•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. ~~Additionally, costs associated with Pullmantur's travel agency network, land-based tours and air charter business to third parties are included in~~ ~~Other operating expenses~~ ~~through March 31, 2014, the date of the sale of Pullmantur's non-core businesses.~~

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 ~~which~~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.

Program refers to the multi-year program designed to communicate and motivate employees to work towards company specific goals. The program includes five goals by 2025: delivering $20.00 adjusted earnings per share; further reducing the company’s carbon footprint by 25% against a 2019 base; delivering strong returns on invested capital; and continuing to improve on record guest satisfaction and employee engagement metrics. These goals have been put in place to focus our leadership on achieving outsized improvements in our performance going forward and are purposely aspirational. The strategies that we will employ to achieve the goals of the program are consistent with our ongoing operating strategies as listed in the Operating Strategies section. During the six-year time horizon of this program, there are many factors that will impact our ability to achieve these ambitious goals. In particular, our goal of reducing our carbon footprint by 25% will be challenging and will depend on our ability to take aggressive steps including the use of new technologies that have not yet been developed or proven.

Adjusted Earnings per Share ("Adjusted EPS") represents Adjusted Net Income attributable to Royal Caribbean Cruises Ltd. 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 Incomerepresents net income 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) costs, net of insurance recoveries, related to the Grand Bahama drydock structure incident involving Oasis of the Seas;(ii)our equity share of the write-off of the Grand Bahama drydock and other incidental expenses by Grand Bahama;(iii) 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; (iv) the change in fair value in the contingent consideration related to the Silversea Cruises acquisition; (v) a loss on the early extinguishment of debt related to the repayment of certain loans; (vi) the amortization of the Silversea Cruises intangible assets resulting from the acquisition; (vii) integration costs related to the Silversea Cruises acquisition; (viii) transaction costs related to the Silversea Cruises acquisition; (ix) restructuring charges incurred in relation to the reorganization of our international sales and marketing structure and other initiatives; (x) the impairment loss and other costs related to the exit of our tour operations business; (xi) the ~~Pullmantur related assets, the net~~impairment loss related to ~~the elimination of the Pullmantur reporting lag, the net gain related to the sale of the Pullmantur~~Skysea Holding; and CDF brands and related costs, restructuring charges and other initiative costs related to our Pullmantur right-sizing strategy and other restructuring initiatives, the estimated impact of the divested Pullmantur non-core businesses for periods prior to the sales transaction, the loss recognized on the sale of ~~Celebrity Century,~~ (xii) the impact of the change in our voyage proration methodology and the reversal of a deferred tax asset valuation allowance due to Spanish tax reform. The estimated impact of the divested Pullmantur non-core businesses was arrived at by adjusting the net income (loss) of these businesses for the ownership percentage we retained, as well as, for intercompany transactions that are no longer eliminated in our consolidated statements of comprehensive income (loss) subsequentaccounting principle related to the ~~sales transaction. For~~recognition of stock-based compensation expense from the ~~full year 2014,~~graded attribution method to the ~~impact of the voyage proration change represents net income that would have been recognized in 2013 had we recognized revenues and cruise operating expenses on a pro-rata basis~~straight-line attribution method for ~~all voyages.~~time-based stock awards.

Available Passenger Cruise Days ("~~APCD"~~APCD") is our measurement of capacity and represents double occupancy per cabin multiplied by the number of cruise days for the ~~period.~~period, which excludes canceled cruise days and drydock days. 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.

~~Double-DoubleProgram~~ refers to the multi-year Adjusted EPS and Return on Invested Capital ("ROIC") goals we publicly announced in 2014 and are seeking to achieve by the end of 2017. We designed this program to help us better execute and achieve our business goals by clearly articulating longer-term financial objectives. Under the Double-Double Program, we are targeting Adjusted EPS of $6.78 by the end of 2017, which is double our 2014 Adjusted EPS of $3.39. We are also targeting ROIC of 10% by the end of 2017 as compared to ROIC of 5.9% in 2014.

Gross Cruise Costs represent the sum of total cruise operating expenses plus marketing, selling and administrative expenses. For the periods presented, Gross Cruise Costs exclude (i) restructuring charges incurred

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in relation to the reorganization of our international sales and marketing structure and other initiatives; (ii) transaction costs related to the Silversea Cruises acquisition; (iii) integration costs related to the Silversea Cruises acquisition; (iv) the impairment loss and other costs related to the exit of our tour operations business; and (v) the impact of the change in accounting principle related to the recognition of stock-based compensation expense from the graded attribution method to the straight-line attribution method for time-based stock awards, which were included within Marketing, selling and administrative expenses.

