ROYAL CARIBBEAN CRUISES LTD Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

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, 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," "could," "driving,"
"estimate," "expect," "goal," "intend," "may," "plan," "project," "seek,"
"should," "will," "would," "considering" 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, 2021, compared to the same periods in 2020;
•a discussion of our business outlook; and
•a discussion of our liquidity and capital resources, including our future
capital and contractual commitments and potential funding sources.
                                       33
--------------------------------------------------------------------------------

Critical Accounting Policies
For a discussion of our critical accounting policies, 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,
2020.
Seasonality
Historically, 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 focused on deployment to the Caribbean, Asia and
Australia during that period.
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 our bareboat charter, procurement and management related
services we perform on behalf of our unconsolidated affiliates and third
parties.
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
                                       34
--------------------------------------------------------------------------------

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 Loss per Share ("Adjusted EPS") represents Adjusted Net Loss
attributable to Royal Caribbean Cruises Ltd. (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.
Adjusted Net Loss attributable to Royal Caribbean Cruises Ltd. represents net
loss less net income attributable to noncontrolling interest excluding certain
items that we believe adjusting for is meaningful when assessing our performance
on a comparative basis. For the periods presented, these items included (i) gain
or loss on the extinguishment of debt; (ii) the amortization of non-cash debt
discount on our convertible notes; (iii) the estimated cash refund expected to
be paid to Pullmantur guests and other expenses incurred as part of the
Pullmantur reorganization; (iv) impairment and credit losses recognized as a
result of the impact of COVID-19; (v) equity investment asset impairments; (vi)
net insurance recoveries related to the collapse of the drydock structure at the
Grand Bahama Shipyard involving Oasis of the Seas; (vii) restructuring charges
incurred in relation to the reduction in our U.S. workforce and other initiative
expenses; (viii) the change in the fair value in the Silversea Cruises
contingent consideration and the amortization of the Silversea Cruises
intangible assets resulting from our acquisition of a 66.7% interest in
Silversea Cruises in 2018; (ix) the noncontrolling interest adjustment to
exclude the impact of the contractual accretion requirements associated with the
put option held by Heritage Cruise Holding Ltd.'s (previously known as Silversea
Cruises Group Ltd.) noncontrolling interest in Silversea Cruises, which
noncontrolling interest we acquired on July 9, 2020; (x) the net gain recognized
in the first quarter of 2021 in relation to the sale of the Azamara brand; and
(xi) currency translation losses recognized during the second quarter of 2020,
in connection with the ships classified as assets held-for-sale that were
previously chartered to Pullmantur.
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.
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 previous periods, we do not disclose or reconcile in this
report our Gross Yields, Net Yields, Gross Cruise Costs, Net Cruise Costs and
Net Cruise Costs Excluding Fuel, 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 2020 and 2021 reduction in capacity and revenues and the shift in
the nature of our running costs, 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.
Recent Developments: COVID-19
Return to Healthy Sailing
Our voluntary suspension of our global cruise operations commenced in March 2020
in response to the COVID-19 outbreak. We have restarted our global cruise
operations in a phased manner, following the requirements and recommendations of
regulatory agencies, with reduced guest occupancy, modified itineraries and
enhanced health, safety and vaccination protocols.
By the end of September 2021, we operated 38 of our Global and Partner Brand
ships, representing 63% of our fleet, and sailed over 500,000 passengers since
we resumed operations. We expect to operate approximately 80% of our fleet and
anticipate serving over 1 million passengers by December 31, 2021.
Uncertainties remain as to the specifics, timing and costs of administering and
implementing our health and safety measures, some of which may be significant.
Based on our assessment of these requirements and recommendations, the status of
COVID-19 infection and/or vaccination rates in the U.S. or globally or for other
reasons, we may determine it necessary to cancel or modify certain of our Global
Brands' cruise sailings. We believe the impact to our global bookings resulting
from COVID-19 will continue to have a material negative impact on our results of
operations and liquidity, which may be prolonged beyond containment of the
disease and its variants.
                                       35
--------------------------------------------------------------------------------


Continued Fleet Ramp-Up
We anticipate load factors on core itineraries to increase to 65-70% during the
fourth quarter of 2021. We anticipate 6.9 million APCDs for the fourth quarter
of 2021 with overall load factors of 60-65% and expect that all ships on core
itineraries in the fourth quarter of 2021 will be cash flow accretive, even when
including start-up costs. Core itineraries exclude sailings during our early
resumption of operations of up to four weeks and also exclude specialized
itineraries that were implemented during the COVID-19 period (e.g. Singapore,
Cyprus). By the end of the year, we expect that 50 of our 61 Global Brand ships
will have returned to service, representing almost 100% of core itinerary
capacity and approximately 80% of worldwide capacity. Our remaining Global Brand
ships are expected to return to service by the spring of 2022 and we expect to
return to historical load factors in the third quarter of 2022. Mainland China
is expected to resume in the spring and we have assumed lower load factors as
this important long term market ramps-up.
On October 25, 2021, the U.S. Centers for Disease Control and Prevention ("CDC")
issued a temporary extension and modification of the Conditional Sail Order
("Conditional Order") effective November 1, 2021 through January 15, 2022, and
expressed its intention to transition to a voluntary program thereafter, in
coordination with interested cruise ship operators. We plan to continue to
operate under the Conditional Order where required, and to voluntarily comply
with the Conditional Order for ships home ported or calling in Florida ports.
Also on October 25, 2021, the U.S. President issued a proclamation effective on
November 8, 2021 that rescinds all previous proclamations suspending entry into
the U.S. of non-citizen non-immigrants. We expect these recent developments to
support our return to service and anticipated load factors.
Update on Bookings
Booking volumes have improved significantly since the slowdown this summer due
to the Delta variant (the "Delta Dip"). We attracted more bookings in the third
quarter compared to the second quarter. September was particularly strong, with
new bookings for 2022 sailings more than 60% higher than the monthly average
during the second quarter of 2021.
Sailings for the full year 2022 are booked within historical ranges and at
higher prices than 2019. Sailings further out are experiencing more normalized
booking trends than sailings closer in. As such, load factors for sailings in
the first quarter of 2022 are lower than historical levels; are improving but
still below average in the second quarter of 2022; and are solidly within
historical levels in the second half of 2022. Pricing remains strong throughout
2022, with or without future cruise credits ("FCC").
As of September 30, 2021, we had $2.8 billion in customer deposits, which
represents an improvement by $0.4 billion from the June 30, 2021 balance despite
the $300 million of revenue that was recognized during the quarter.
Approximately 35% of the customer deposit balance is related to FCCs. This has
dropped from 40% in the prior quarter, indicating net new demand. Customer
deposits for cruises taking place in the second quarter of 2022 and onward are
higher than customer deposits on the same three brands for cruises taking place
in the same time horizon as of September 30, 2019.
Update on Recent Liquidity Actions and Ongoing Uses of Cash
As of September 30, 2021, we had liquidity of $4.1 billion, including $0.1
billion of undrawn revolving credit facility capacity, $3.3 billion in cash and
cash equivalents, and a $0.7 billion commitment for a 364-day term loan facility
available to draw on at any time prior to August 12, 2022. Our revolving credit
facilities were mostly utilized through a combination of amounts drawn and
letters of credit issued under the facilities as of September 30, 2021. We
continue to prioritize and bolster liquidity while taking steps to improve our
balance sheet and reduce its interest costs to be well positioned for recovery.
Reduced Operating Expenses
We took significant actions in early 2020 to reduce operating expenses during
the suspension of our global cruise operations. In particular, we:
•  significantly reduced ship operating expenses, including crew payroll, food,
fuel, insurance and port charges;
•  further reduced operating expenses as the Company's ships are currently
transitioning into various levels of layup with   several ships in the fleet
transitioning into cold layup;
•  significantly reduced marketing and selling expenses;
•  reduced and furloughed our workforce, with approximately 23% of our US
shoreside employee base being impacted in 2020; and
•  suspended travel for shoreside employees and instituted a hiring freeze
across the organization.
                                       36
--------------------------------------------------------------------------------

