollar of $13.4 million.

The increase in revenues was due to our return of operations, in which the majority of our fleet was in service in 2022, compared to 2021, when the suspension of our global cruise operations was in effect. Occupancy in 2022 was 81.2% compared to 35.7% in 2021.

Onboard and other revenues included concession revenues of $233.4 million in 2022 and $25.3 million in 2021.

Cruise Operating Expenses

Total Cruise operating expenses for 2022 increased $3.3 billion to $4.8 billion from $1.5 billion in 2021. The increase was primarily due to:

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

*•*a $636.7 million increase in Other operating expenses;

•a $560.8 million increase in Fuel expense;

• a $450.9 million increase in Payroll and related;

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

*•*a $375.8 million increase in Food expense.

The increase in operating expenses noted above was driven by the return to operations in 2022, with the majority of our fleet in service compared to 2021, when the suspension of our global cruise operations was in effect. The 2022 operating expenses include the overhead costs associated with bringing our ships back to service and our crew back on board our ships. Additionally, as discussed above in Recent Developments, high inflation has impacted our operating costs, especially in fuel and food expense. Our cost of fuel (net of the financial impact of fuel swap agreements) for 2022 increased 55% per metric ton compared to 2021 mainly due to the increase in fuel price.

Marketing, Selling and Administrative Expenses

Marketing, selling and administrative expenses for 2022 increased $271.6 million, or 31.3%, to $1.1 billion from $0.9 billion in 2021. The increase was primarily due to the ramp up of our global sales and marketing efforts starting in the second half of 2021 as we commenced our resumption of operations. Additionally, having our full fleet in service as of June 30, 2022 increased overall expenses compared to 2021.

Depreciation and Amortization Expenses

Depreciation and amortization expenses for 2022 increased $86.6 million, or 9.0%, compared to 2021. The increase was primarily due to the addition of Wonder of the Seas and Celebrity Beyond to our fleet in January 2022 and April 2022, respectively, and depreciation for Odyssey of the Seas and Silver Dawn, which were delivered in March 2021 and November 2021, respectively.

Impairment and Credit Losses (Recoveries)

Credit loss recoveries for 2022 was $(0.6) million compared to Impairment and credit losses of $39.9 million in 2021. The decrease in impairment loss was primarily due to 2021 impairment charges of certain construction in progress projects that were reduced in scope or terminated as a result of COVID-19, which did not recur in 2022.

Other Income (Expense)

Interest expense, net of interest capitalized for 2022 decreased $75.4 million, or 7.5%, to $932.6 million from $1.0 billion in 2021. The decrease was primarily due to a debt extinguishment loss of $138.8 million recognized in 2021 associated with the partial redemption of the 11.50% senior secured notes due 2025, compared to a debt extinguishment loss of $16.4 million in 2022, and the elimination of the non-cash debt discount amortization on our convertible notes under the adoption of ASU 2020-06. The decrease was partially offset by a higher average cost of debt in 2022 compared to 2021. Refer to Note 2*. Summary of Significant Accounting Policies* to our consolidated financial statements for further information on ASU 2020-06.

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

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

Other Comprehensive (Loss) Income

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

Future Application of Accounting Standards

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

Liquidity and Capital Resources

Sources and Uses of Cash

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

Net cash used in investing activities increased $1.3 billion to cash used of $2.9 billion for the nine months ended September 30, 2022, compared to cash used of $1.6 billion for the same period in 2021. The increase was primarily attributable to an increase in capital expenditures of $0.9 billion during the nine months ended September 30, 2022, compared to the same period in 2021, an increase in cash paid on derivative financial instruments of $334.5 million and a decrease in proceeds from the sale of property and equipment and other assets of $175.4 million during the nine months ended September 30, 2022.

Net cash provided by financing activities was $1.8 billion for the nine months ended September 30, 2022, compared to cash provided of $2.8 billion for the same period in 2021. The decrease of $1.0 billion was primarily attributable to $1.6 billion of proceeds from common stock issuances during the first nine months of 2021, which did not recur during the same period in 2022, and higher repayments of debt of $2.9 billion during the nine months ended September 30, 2022, compared to the same period in 2021. These decreases were partially offset by higher debt proceeds of $3.1 billion during the nine months ended September 30, 2022, compared to the same period in 2021 and repayments of commercial paper notes of $414.6 million during the nine months ended September 30, 2021, which did not recur in 2022.