Gross Yields represent total revenues per APCD.

Net Cruise Costs and Net Cruise Costs Excluding Fuel 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 historical Gross Cruise Costs to Net Cruise Costs and Net Cruise Costs Excluding Fuel is provided below under Results of ~~Operations. We have not provided a quantitative reconciliation of projected Gross Cruise Costs to projected~~ Operations. Net Cruise Costs and ~~projected~~ Net Cruise Costs Excluding Fuel ~~due to~~exclude the ~~significant uncertainty in projecting the~~ costs, ~~deducted to arrive at these measures. Accordingly, we do not believe that reconciling information for such projected figures would be meaningful. For the periods prior to the sale~~net of ~~the Pullmantur non-core businesses, Net Cruise Costs excludes the estimated impact of these divested businesses. Net Cruise Costs also excludes the net gain~~insurance recoveries, related to the ~~sale~~Grand Bahama drydock structure incident involving Oasis of the ~~Pullmantur and CDF brands and related costs and initiative costs related to our Pullmantur right-sizing strategy and other restructuring initiatives, as well as the loss recognized on the sale of~~ ~~Celebrity Century.~~Seas.

Net Revenues represent total revenues less commissions, transportation and other expenses and onboard and other expenses (each of which is described above under the Description of Certain Line Items heading). ~~For the periods prior to the sale of the Pullmantur non-core businesses, we have presented Net Revenues excluding the estimated impact of these divested businesses in the financial tables under~~ ~~Results of Operations~~.

Net Yields represent Net Revenues per APCD. We utilize Net Revenues and Net Yields to manage our business on a day-to-day basis as we believe that ~~it is~~they are the most relevant ~~measure~~measures of our pricing performance because ~~it reflects~~they reflect the cruise revenues earned by us net of our most significant variable costs, which are commissions, transportation and other expenses and onboard and other expenses. A reconciliation of historical Gross Yields to Net Yields is provided below under Results of Operations. We have not provided a quantitative reconciliation of projected Gross Yields to projected Net Yields due to the significant uncertainty in projecting the costs deducted to arrive at this measure. Accordingly, we do not believe that reconciling information for such projected figures would be meaningful. For the periods prior to the sale of the Pullmantur non-core businesses, Net Yields excludes the estimated impact of these divested businesses. Net Yields also excludes initiative costs related to the sale of the Pullmantur and CDF brands.

Occupancy, in accordance with cruise vacation industry practice, is calculated by dividing Passenger Cruise Days 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.

We believe Net Yields, Net Cruise Costs and Net Cruise Costs Excluding Fuel are our most relevant non-GAAP financial measures. However, a significant portion of our revenue and expenses are denominated in currencies other than the United States dollar. Because our reporting currency is the United States dollar, the value of these revenues and expenses can be affected by changes in currency exchange rates. Although such changes in local currency prices are just one of many elements impacting our revenues and expenses, they can be an important element. For this reason, we also monitor Net Yields, Net Cruise Costs and Net Cruise Costs Excluding Fuel as if the current ~~periods'~~period's currency exchange rates had remained constant with the comparable prior ~~periods'~~period's rates, or on a "Constant Currency" basis.

It should be emphasized that Constant Currency is primarily used for comparing short-term changes and/or projections. Changes in guest sourcing and shifting the amount of purchases between currencies can change the impact of the purely currency-based fluctuations.

The use of certain significant non-GAAP measures, such as Net Yields, Net Cruise Costs and Net Cruise Costs Excluding Fuel, allows us to perform capacity and rate analysis to separate the impact of known capacity changes from other less predictable changes which affect our business. We believe these non-GAAP measures provide expanded insight to measure revenue and cost performance in addition to the standard ~~United States~~ GAAP based financial measures. There are no specific rules or regulations for determining non-GAAP and Constant Currency measures, and as such, ~~there exists the possibility that~~ they may not be comparable to other companies within the industry.