During our ramp up of operations, we have incurred and will continue to incur
incremental spend related to bringing ships back to operating status, returning
crew members to ships and implementing enhanced health and safety protocols. We
also collected and will continue to collect deposits related to those sailings
and for future cruises. The decision to bring ships back into service considers
many variables, including deployment opportunities, commercial potential, cost
of operations and cash flow.
Capital Expenditures
COVID-19 has impacted shipyard operations, which have and may continue to result
in delays of our previously contracted ship deliveries. As of September 30,
2021, we anticipate that overall full year capital expenditures, based on our
existing ships on order, will be approximately $2.1 billion for 2021. This
amount does not include any ships on order by our Partner Brands. We took
delivery of Odyssey of the Seas during the first quarter of 2021 and expect
delivery of Silver Dawn during the fourth quarter of 2021. For 2022, we have two
ship deliveries scheduled: Wonder of the Seas and Celebrity Beyond. Excluding
newbuild deliveries, our capital expenditures for 2022 will depend on our
schedule to return to service.
Debt Maturities, New Financings and Other Liquidity Actions
During the nine months ended September 30, 2021, the Company continued to take
actions to further improve its liquidity position and manage cash flow. In
particular, we:
•  extended the maturity date or termination date, as applicable, of certain of
the advances and commitments held by consenting lenders under our $1.0 billion
unsecured loan due April 2022 and our $1.55 billion unsecured revolving credit
facility due October 2022, each by 18 months to October 2023 and April 2024,
respectively;
•  extended the period during which we may draw upon our binding commitment for
a $700.0 million 364-day term loan facility by one year, which is now available
for draw at any time prior to August 12, 2022;
•  issued $1.5 billion of 5.5% senior unsecured notes due in 2028 for net
proceeds of approximately $1.48 billion;
•issued $650.0 million of 4.25% senior unsecured notes due in 2026 for net
proceeds of approximately $640.6 million, which were used to fully repay the
Silversea Notes, in the amount of $619.8 million, and to pay the related call
premiums, accrued interest and fees;
•issued $1.0 billion of 5.50% senior notes due in 2026 for net proceeds of
approximately $986.0 million which were used to replenish our capital as a
result of the redemption of a portion of the 11.50% senior secured notes due
2025 in the amount of $928.0 million, and to pay the related call premiums and
accrued interest;
•amended the credit agreements for the unsecured financings of our first and
second Evolution-class ships, increasing their maximum loan amounts by €175.6
million in the aggregate to finance ship design modifications that incorporate
innovative sustainability features and additional premium cabins;
•issued 16.9 million shares of common stock for approximately $1.5 billion;
•amended $4.9 billion of our non-export-credit facilities and certain of our
credit card processing agreements to extend the waiver of the financial
covenants through and including the third quarter of 2022 and to implement
modified covenants for the period starting fourth quarter of 2022 and extending
through and including the fourth quarter of 2023; and
•  amended $6.3 billion of our export-credit facilities to extend the waiver of
the financial covenants through and including the fourth quarter of 2022 and
defer $1.15 billion of principal payments due between April 2021 and April 2022.
As of the date of this report, there are no scheduled debt maturities for the
remainder of 2021, and scheduled debt maturities of $2.2 billion for 2022.
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
and additional financings and refinancings.