Future Capital Commitments

Capital Expenditures

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

Ship			Shipyard			Expected Delivery Date						Approximate Berths
Royal Caribbean International —
Oasis-class:
Utopia of the Seas			Chantiers de l'Atlantique			2nd Quarter 2024						5,700
Icon-class:
Icon of the Seas			Meyer Turku Oy			4th Quarter 2023						5,600
Unnamed			Meyer Turku Oy			2nd Quarter 2025						5,600
Unnamed			Meyer Turku Oy			2nd Quarter 2026						5,600
Celebrity Cruises —
Edge-class:
Celebrity Ascent			Chantiers de l'Atlantique			4th Quarter 2023						3,250
Silversea Cruises
Evolution Class:
Silver Nova			Meyer Werft			2nd Quarter 2023						730
Unnamed			Meyer Werft			2nd Quarter 2024						730
TUI Cruises (50% joint venture) —
Mein Schiff 7			Meyer Turku Oy			2nd Quarter 2024						2,900
Unnamed			Fincantieri			4th Quarter 2024						4,100
Unnamed			Fincantieri			2nd Quarter 2026						4,100
Total Berths												38,310

In addition, as of September 30, 2022, we have an agreement in place with Chantiers de l’Atlantique to build an additional fifth Edge-class ship with capacity of approximately 3,250 berths, estimated for delivery in 2025, which is contingent upon completion of conditions precedent and financing.

Our future capital commitments consist primarily of new ship orders. As of September 30, 2022, the aggregate expected cost of our ships on order presented in the table above, excluding any ships on order by our Partner Brands, was $9.1 billion, of which we had deposited $0.7 billion. Approximately 54.4% of the aggregate cost was exposed to fluctuations in the Euro exchange rate at September 30, 2022.

We have been, and may continue to be, negatively impacted on our cash flows, liquidity and financial position by the COVID-19 pandemic. In order to preserve liquidity, we deferred a significant portion of our planned 2020, 2021 and 2022 capital expenditures. As of September 30, 2022, we anticipate overall full year capital expenditures, based on our existing ships on order, will be approximately $3.2 billion for 2022. This amount does not include any ships on order by our Partner Brands.

Material Cash Requirements

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

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

(1) Long-term debt obligations mature at various dates through fiscal year 2037 and bear interest at fixed and variable rates. Interest on variable-rate debt is calculated based on forecasted debt balances, including the impact of interest rate swap agreements using the applicable rate at September 30, 2022. Debt denominated in other currencies is calculated based on the applicable exchange rate at September 30, 2022.

(2) Amounts are based on contractual installment and delivery dates for our ships on order. Included in these figures are $5.2 billion in final contractual installments, which have committed financing covering 80% of the cost of the ships on order for our Global Brands, almost all of which include sovereign financing guarantees. COVID-19 has impacted shipyard operations which have and may result in delays for our previously contracted ship deliveries. Amounts do not include potential obligations which remain subject to cancellation at our sole discretion or any agreements entered for ships on order that remain contingent upon completion of conditions precedent.

Refer to Note 7*. Debt* for maturities related to debt.

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

Refer to Funding Needs and Sources for discussion on the planned funding of the above material cash requirements.

As a normal part of our business, depending on market conditions, pricing and our overall growth strategy, we continuously consider opportunities to enter into contracts for the building of additional ships. We may also consider the sale of ships or the purchase of existing ships. We continuously consider potential acquisitions and strategic alliances. If any of these were to occur, they would be financed through the incurrence of additional indebtedness, the issuance of additional shares of equity securities or through cash flows from operations.

Off-Balance Sheet Arrangements

Refer to Note 6*. Other Assets* for ownership restrictions related to TUI Cruises.

Refer to Note 7*. Debt* for surety and credit card processor agreements.

Refer to Note 9*. Commitments and Contingencies* for other agreements.

As of September 30, 2022, other than the items referenced above, we are not party to any other off-balance sheet arrangements, including guarantee contracts, retained or contingent interest, certain derivative instruments and variable interest entities, that either have, or are reasonably likely to have, a current or future material effect on our financial position.