We have not provided a quantitative reconciliation of (i) projected Total revenues to projected Net Revenues, (ii) projected Gross Yields to projected Net Yields, (iii) projected Gross Cruise Costs to projected Net Cruise Costs and projected Net Cruise Costs Excluding Fuel and (iv) projected Net Income attributable to Royal Caribbean Cruises Ltd. and Earnings per Share to projected Adjusted Net Income and Adjusted Earnings per Share because preparation of meaningful GAAP projections of Total revenues, Gross Yields, Gross Cruise Costs, Net Income attributable to Royal Caribbean Cruises Ltd. and Earnings per Share would require unreasonable effort. Due to

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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 restructuring expenses or other 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 GAAP. Due to this uncertainty, we do not believe that reconciling information for such projected figures would be meaningful.

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Executive Overview

~~The year 2016 marked the penultimate~~By all accounts, 2019 was another year of very strong performance. We introduced three new vessels - Spectrum of the Seas, Celebrity Flora, and TUI Cruises Mein Schiff 2, launched a very successful Perfect Day destination at Coco Cay, modernized six ships and implemented Excalibur, our ~~Double-Double program ("Double-Double"), which~~digital transformation platform, on most of the fleet. In addition, we ~~implemented~~continued to find efficiencies, implement synergies and reduce costs, while at the same time, remained focused on strategic investments in 2014 to challenge our employees towards a true step change in performance. As part of this effort, we set two multi-year financial targets, including doubling our 2014 Adjusted Earnings Per Share (“Adjusted EPS”) and achieving double-digit Return on Invested Capital (“ROIC”) by the end of 2017. By communicating these goals to our employees, we have been able to better align and influence internal decision making and energize and focus our personnel towards reaching these targets. Our long-term commitment to grow revenue yields, manage costs and maintain steady capacity growth continues to guide us towards Double-Double. While our Double-Double goals are demanding, they are consistent with and reflect the trajectory of our business over the last several years in which we have experienced annual Adjusted EPS growth of approximately 39%, 42% and 26% and annual ROIC growth of approximately 16%, 29% and 17% in each of 2014, 2015 and 2016, respectively. areas that will boost revenue.

Our ~~2016~~2019 net income was ~~$1.3~~$1.9 billion, or ~~$5.93~~$8.95 per diluted share, compared to ~~$665.8 million,~~$1.8 billion, or ~~$3.02~~$8.56 per diluted share, in ~~2015.~~2018. Adjusted Net Income for ~~2016~~2019 was ~~$1.3~~$2.0 billion, or ~~$6.08~~$9.54 per diluted share, compared to ~~$1.1~~$1.9 billion, or ~~$4.83~~$8.86 per diluted share, in ~~2015.~~2018. Adjusted EPS for ~~2016 represents the third straight year we achieved a record amount, growing over 25% on 2015.~~

~~Additionally, Net Yields~~2019, on a ~~Constant-Currency~~diluted basis, ~~increased~~represents an 8% increase in earnings compared to 2018. We were able to achieve these results despite the dry-dock incident in the Grand Bahama shipyard, the cancellation of cruises to Cuba beginning in June of this year and an unusual hurricane season, all of which negatively impacted the company’s adjusted earnings per share for the ~~seventh consecutive year. For the~~ year ~~ended December 31, 2016, our Net Yields on a Constant-Currency basis~~by approximately $0.80.

Total revenues increased ~~by 3.9%,~~$1.5 billion in 2019 to $11.0 billion, compared to $9.5 billion in 2018, primarily driven by increases in both ticket and onboard ~~yields~~yields. During 2019, our Gross Yields and Net Yields increased by 8.0%, on a ~~benefit from~~Constant-Currency basis, marking the ~~deconsolidation~~tenth consecutive year of ~~the Pullmantur brand from the rest of the company in August. The success of North American based sailings such as the Caribbean, Alaska, and Bermuda were largely responsible for our organic~~ revenue growth. ~~Higher yields were~~The addition of new vessels to the fleet, the consolidation of Silversea Cruises, Perfect Day at CocoCay and our Miami terminal operation also ~~generated by the introductions of two new ships in 2016 -~~ ~~Ovation of the Seas~~ ~~in April~~contributed to our year-over-year revenue growth. Onboard revenue and ~~Harmony of the Seas~~ in May. Partly offsetting these successes was softer than anticipated demand from the China market and the continued geopolitical turmoil in Europe, resulting in a shift of sourcing from North American guests to European guests, particularly for Mediterranean sailings.