Results of Operations
                                       37

--------------------------------------------------------------------------------

Summary

Net Loss attributable to Royal Caribbean Cruises Ltd. and Adjusted Net Loss
attributable to Royal Caribbean Cruises Ltd. for the third quarter of 2021 were
$(1.4) billion and $(1.2) billion, or $(5.59) and $(4.91) per share on a diluted
basis, respectively, reflecting the ramp up of our return to operations, and
increased sales and marketing expenses during the quarter, compared to Net Loss
attributable to Royal Caribbean Cruises Ltd. and Adjusted Net Loss attributable
Royal Caribbean Cruises Ltd. of $(1.3) billion and $(1.2) billion, or $(6.29)
and $(5.62) per share on a diluted basis, respectively, for the third quarter of
2020.
Net Loss attributable to Royal Caribbean Cruises Ltd. and Adjusted Net Loss
attributable to Royal Caribbean Cruises Ltd. for the nine months ended September
30, 2021 were $(3.9) billion and $(3.6) billion, or $(15.56) and $(14.41) per
share on a diluted basis, respectively, compared to Net Loss attributable to
Royal Caribbean Cruises Ltd. and Adjusted Net Loss attributable Royal Caribbean
Cruises Ltd. of $(4.4) billion and $(2.8) billion, or $(21.01) and $(13.26) per
share on a diluted basis, respectively, for the nine months ended September 30,
2020.
Significant items for the quarter and nine months ended September 30, 2021
include:
•Total revenues, excluding the effect of changes in foreign currency exchange
rates, increased $487.0 million and decreased $1,633.5 million, respectively,
for the quarter and nine months ended September 30, 2021, as compared to the
same periods in 2020. The increase in total revenues in the third quarter of
2021 reflects the ramp up in our return to operations compared to the third
quarter of 2020, during which we continued to observe our global cruise
suspension. For the nine months ended September 30, 2021, the decrease in total
revenues reflects a 41.1% capacity decrease compared to the same period in 2020
reflecting the lay-up of the majority of our fleet during the first half of
2021, compared to the operation of the majority of our fleet up through our
global suspension in March of 2020.
•The effect of changes in foreign currency exchange rates related to our
passenger ticket and onboard and other revenue transactions, denominated in
currencies other than the United States dollar, resulted in an increase in total
revenues of $3.6 million and $8.7 million for the quarter and nine months ended
September 30, 2021, respectively, compared to the same periods in 2020.
•Total cruise operating expenses, excluding the effect of changes in foreign
currency exchange rates, increased $503.3 million and decreased $987.6 million
for the quarter and nine months ended September 30, 2021, respectively, as
compared to the same periods in 2020. The increase in total cruise operating
expenses in the third quarter of 2021 reflects the ramp up of our operations
compared to our suspension of cruise operations in 2020. The decrease during the
nine months ended September 30, 2021 compared to the same period in 2020
reflects the capacity decrease mentioned above.
•The effect of changes in foreign currency exchange rates related to our cruise
operating expenses, denominated in currencies other than the U.S. dollar,
resulted in an increase in total operating expenses of $1.8 million and $9.7
million, respectively, for the quarter and nine months ended September 30, 2021,
compared to the same periods in 2020.
•Our consolidated results of operations include Silversea Cruises' results of
operations on a three-month reporting lag for April, May and June 2021, for the
quarter ended September 30, 2021, and from October 1, 2020 through June 30, 2021
for the nine months ended September 30, 2021.
•In March 2021, we extended the maturity date or termination date of certain of
the advances and commitments, as applicable, held by consenting lenders under
our $1.0 billion unsecured loan due April 2022 and our $1.55 billion unsecured
revolving credit facility due October 2022, by 18 months to October 2023 and
April 2024, respectively.
•In March 2021, we extended our binding commitment for a $700.0 million 364-day
term loan facility by one year which is currently available for draw at any time
prior to August 12, 2022.
•In March 2021, we issued $1.5 billion of senior unsecured notes due in 2028.
Interest on the senior notes accrues at 5.5% and is payable semi-annually.
                                       38
--------------------------------------------------------------------------------

•In March 2021, we issued 16.9 million shares of common stock, par value $0.01
per share, at an average price of $91.00 per share for net proceeds of
$1.5 billion.
•In March 2021, we amended $4.9 million of our non-export-credit facilities and
certain of our credit card processing agreements to extend the waiver of the
financial covenants through and including the third quarter of 2022.
•In March 2021, we amended $6.3 million of our export-credit facilities to
extend the waiver of the financial covenants through and including the third
quarter of 2022, and subsequently in the third quarter of 2021, we entered into
a letter agreement to extend the waiver period to the end of the fourth quarter
of 2022; including the deferral of up to $1.15 billion of principal payments due
between April 2021 and April 2022.
•In March 2021, we entered into amendments to our drawn and undrawn ECA
facilities to provide for the issuance of guarantees in satisfaction of existing
obligations under these facilities.
•In March 2021, we took delivery of Odyssey of the Seas.
•In June 2021, we issued $650.0 million of senior unsecured notes due in 2026
for net proceeds of approximately $640.6 million, which were used to fully repay
the Silversea Notes in the amount of $619.8 million and to pay the related call
premiums, accrued interest and fees. Interests on the Silversea Notes accrued at
7.25% per annum and was payable semi-annually.
•In June 2021, Hapag-Lloyd took delivery of Hanseatic Spirit.
•In August 2021, we issued $1.0 billion of 5.50% senior unsecured notes due in
2026 for net proceeds of approximately $986.0 million, which we used to
replenish capital as a result of the redemption of a portion of the 11.50%
senior secured notes due 2025, in the amount of $928.0 million plus call
premiums, accrued interest, and fees.

                                       39
--------------------------------------------------------------------------------

Results of operations for the quarter and nine months ended September 30, 2021
compared to the same periods in 2020 are presented in the following tables (in thousands, except data per share):

                                                                                      Quarter Ended September 30,
                                                                         2021                                            2020
                                                                                  % of Total                                     % of Total
                                                                                   Revenues                                       Revenues
Passenger ticket revenues                              $     280,153                     61.3  %       $      3,204                      (9.5) %
Onboard and other revenues                                   176,805                     38.7  %            (36,892)                    109.5  %
Total revenues                                               456,958                    100.0  %            (33,688)                    100.0  %
Cruise operating expenses:
Commissions, transportation and other                         64,780                     14.2  %             (3,321)                      9.9  %
Onboard and other                                             42,703                      9.3  %              6,036                     (17.9) %
Payroll and related                                          265,974                     58.2  %            119,213                    (353.9) %
Food                                                          48,950                     10.7  %              5,640                     (16.7) %
Fuel                                                         118,127                     25.9  %             53,815                    (159.7) %
Other operating                                              273,157                     59.8  %            127,226                    (377.7) %
Total cruise operating expenses                              813,691                    178.1  %            308,609                    (916.1) %
Marketing, selling and administrative expenses               323,422                     70.8  %            246,779                    (732.5) %
Depreciation and amortization expenses                       325,907                     71.3  %            317,139                    (941.4) %
Impairment and credit losses                                    (238)                    (0.1) %             89,899                    (266.9) %
Operating Loss                                            (1,005,824)                  (220.1) %           (996,114)                  2,956.9  %
Other (expense) income:
Interest income                                                3,786                      0.8  %              5,017                     (14.9) %
Interest expense, net of interest capitalized               (430,661)                   (94.2) %           (259,349)                    769.9  %

Equity investment loss                                       (29,085)                    (6.4) %            (78,013)                    231.6  %

Other income (expense)                                        37,230                      8.1  %            (10,853)                     32.2  %
                                                            (418,730)                   (91.6) %           (343,198)                  1,018.8  %
Net Loss                                                  (1,424,554)                  (311.7) %         (1,339,312)                  3,975.6  %
Less: Net Income attributable to noncontrolling
interest                                                           -                        -  %              7,444                     (22.1) %

Net loss attributable to Royal Caribbean Cruises Ltd. $ (1,424,554)

           (311.7) %       $ (1,346,756)                  3,997.7  %
Diluted Loss per Share                                 $       (5.59)                                  $      (6.29)