Funding Needs and Sources

Historically, we have relied on a combination of cash flows provided by operations, draw-downs under our available credit facilities, the incurrence of additional debt and/or the refinancing of our existing debt and the issuance of additional shares of equity securities to fund our obligations. COVID-19 resulted in our voluntary suspension of global cruise operations from March 2020 up to our full fleet returning to service during the second quarter of 2022. The suspension of operations strained our sources of cash flow and liquidity, causing us to take actions resulting in reductions in our operating expenses, reductions in our capital expenses and new financings and other liquidity actions.

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

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

As of September 30, 2022, our obligations due through September 30, 2023 primarily consisted of $3.9 billion related to debt maturities, $1.3 billion related to interest on debt and $0.7 billion related to progress payments on our ship orders and, based on the expected delivery date, the final installment payable due upon the delivery of Silver Nova. We addressed $2.0 billion of these debt maturities in October 2022 with the closing of the 9.250% senior notes due 2029 and the 8.250% senior secured notes due 2029 and the concurrent redemption of the 2023 notes as further described in Note 7. Debt.

As of September 30, 2022, we had liquidity of $3.1 billion, including cash and cash equivalents of $1.6 billion, $0.8 billion of undrawn revolving credit facility capacity, and a $0.7 billion commitment for a 364-day term loan facility available to draw on at any time on or prior to August 12, 2023. Our revolving credit facilities were partially utilized through a combination of amounts drawn and letters of credit issued under the facilities as of September 30, 2022. We have agreed with certain of our lenders not to pay dividends or engage in stock repurchases. Refer to Note 10*. Shareholders' Equity* to our consolidated financial statements for further information.

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

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

Based on our assumptions and estimates and our financial condition, we believe that we have sufficient financial resources to fund our obligations for at least the next twelve months from the issuance of these financial statements. However, there is no assurance that our assumptions and estimates are accurate as there is inherent uncertainty in our ability to predict future liquidity requirements. Refer to Note 1*. General, Management’s Plan and Liquidity,* to our consolidated financial statements under Part I. Item 1. Financial Statements for further information.

Debt Covenants

Both our export credit facilities and our non-export credit facilities contain covenants that require us, among other things, to maintain a fixed charge coverage ratio of at least 1.25x and limit our net debt-to-capital ratio, and under certain facilities, to maintain a minimum level of shareholders' equity. The fixed charge coverage ratio is calculated by dividing net cash from operations for the past four quarters by the sum of dividend payments plus scheduled principal debt payments in excess of any new financings for the past four quarters. Our minimum net worth and maximum net debt-to-capital calculations exclude the impact of Accumulated other comprehensive loss on Total shareholders’ equity.

During the first quarter of 2021, we amended $4.9 billion of our non-export credit facilities and $6.3 billion of our export credit facilities, and certain credit card processing agreements, to extend the waiver of our financial covenants through and including at least the third quarter of 2022, and subsequently in the third quarter of 2021, we entered into a letter agreement to extend the waiver period for our export credit facilities to the end of the fourth quarter of 2022. During the fourth quarter of 2021, we amended $7.3 billion of outstanding export-credit facilities plus committed export-credit facilities to modify financial covenant levels for 2023 and 2024, following the waiver period through and including the fourth quarter of 2022.

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

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

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

Any further covenant waivers may lead to increased costs, increased interest rates, additional restrictive covenants and other available lender protections as may be agreed with our lenders. There can be no assurance that we would be able to obtain additional waivers in a timely manner, or on acceptable terms. If we require additional waivers and are not able to obtain them or repay the debt facilities, this would lead to an event of default and potential acceleration of amounts due under all of our outstanding debt and derivative contracts.

Dividends

During the second quarter of 2020, we agreed with certain of our lenders not to pay dividends or engage in common stock repurchases for so long as our debt covenant waivers are in effect. In addition, in the event we declare a dividend or engage in share repurchases, we will need to repay the amounts deferred under our export credit facilities. Accordingly, we did not declare a dividend during the ten consecutive quarters ended September 30, 2022. Pursuant to amendments made to these agreements during the first quarter of 2021, the restrictions on paying cash dividends and effectuating share repurchases were extended through and including the third quarter of 2022. In addition, in the event we thereafter declare a dividend, we will need to repay our amounts deferred under the export credit facilities.