Net onboard revenue yield in 2016 grew by 7.8% year-over-year on a Constant Currency basis, despite the increasing value of the dollar relative to our basket of foreign currencies which created an unfavorable impact on our earnings and limited the spending power of our foreign guests. Growthgrowth came from a variety of ~~areas, most notably from~~revenue enhancing initiatives, including beverage package sales and promotions, gaming initiatives and new strategies and promotions on our ~~high speed onboard internet products. We expect~~shore excursions, specialty restaurants and Internet services.

Cruise operating expenses increased $801.0 million in 2019 to ~~continue this upward onboard yield growth trend~~$6.1 billion from $5.3 billion in ~~2017~~2018. Adjusting for capacity, our Gross Cruise Costs and ~~expect them to grow by slightly more than the average net revenue yield growth for the year.~~

~~We remain dedicated to finding efficiencies, identifying synergies and reducing costs, while at the same time, focusing on strategic investments in areas that will boost revenue. In 2016, our~~ Net Cruise Costs ~~excluding fuel~~Excluding Fuel increased by ~~0.9%~~8.7% and 11.4%, respectively, on a Constant Currency basis compared to ~~2015. Going into 2017, we expect Net Cruise Costs excluding fuel on a Constant Currency basis to be flat as we remain intensely focused on cost controls,~~2018 driven primarily by the consolidation of Silversea Cruises, our new operations of Perfect Day at CocoCay and ~~further realize economies of scale.~~our terminal operation in Miami.

The Company remains focused on improving returns for our shareholders. In ~~2016,~~2019, we bought back ~~$300~~$100.0 million in shares of common stock ~~completing~~and have $600.0 million remaining under our ~~$500 million~~$1.0 billion share repurchase program that was announced in ~~October 2015. Additionally, in September 2016,~~May 2018. Consistent with our earnings growth, we also announced a ~~28%~~11% increase to our common stock ~~dividend.~~dividend, our seventh consecutive year with a dividend increase.

~~For~~

Perfect Day at CocoCay is the first of our Perfect Day Island Collection of next-level private destinations. The island debuted a combination of first-of-their-kind thrills and one-of-a-kind ways to chill that significantly change what is possible in a vacation destination. The island features the tallest waterslide in North America, the Up and Away helium balloon, and the Caribbean’s largest wave pool.

The year ~~2017,~~2020 has started off challenging as we address the impact of the recent coronavirus outbreak on our operations. Prior to the outbreak, our sailings in China were trending particularly well both in terms of rate and volume. Our itineraries in China were expected to represent 6% and 4% of our full year and first quarter 2020 capacity, respectively. The travel restrictions and other measures taken by China and other countries to contain the disease have resulted in the cancellation of an increasing number of our cruises in the region. We have also implemented several measures restricting the boarding of certain at-risk guests and crew on our ships. These and other concerns and restrictions relating to the coronavirus outbreak are having an impact on the demand for cruises and causing travel restrictions, guest cancellations, an unavailability of ports and/or destinations, ship redeployments and an inability to source our crew, provisions or supplies from certain places. All of these issues are having and are likely to continue to have a material impact on our bookings, operations and our overall financial performance. However, given the fluidity and uncertainty of this situation, we are unable to predict the full financial impact that this incident will have on our operations and financial condition, including what our yields and earnings for 2020 will be (see Outlook).

In 2020, we expect our capacity to increase 4.8% year-over-year as we add Odyssey of the Seas and Celebrity Apex as well as two Silversea vessels, Silver Origin and Silver Moon, to the fleet. We’ve slightly

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increased our capacity in the Caribbean ~~will increase year-over-year as~~ ~~Harmony~~to over 50% of our total capacity in 2020, driven by the inaugural winter seasons of Odyssey of the Seasand Celebrity ~~Equinox~~Apex. Our European itineraries will ~~remain in~~account for 17% of our 2020 capacity with the ~~Caribbean year-round rather than spending~~year-over-year increase driven by the ~~summer in Europe. While~~ ~~Harmony~~timing of drydocks and the addition of Celebrity Apex and Silver Moon. Excluding the impact of the ~~Seas~~ ~~will be replaced by~~ ~~Freedom of the Seas~~ ~~in Europe,~~recent coronavirus outbreak, we ~~will not be replacing~~ ~~Celebrity Equinox~~ in the Eastern Mediterranean. The combination of these deployment changes result in a reduction in capacity in Europe. Our capacity in the Asia Pacific region is expected to grow 5% year-over-year primarily due to the first fullexpect another year of ~~deployment~~total revenue and net yield growth driven by our new ships, strong demand for ~~Ovation of the Seas. Industry-wide capacity in the region is expected to grow 17%, slowing~~ our core products and continued growth from ~~the 34% growth increase the region experienced in 2016.~~our onboard revenue areas.