                                       40

--------------------------------------------------------------------------------

                                                                                  Nine Months Ended September 30,
                                                                        2021                                               2020
                                                                                    % of Total                                     % of Total
                                                                                     Revenues                                       Revenues
Passenger ticket revenues                         $        323,782                         58.9  %       $  1,487,077                     68.4  %
Onboard and other revenues                                 226,104                         41.1  %            687,590                     31.6  %
Total revenues                                             549,886                        100.0  %          2,174,667                    100.0  %
Cruise operating expenses:
Commissions, transportation and other                       72,917                         13.3  %            342,632                     15.8  %
Onboard and other                                           55,782                         10.1  %            151,333                      7.0  %
Payroll and related                                        530,250                         96.4  %            693,480                     31.9  %
Food                                                        74,618                         13.6  %            154,439                      7.1  %
Fuel                                                       219,058                         39.8  %            327,275                     15.0  %
Other operating                                            569,383                        103.5  %            830,689                     38.2  %
Total cruise operating expenses                          1,522,008                        276.8  %          2,499,848                    115.0  %
Marketing, selling and administrative expenses             867,021                        157.7  %            944,087                     43.4  %
Depreciation and amortization expenses                     959,512                        174.5  %            961,226                     44.2  %
Impairment and credit losses                                39,934                          7.3  %          1,354,514                     62.3  %
Operating Loss                                          (2,838,589)                      (516.2) %         (3,585,008)                  (164.9) %
Other income (expense):
Interest income                                             13,317                          2.4  %             15,757                      0.7  %
Interest expense, net of interest capitalized           (1,007,986)                      (183.3) %           (571,149)                   (26.3) %
Equity investment loss                                    (137,044)                       (24.9) %           (140,258)                    (6.4) %
Other income (expense)                                      66,771                         12.1  %           (127,537)                    (5.9) %
                                                        (1,064,942)                      (193.7) %           (823,187)                   (37.9) %
Net Loss                                          $     (3,903,531)                      (709.9) %       $ (4,408,195)                  (202.7) %
Less: Net Income attributable to noncontrolling
interest                                                         -                            -  %             22,332                      1.0  %
Net Loss attributable to Royal Caribbean Cruises
Ltd.                                              $     (3,903,531)                      (709.9) %       $ (4,430,527)                  (203.7) %
Diluted Loss per Share                            $         (15.56)                                      $     (21.01)











                                       41

--------------------------------------------------------------------------------

Adjusted net loss attributable to Royal Caribbean Cruises Ltd. and Adjusted loss per share attributable to Royal Caribbean Cruises Ltd. were calculated as follows (in thousands, except per share data):

                                                            Quarter Ended September 30,                   Nine Months Ended September 30,
                                                             2021                   2020                     2021                    2020

Net loss attributable to Royal Caribbean Cruises Ltd. $ (1,424,554)

$ (1,346,756) $ (3,903,531) $ (4,430,527)
Adjusted net loss attributable to Royal Caribbean Cruises Ltd.

                                               (1,249,701)           (1,204,350)                (3,615,102)           (2,797,335)
Net Adjustments to Net Loss attributable to Royal
Caribbean Cruises Ltd.                                $       174,853          $    142,406          $         288,429          $  1,633,192
Adjustments to Net Loss attributable to Royal
Caribbean Cruises Ltd.:
Loss on extinguishment of debt (1)                    $       141,915          $        774          $         138,759                41,109
Convertible debt amortization of debt discount (2)             26,073                17,750                     78,219                21,934
Pullmantur reorganization settlement (3)                        5,242                     -                     10,242                21,637
Impairment and credit losses (4)                                 (237)               89,899                     39,934             1,354,514
Equity investment impairments (5)                                   -                     -                     26,042                39,735

Incident of the Oasis of the Seas, Grand Bahama write-off of the dry dock and other incidental expenses (6)

                         -                     -                     (6,584)               (1,938)

Restructuring and other initiative expenses (7)

                                                                74                 5,720                      1,721                50,745

Change in the fair value of contingent consideration and amortization of Silversea Cruises intangible assets related to Silversea Cruises acquisition (8)

             1,623                 2,548                      4,869               (35,919)
Noncontrolling interest adjustment (9)                              -                25,715                          -                72,331
Net gain related to the sale of the Azamara brand
(10)                                                              163                     -                     (4,773)                    -
Currency translation adjustment losses (11)                         -                     -                          -                69,044
Net Adjustments to Net Loss attributable to Royal
Caribbean Cruises Ltd.                                $       174,853          $    142,406          $         288,429          $  1,633,192

Basic:
  Loss per Share                                      $         (5.59)         $      (6.29)         $          (15.56)         $     (21.01)
  Adjusted Loss per Share                             $         (4.91)         $      (5.62)         $          (14.41)         $     (13.26)

Diluted:
  Loss per Share                                      $         (5.59)         $      (6.29)         $          (15.56)         $     (21.01)
  Adjusted Loss per Share                             $         (4.91)         $      (5.62)         $          (14.41)         $     (13.26)

Weighted-Average Shares Outstanding:
Basic                                                         254,713               214,163                    250,808               210,894
Diluted                                                       254,713               214,163                    250,808               210,894


(1)For the three months ended September 30, 2021, represents the net loss on the
partial repayment of the 11.50% senior secured notes due 2025 in the amount of
$928.0 million. For the nine months ended September 30, 2021, represents the net
loss on the partial repayment of the 11.50% senior secured notes due 2025, the
second quarter 2021 net gain on the full repayment of the Silversea Notes and
the first quarter 2021 loss on the partial repayment of the $1.55 billion
unsecured revolving credit facility. For the nine months ended September 30,
2020, represents a loss on the extinguishment of the $2.2 billion Senior Secured
Term Loan.
(2)Represents the amortization of non-cash debt discount on our convertible
notes.
(3)Represents estimated cash refunds expected to be paid to Pullmantur guests
and other expenses incurred as part of the Pullmantur reorganization.
(4)In 2021 and 2020, represents asset impairment and credit losses as a result
of the impact of COVID-19. In 2021, amounts are net of the recovery of credit
losses recognized in 2020.
                                       42
--------------------------------------------------------------------------------

(5)Represent equity investment asset impairments, primarily for our investments
in TUI Cruises GmbH in 2021 and Grand Bahama Shipyard in 2020, as a result of
the impact of COVID-19.
(6)Amounts include net insurance recoveries related to the collapse of the
drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas.
(7)Represents primarily restructuring charges incurred in relation to the
reduction in our U.S. workforce and other initiatives expenses. Refer to Note
13. Restructuring Charges to our consolidated financial statements under Item 1.
Financial Statements for further information on the restructuring activities.
(8)Related to the Silversea Cruises acquisition.
(9)Adjustment made to exclude the impact of the contractual accretion
requirements associated with the put option held by Heritage Cruise Holding
Ltd.'s (previously known as Silversea Cruises Group Ltd.) noncontrolling
interest, which noncontrolling interest we acquired on July 9, 2020.
(10)Represents the net gain recognized in the first quarter of 2021 in relation
to the sale of the Azamara brand.
(11)Represents currency translation losses recognized during the second quarter
of 2020, in connection with the ships classified as assets held-for-sale that
were previously chartered to Pullmantur.

The selected statistical information is presented in the following table (1):

                                                    Quarter Ended September 30,                             Nine Months Ended September 30,
                                                   2021                        2020                        2021                          2020
Passengers Carried                                     251,744                     1,230                       327,226                    1,261,075
Passenger Cruise Days                                1,496,609                     5,424                     1,771,087                    8,653,799
APCD                                                 4,112,256                     5,424                     4,967,078                    8,437,003
Occupancy                                                 36.4  %                  100.0  %                       35.7  %                     102.6  %


(1)Due to the three-month reporting lag, we include Silversea Cruises' results
of operations from April 1 through June 30 for the quarters ended September 30,
2021 and 2020 and from October 1 through June 30 for the nine months ended
September 30, 2021 and 2020. Refer to Note 1. General to our consolidated
financial statements for more information on the three-month reporting lag.

















                                       43

--------------------------------------------------------------------------------




2021 Outlook
The Company's operations are still impacted by the magnitude, duration, speed
and geographic reach of COVID-19 and its related variants. As a consequence, we
cannot reasonably estimate the impact of COVID-19 on our business, financial
condition or near or longer-term financial or operational results. The adverse
impact of the COVID-19 pandemic on our revenues, consolidated results of
operations, cash flows and financial condition has been and will continue to be
material in 2021. We expect to incur a net loss on both a U.S. GAAP and adjusted
basis for our fourth quarter and our 2021 fiscal year, the extent of which will
depend on many factors including the timing and extent of our return to service.
See Recent Developments: COVID-19 - Continued Fleet Ramp-Up and Update on
Bookings for further indications on our resumption of operations and the booking
environment.


                                       44

--------------------------------------------------------------------------------

Quarter Ended September 30, 2021 Compared to Quarter Ended September 30, 2020
In this section, references to 2021 refer to the quarter ended September 30,
2021 and references to 2020 refer to the quarter ended September 30, 2020.
Revenues
Total revenues for 2021 increased $490.6 million, or 1,456.4%, to $457.0 million
from $(33.7) million in 2020.
Passenger ticket revenues comprised 61.3% of our 2021 total revenues. Passenger
ticket revenues for 2021 increased by $276.9 million to $280.2 million from $3.2
million in 2020. The increase in Passenger ticket revenues in the third quarter
of 2021 reflects the expansion of our global return to service compared to our
continued suspension of cruise operations in the third quarter of 2020.
Favorable movements in foreign currency exchange rates related to our revenue
transactions denominated in currencies other than the United States dollar
increased Passenger ticket revenues by $3.0 million.
The remaining 38.7% of 2021 total revenues was comprised of Onboard and other
revenues, which increased $213.7 million, or 579.3%, to $176.8 million in 2021
from $(36.9) million in 2020. The increase in Onboard and other revenues was due
to the ramp up of our return to service noted above. Onboard and other revenues
for the quarter ended September 30, 2020 includes a charge of $67.9 million to
correct cancellation revenue, for certain immaterial bookings, that was
incorrectly recognized during the six months ended June 30, 2020. The charge is
offsetting cancellation and other revenue recognized during the quarter ended
September 30, 2020 and is considered immaterial to our financial statements.
Onboard and other revenues included concession revenues of $22.9 million in 2021
and $0.4 million in 2020.
Cruise Operating Expenses
Total Cruise operating expenses for 2021 increased $505.1 million, or 163.7%, to
$813.7 million from $308.6 million in 2020. The increase was primarily due to:
•a $145.9 million increase in Other operating expenses primarily due to
increased hotel and vessel maintenance and consumables;
•a $146.8 million increase in Payroll and related;
•a $68.1 million increase in Commissions, transportation and other expenses;
•a $64.3 million increase in Fuel expenses;
•a $43.3 million increase in Food expenses; and
•a $36.7 million increase in Onboard and other expenses.
Marketing, Selling and Administrative Expenses
Marketing, selling and administrative expenses for 2021 increased $76.6 million,
or 31.1%, to $323.4 million from $246.8 million in 2020. The increase in 2021
was primarily due to increases in marketing and sales activities related to our
return to service.
Depreciation and Amortization Expenses
Depreciation and amortization expenses for 2021 increased by $8.8 million, or
2.8%, to $325.9 million from $317.1 million in 2020 primarily due to the
addition of Odyssey of the Seas to our fleet during the first quarter of 2021.
Impairment and Credit Losses
Impairment and credit losses for 2021 decreased by $90.1 million compared to
impairment losses of $83.9 million recognized during the quarter ended September
30, 2020 due to the impact of COVID-19 on our operations and cash flows
primarily related to our Property and equipment, net. Additionally, credit
losses of $6.0 million were recognized during the third quarter of 2020 related
to our notes receivable.