~~In May 2016, we announced the order of our fifth Oasis-class ship for delivery in the spring of 2021, and two additional Edge-class ships scheduled for delivery in the fall of each of 2021 and 2022.~~ In addition, we recently announced our

program which presents specific goals to ~~investing in new hardware, we opportunistically evaluate selling or transferring older ships to~~be achieved by 2025: delivering $20.00 adjusted earnings per share; further ~~optimize our fleet. Since 2014, we have sold or are about to sell four ships that are expected~~reducing the company’s carbon footprint by 25%; delivering strong returns on invested capital; and continuing to improve on record guest satisfaction and employee engagement metrics. Our management team is goal motivated and our ~~ROIC - the sale~~aim, through this program, is to establish clear, simple, and ambitious targets that will motivate our people and drive superior results. Adopting these clear and simple

goals will help guide our everyday decision-making to focus on People, Profits and Planet.

Table of ~~Celebrity Century~~ ~~to a subsidiary of Skysea Holdings, the sale of~~ ~~Ocean Dream~~ ~~to an unrelated third party, the sale of~~ ~~Splendour of the Seas~~ ~~to TUI Cruises, and most recently, the pending sale of~~ ~~Legend of the Seas~~ ~~to Thomson Cruises.~~C ontents

Results of Operations

For reporting purposes, we include Silversea Cruises’ results of operations on a three-month reporting lag from October 1, 2018 through September 30, 2019 in our consolidated results of operations for the year ended December 31, 2019 and from the date of acquisition through September 30, 2018 in our consolidated results of operations for the year ended December 31, 2018. Refer to Note 1. General and Note 3. Business Combinations to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for further information on the three-month reporting lag and the Silversea Cruises acquisition.

In addition to the items discussed above under "Executive Overview," significant items for ~~2016~~2019 include:

~~Both our net income~~•Our Net Income attributable to Royal Caribbean Cruises Ltd. and Adjusted Net Income for the year ended December 31, ~~2016~~2019 was ~~$1.3~~$1.9 billion and $2.0 billion, or ~~$5.93~~$8.95 and ~~$6.08~~$9.54 per share on a diluted basis, respectively, as compared to ~~net income~~Net Income attributable to Royal Caribbean Cruises Ltd. and Adjusted Net Income of ~~$665.8 million~~$1.8 billion and ~~$1.1~~$1.9 billion, or ~~$3.02~~$8.56 and ~~$4.83~~$8.86 per share on a diluted basis, respectively, for the year ended December 31, ~~2015.~~2018.

•Total revenues, excluding the effect of changes in foreign currency rates, increased by $1.6 billion for the year ended December 31, 2019 compared to the same period in 2018 primarily due to an increase in capacity and an increase in ticket prices and onboard spending on a per passenger basis, which are further discussed below.

•The effect of changes in foreign currency exchange rates related to our passenger ticket and onboard and other revenue transactions, ~~and~~denominated in currencies other than the United States dollar, resulted in a decrease in total revenues of $127.4 million for the year ended December 31, 2019 compared to the same period in 2018.

•Total cruise operating expenses, excluding the effect of changes in foreign currency rate, increased by $837.5 million for the year ended December 31, 2019 compared to the same period in 2018, primarily due to an increase in capacity, which is further discussed below.

•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 toin total ~~revenues~~operating expenses of ~~$187.9~~$36.9 million for the year ended December 31, ~~2016~~2019 compared to the same period in ~~2015~~2018.