                                       45

--------------------------------------------------------------------------------

Other Income (Expense)
Interest expense, net of interest capitalized for 2021 increased $171.3 million,
or 66.1%, to $430.7 million from $259.3 million in 2020. The increase was
primarily due to a debt extinguishment loss of $141.9 million recognized in the
third quarter of 2021 associated with the partial repayment of the 11.50% senior
secured notes due 2025. Refer to Note 7. Debt to our consolidated financial
statements for further information. Additionally, a higher average cost of debt
compared to 2020 contributed to the 2021 increase in Interest expense, net of
interest capitalized.
Equity investment loss in 2021 decreased by $48.9 million, to $29.1 million from
$78.0 million in 2020 primarily due to a reduction in losses for TUI Cruises,
one of our equity investments, during the third quarter of 2021 compared to
2020.
Other income (expense) was $37.2 million in 2021, compared to $(10.9) million in
2020. The $48.1 million increase in income was primarily due to a $22.0 million
tax benefit recognized in 2021, a $12.4 million decrease in expense compared to
2020 related to the change in fair value of fuel swap derivative instruments
with no hedge accounting, and a decrease of $8.0 million in foreign exchange
losses from the remeasurement of monetary assets and liabilities denominated in
foreign currency compared to 2020.
Other Comprehensive (Loss) Income
Other comprehensive loss in 2021 was $11.9 million compared to Other
comprehensive income of $82.1 million in 2020. The decrease in income of $94.0
million was primarily due to our recognition of a Loss on cash flow derivative
hedges of $13.3 million in 2021 compared to a Gain on cash flow derivative
hedges of $66.1 million in 2020, primarily due to a decrease in the fair value
of our foreign currency forwards in 2021 compared to an increase in 2020.
Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30,
2020
In this section, references to 2021 refer to the nine months ended September 30,
2021 and references to 2020 refer to the nine months ended September 30, 2020.
Revenues
Total revenues for 2021 decreased $1.6 billion, or 74.7%, to $549.9 million from
$2.2 billion in 2020.
Passenger ticket revenues comprised 58.9% of our 2021 total revenues. Passenger
ticket revenues for 2021 decreased by $1.2 billion, or 78.2%, to $0.3 billion in
2021 from $1.5 billion in 2020. The decrease in Passenger ticket revenues was
due to a 41.1% decrease in capacity driven by the lay-up of the majority of our
fleet during the first half of 2021 compared to the operation of the majority of
our fleet up through our global suspension in March of 2020. Our results of
operations for the nine months ended September 30, 2020 include Silversea
Cruises' fourth quarter 2019 and first and second quarter 2020 sailings,
reported on a one quarter lag. Favorable movements in foreign currency exchange
rates related to our revenue transactions denominated in currencies other than
the United States dollar increased Passenger ticket revenues by $4.2 million
The remaining 41.1% of 2021 total revenues was comprised of Onboard and other
revenues, which decreased $461.5 million, or 67.1%, to $226.1 million in 2021
from $687.6 million in 2020. The decrease in Onboard and other revenues was
primarily due to the decrease in capacity noted above and offset by the
favorable effect of changes in foreign currency exchange rates related to our
onboard and other revenues denominated in currencies other than the United
States dollar of $4.5 million.
Onboard and other revenues for the nine months ended September 30, 2020 also
includes a charge of $67.9 million recorded in the quarter ended September 30,
2020 to correct cancellation revenue, for certain immaterial bookings, which was
incorrectly recognized during the six months ended June 30, 2020. The charge is
considered immaterial to our financial statements.
Onboard and other revenues included concession revenue of $25.3 million in 2021
and $75.1 million in 2020.
Cruise Operating Expenses
Total cruise operating expenses for 2021 decreased $1.0 billion, or 39.1%, to
$1.5 billion from $2.5 billion in 2020. The decrease was primarily due to:
•a $269.7 million decrease in Commissions, transportation and other expenses;
•a $261.3 million decrease in Other operating expenses;
•a $163.2 million decrease in Payroll and related expense;
                                       46
--------------------------------------------------------------------------------

•a $108.2 million decrease in Fuel expenses;
•a $95.6 million decrease in Onboard and other expenses;
•a $79.8 million decrease in Food expenses; and
•the unfavorable effect of changes in foreign currency exchange rates related to
our expense transactions denominated in currencies other than the United States
dollar of $9.7 million.
Marketing, Selling and Administrative Expenses
Marketing, selling and administrative expenses decreased $77.1 million, or 8.2%,
to $867.0 million from $944.1 million in 2020. The decrease was due to the
reduction and deferral of general and administrative and global sales and
marketing activities primarily during the first half of 2021 due to the impact
of COVID-19 on our operations and a reduction in payroll and benefits as a
result of our April 2020 reduction in workforce.
Depreciation and Amortization Expenses
Depreciation and amortization expenses for 2021 remained in line with 2020 with
a decrease of $1.7 million, or 0.2%.
Impairment and Credit Losses
Impairment and credit losses for 2021 decreased by $1.3 billion compared to
charges recorded during the nine months ended September 30, 2020 due to the
impact of COVID-19 on our operations and cash flows, which impacted our
long-lived assets related to goodwill, intangibles, vessels and operating lease
right-of-use asset, and resulted in credit losses.
Other Income (Expense)
Interest expense, net of interest capitalized for 2021 increased $436.8 million,
or 76.5%, to $1.0 billion from $571.1 million in 2020. The increase was
primarily due to a debt extinguishment loss of $141.9 million recognized in the
third quarter of 2021 associated with the partial repayment of the 11.50% senior
secured notes due 2025. Refer to Note 7. Debt to our consolidated financial
statements for further information. Additionally, a higher average debt level
compared to 2020 related to new debt issuances in 2020 and 2021 coupled with a
higher average cost of debt contributed to the 2021 increase in Interest
expense, net of interest capitalized.
Equity investment loss decreased $3.2 million, or 2.3%, to a loss of $137.0
million in 2021 from a loss of $140.3 million in 2020 mainly as a result of a
2021 $26.0 million impairment charge of our investee's long-lived assets,
compared to a $39.7 million impairment charge of equity investments in 2020
primarily for our investment in Grand Bahama Shipyard.
Other income (expense) was $66.8 million in 2021, compared to $(127.5) million
in 2020. The $194.3 million change was primarily due to a $127.4 million
year-over-year increase in the fair value of fuel swaps with no hedge
accounting. Additionally, we recorded a deferred currency translation adjustment
loss of $69.0 million in the quarter ended June 30, 2020 related to the 2016
sale of our majority interest in the Pullmantur brand. We recognized the
deferred currency translation loss as we no longer have significant involvement
in Pullmantur's operations. In June 2020, we terminated the agreements
chartering our ships to the Pullmantur brand as a result of its reorganization
filing under Spanish law. We also recognized $20.0 million of expense during the
second quarter of 2020, approximating the estimated total cash refund expected
to be paid to Pullmantur guests and other expenses incurred as part of a
settlement agreement with our joint venture partner as part of the brand's
reorganization. The increases in Other income were partially offset by income
reported in 2020 of $45.1 million for the change in contingent consideration
payable to Heritage in 2020, which did not recur in 2021.
Other Comprehensive Income (Loss)
Other comprehensive income in 2021 was $63.5 million compared to Other
comprehensive loss of $71.4 million in 2020. The change of $134.9 million, or
189.0%, was primarily due to a Gain on cash flow derivative hedges in 2021 of
$48.5 million, compared to a Loss on cash flow derivative hedges of $110.1
million in 2020 primarily due to an increase in the fair value of our fuel swaps
in 2021 compared to a decrease in 2020.
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
                                       47
--------------------------------------------------------------------------------

Net cash used in operating activities decreased $1.2 billion to $1.7 billion for
the nine months ended September 30, 2021 compared to Net cash used in operating
activities of $2.9 billion for the same period in 2020. Our gradual resumption
of operations in 2021 and our announcement for the resumption of future
operations has generated increased guest ticket collections, resulting in an
increase of customer deposits of $1.0 billion during the nine months ended
September 30, 2021, compared to a decrease of customer deposits of $(1.6)
billion during the nine months ended September 30, 2020, while our global
operations were suspended. The increase in customer deposits was offset by
increased service expenses for certain ships in our fleet during the nine months
ended September 30, 2021, reflecting our resumption of cruise operations
globally and preparations for our announced sailings in the near term.
Net cash used in investing activities decreased $0.2 billion to $1.6 billion for
the nine months ended September 30, 2021, compared to $1.8 billion for the same
period in 2020. The decrease was primarily attributable to an increase in
proceeds from the sale of property and equipment and other assets of $175.4
million during the nine months ended September 30, 2021 compared to 2020 and a
decrease in cash paid on settlement of derivative financial instruments of $85.0
million, partially offset by an increase in capital expenditures of $81.0
million during the nine months ended September 30, 2021 compared to the same
period in 2020.
Net cash provided by financing activities were $2.8 billion for the nine months
ended September 30, 2021, compared to $7.5 billion for the same period in 2020.
The decrease of $4.6 billion was primarily attributable to higher debt proceeds
and issuance of commercial paper notes of $15.3 billion, during the nine months
ended September 30, 2020, compared to the same period in 2021, offset by higher
debt and commercial paper repayments of $8.6 billion during the nine months
ended September 30, 2020, compared to the same period in 2021. Additionally
during the nine months ended September 30, 2021, we received $1.6 billion in
proceeds from common stock issuances compared to none during the same period in
2020.
                                       48
--------------------------------------------------------------------------------

Future Capital Commitments
Capital Expenditures
COVID-19 has impacted shipyard operations, which has resulted and may continue
to result in delays of our previously contracted ship deliveries. As of
September 30, 2021, 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:
                                                                                                                         Approximate
Ship                                                      Shipyard                   Expected Delivery Date                 Berths
Royal Caribbean International -
Oasis-class:
Wonder of the Seas                               Chantiers de l'Atlantique              1st Quarter 2022                    5,700
Unnamed                                          Chantiers de l'Atlantique              2nd Quarter 2024                    5,700

Icon class:

Icon of the Seas                                       Meyer Turku Oy                   3rd Quarter 2023                    5,600
Unnamed                                                Meyer Turku Oy                   2nd Quarter 2025                    5,600
Unnamed                                                Meyer Turku Oy                   2nd Quarter 2026                    5,600
Celebrity Cruises -
Edge-class:
Celebrity Beyond                                 Chantiers de l'Atlantique              2nd Quarter 2022                    3,250
Unnamed                                          Chantiers de l'Atlantique              4th Quarter 2023                    3,250
Silversea Cruises
Muse-Class:
Silver Dawn                                             Fincantieri                     4th Quarter 2021                     600
Evolution Class:
Unnamed                                                 Meyer Werft                     2nd Quarter 2023                     730
Unnamed                                                 Meyer Werft                     2nd Quarter 2024                     730
TUI Cruises (50% joint venture)
Mein Schiff 7                                          Meyer Turku Oy                   2nd Quarter 2024                    2,900
Unnamed                                                 Fincantieri                     4th Quarter 2024                    4,100
Unnamed                                                 Fincantieri                     2nd Quarter 2026                    4,100
Total Berths                                                                                                                47,860



In April 2019, we entered into an agreement with Chantiers de l'Atlantique to
build the fifth Edge-class ship for Celebrity Cruises. The ship is expected to
have an aggregate capacity of approximately 3,250 berths and is expected to
enter service in the fourth quarter of 2025. The order with Chantiers de
l'Atlantique is contingent upon completion of conditions precedent and
financing.
In September 2021, we amended the credit agreements for the first and second
Evolution-class ships to increase their maximum loan amounts by €175.6 million
on an aggregate basis, or approximately $203.5 million based on the exchange
rate at September 30, 2021. The increase in the loan amounts will finance ship
design modifications that incorporate innovative sustainability features and
additional premium cabins, increasing the capacity for each ship to 730 berths.
At our election, interest on the incremental portion of Evolution 1 and
Evolution 2 will accrue either (1) at a fixed rate of 4.34% and 4.38%,
respectively (inclusive of the applicable margin) or (2) at a floating rate
equal to LIBOR plus 0.99% and 1.03%, respectively.
Our future capital commitments consist primarily of new ship orders. As of
September 30, 2021, the aggregate cost of our ships on order presented in the
table above, excluding any ships on order by our Partner Brands, was $12.8
billion, of which we had deposited $784.8 million. Approximately 62.5% of the
aggregate cost was exposed to fluctuations in the Euro exchange rate at
September 30, 2021.
Decreased demand for cruising as a result of concerns regarding COVID-19 has
had, and is expected to continue to have, a material impact on our cash flows,
liquidity and financial position. In order to preserve liquidity throughout the
COVID-19 pandemic, we deferred a significant portion of our planned 2020 and
2021 capital expenditures. As of September 30, 2021, we anticipate overall full
year capital expenditures, based on our existing ships on order, will be
approximately $2.1 billion for 2021. This amount does not include any ships on
order by our Partner Brands.
                                       49
--------------------------------------------------------------------------------

Contractual obligations from September 30, 2021, our contractual obligations were as follows (in thousands):

                                                                                      Payments due by period
                                                                       Less than                1-3                  3-5               More than
                                                    Total                1 year                years                years               5 years
Operating Activities:
Operating lease obligations(1)                 $  1,297,500          $    

31 647 $ 200,537 $ 164,846 $ 900,470
Interest on debt (2)

                               3,670,097              935,853             1,361,541              736,777              635,926
Other(3)                                            432,787              123,112                96,011               58,107              155,557
Investing Activities:                                        0
Ship purchase obligations(4)                     10,282,754            2,682,967             4,796,104            2,803,683                    -

Financing Activities:                                        0
Debt obligations(5)                              20,642,096              924,453            10,140,513            4,983,076            4,594,054
Finance lease obligations(6)                        197,407               32,291                27,808                8,187              129,121
Other(7)                                             20,128                9,435                10,693                    -                    -
Total                                          $ 36,542,769          $ 4,739,758          $ 16,633,207          $ 8,754,676          $ 6,415,128


(1)   We are obligated under noncancelable operating leases primarily for
preferred berthing arrangements, real estate and shipboard equipment. Amounts
represent contractual obligations with initial terms in excess of one year.
(2)   Long-term debt obligations mature at various dates through fiscal year
2033 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,
2021. Debt denominated in other currencies is calculated based on the applicable
exchange rate at September 30, 2021.
(3)  Amounts primarily represent future commitments with remaining terms in
excess of one year to pay for our usage of certain port facilities, marine
consumables, services and maintenance contracts.
(4)  Amounts are based on contractual installment and delivery dates for our
ships on order. Included in these figures are $8.2 billion in final contractual
installments, which have committed financing. COVID-19 has impacted shipyard
operations, which has resulted and may continue to result in delays of 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. Additionally, amounts do not include activity related to
Silversea Cruises, including ships placed on order, if any, during the
three-month reporting lag period.

(5)  Amounts represent debt obligations with initial terms in excess of one
year. Debt denominated in other currencies is calculated based on the applicable
exchange rate at September 30, 2021. In addition, debt obligations presented
above are net of debt issuance costs of $359.1 million as of September 30, 2021.
(6)  Amounts represent finance lease obligations with initial terms in excess of
one year, net of imputed interest.
(7)  Amounts represent fees payable to sovereign guarantors in connection with
certain of our export credit debt facilities and facility fees on our revolving
credit facilities.
Please refer to Funding Needs and Sources for discussion on the planned funding
of the above contractual obligations.
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
TUI Cruises has entered into various ship construction and credit agreements
that include certain restrictions on each of our and TUI AG's ability to reduce
our current ownership interest in TUI Cruises below 37.55% through May 2033.
                                       50
--------------------------------------------------------------------------------

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 obligation is probable.
In June of 2021, we exercised our option under our operating lease with SMBC
Leasing and Finance, Inc (the "Lessor") to purchase Terminal A at PortMiami in
July 2021 for the pre-agreed purchase price of $220.0 million. Upon purchase of
the terminal lease in July 2021, the underlying asset was recorded as a
leasehold improvement within Property and equipment, net. Our July 2021 purchase
of the Port of Miami terminal eliminated the residual value guarantee and a
requirement under the lease to post $181.1 million of cash collateral on or
before July 18, 2021.
On February 25, 2021, S&P Global downgraded our senior unsecured rating from B+
to B, which had no financial impact, and downgraded our $3.32 billion Secured
Notes and Silversea Notes, which were fully repaid in June 2021 with a portion
of the proceeds from the $650 million June Unsecured Notes, from BB to BB-. This
downgrade had no impact on the terms of the notes.
Certain of our surety agreements with third party providers for the benefit of
certain agencies and associations that provide travel related bonds, allow the
sureties to request collateral. We also have agreements with our credit card
processors relating to customer deposits received by us for future voyages.
These agreements allow the credit card processors to require us, under certain
circumstances, including breach of the financial covenants, the existence of
other material adverse changes, excessive chargebacks, and other triggering
events, to maintain a reserve that can be satisfied by posting collateral. As of
September 30, 2021, we have posted letters of credit as collateral with our
sureties and credit card processors under our revolving credit facilities in the
amount of $162.3 million.
Executed amendments are in place for the majority of our credit card processors,
waiving reserve requirements tied to breach of our financial covenants through
at least September 30, 2022, with modified covenants thereafter, and as such, we
do not anticipate any incremental collateral requirements for the processors
covered by these waivers in the next 12 months. We have a reserve with a
processor where the agreement was amended in the first quarter of 2021, such
that proceeds are held in reserve until the sailing takes place or the funds are
refunded to the customer. The maximum projected exposure with the processor,
including amounts currently withheld and reported in Trade and other
receivables, is approximately $237.7 million. The amount and timing are
dependent on future factors that are uncertain, such as the pace of resumption
of our cruise operations, the volume of future deposits and whether we transfer
our business to other processors. If we require additional waivers on the credit
card processing agreements and are not able to obtain them, this could lead to
the termination of these agreements or the trigger of reserve requirements.
As of September 30, 2021, other than the items described 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 relied on a combination of cash flows provided by operations,
drawdowns 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. The impact of COVID-19 has
resulted in our voluntary suspension of global cruise operations from March 2020
up to our recent gradual resumption of operations. 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 and are not limited to: further reductions in capital
expenditures, operating expenses and administrative costs and additional
financings. See further discussion on these liquidity actions at Recent
Developments - COVID-19.
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, 2021, we had 10.3
billion of committed financing for final delivery installments on our ships on
order.
As of September 30, 2021, we had $4.7 billion in contractual obligations due
through September 30, 2022, of which approximately $0.9 billion relates to debt
maturities, $0.9 billion relates to interest on debt and $2.7 billion relates to
progress
                                       51
--------------------------------------------------------------------------------

payments on our ship orders and the final installments payable due upon the
delivery of Silver Dawn, Wonder of the Seas and Celebrity Beyond.
As of September 30, 2021, we had liquidity of $4.1 billion, including $0.1
billion of undrawn revolving credit facility capacity, $3.3 billion in cash and
cash equivalents, and a $0.7 billion commitment for a 364-day term loan facility
available to draw at anytime prior to August 12, 2022. Our revolving credit
facilities were mostly utilized through a combination of amounts drawn and
letters of credit issued under the facilities as of September 30, 2021. 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.

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 the liquidity resulting from the actions mentioned above will be sufficient
to fund our liquidity requirements over at least the next twelve months.
However, there is no assurance that our assumptions and estimates are accurate
due to possible unknown variables related to this unprecedented suspension of
our operations and, as such, there is inherent uncertainty in our ability to
predict future liquidity requirements.
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 to no
more than 62.5%, 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.
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.
The amendments impose a monthly-tested minimum liquidity covenant of $350
million. 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, 2021, we were in
compliance with the applicable minimum liquidity covenant 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.
If we require additional waivers on the credit card processing agreements and
are not able to obtain them, this could lead to the termination of these
agreements or the trigger of reserve requirements.
Dividends
                                       52

————————————————– ——————————-

During the first quarter of 2020, we declared a cash dividend on our common
stock of $0.78 per share, which was paid in April 2020. During the first quarter
of 2020, we also paid a cash dividend on our common stock of $0.78 per share,
which was declared during the fourth quarter of 2019.
During the second quarter of 2020, we agreed with certain of our lenders not to
pay dividends or engage in common stock repurchases for so long as our debt
covenant waivers are in effect. In addition, in the event we declare a dividend
or engage in share repurchases, we will need to repay the amounts deferred under
our export credit facilities. Accordingly, we did not declare a dividend during
the six consecutive quarters ending September 30, 2021. 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.

© Edgar online, source Previews