•Effective June 5th, 2019, we stopped sailings to Cuba as the U.S government rescinded authorized travel to Cuba under the People-to-People program and ~~a decrease~~prohibited travel to Cuba via cruise ~~operating expenses of $40.9 million for the year ended December 31, 2016 compared to the same period in 2015.~~

~~Total revenues, excluding the unfavorable effect of changes in foreign currency exchange rates, increased by $385.2 million for the year ended December 31, 2016 compared to the same period in 2015~~ships. The estimated negative impact resulting from this regulatory change, primarily due to ~~an increase in overall capacity and ticket prices, which are further discussed below.~~

~~Total Cruise operating expenses, excluding the favorable effect of~~ changes in ~~foreign currency exchange rates, decreased~~itineraries, is approximately $0.29 per share on a diluted basis to our Net Income attributable to Royal Caribbean Cruises Ltd.

•The estimated negative impact resulting from the Grand Bahama drydock structure incident involving Oasis of the Seas, net of insurance recoveries and including our share of the write-off of the related drydock by ~~$41.9~~Grand Bahama, is approximately $0.36 per share on a diluted basis to our Net Income attributable to Royal Caribbean Cruises Ltd.

•The estimated negative impact resulting from 2019 hurricane-related disruptions was approximately $0.15 per share on a diluted basis to our Net Income attributable to Royal Caribbean Cruises Ltd.

•In April 2019, we entered into and drew in full on an unsecured three-year term loan agreement in the amount of $1.0 billion. Proceeds of this loan were used to repay the $700 million ~~for the year ended December 31, 2016 compared~~364-day loan due July 2019 related to the ~~same period in 2015, primarily due to a decrease in fuel expense, excluding~~acquisition of Silversea Cruises and the ~~impact~~remaining balance of the ~~increase~~unsecured term loan originally incurred in ~~capacity, which is further discussed below.~~

~~Effective January 1, 2016, we eliminated Pullmantur Holdings', the parent company~~2010 to purchase Allure of the ~~Pullmantur and CDF brands, two-month reporting lag to be consistent with~~Seas. The repayment of these loans resulted in a total loss on the ~~fiscal calendar~~extinguishment of ~~the Company. As a result~~debt of ~~this change, the results of Pullmantur Holdings for November and December 2015 are included in our statement of comprehensive~~$6.3 million, which was recognized within Other (expense) income ~~(loss) for the year ended December 31, 2016. The effect of this change was a decrease to net income of $21.7 million and this amount is reported~~ within~~Other income~~ in our consolidated statements of comprehensive income (loss) ~~for the year ended December 31, 2016. Refer to Note 1.~~ ~~General~~ ~~to our consolidated financial statements under Item 8.~~ ~~Financial Statements and Supplementary Data~~ ~~for further information on the elimination~~.

Table of ~~the Pullmantur reporting lag.~~C ontents

In July 2016, we sold 51% of our interest in Pullmantur Holdings. We retain a 49% interest in Pullmantur Holdings as well as full ownership of the four vessels currently operated by the Pullmantur brand under bareboat charter arrangements. As a result of the sale of a majority interest in Pullmantur Holdings, we recognized an immaterial gain and no longer consolidate these businesses in our consolidated financial statements effective August 2016. Refer to Note 1. ~~General~~ ~~to our consolidated financial statements under Item 8.~~ ~~Financial Statements and Supplementary Data~~ ~~for further information.~~

Other items for ~~2016~~2019 include:

•In February 2019, TUI Cruises, our 50% joint venture, took delivery of a new Mein Schiff 2 and the existing Mein Schiff 2 was renamed Mein Schiff Herz.

~~In April 2016,~~•During the second quarter of 2019, we took delivery of ~~Ovation~~Spectrum of the Seasand Celebrity Flora. To finance the ~~purchase,~~purchases, we borrowed ~~$841.8~~$908.0 million ~~under a previously committed 12-year unsecured term loan, which is 95% guaranteed by Hermes. Refer to Note 7.~~ ~~Long-Term Debt~~ ~~to our consolidated financial statements under Item 8.~~ ~~Financial Statements~~ and ~~Supplementary Data~~ ~~for further information.~~

~~In May 2016, we took delivery of~~ ~~Harmony of the Seas. To finance the purchase, we borrowed €700.7~~€80.0 million, or ~~$739.2~~approximately $89.8 million based on the exchange rate at December 31, ~~2016, and $226.1 million~~2019, respectively, under previously committed unsecured term loans. ~~Both of the facilities are 100% guaranteed by COFACE.~~ Refer to Note 7. ~~Long-Term~~9. Debt to our consolidated financial statements under Item 8. 1. Financial Statements ~~and Supplementary Data~~ for further information.

Additionally, Spectrum of the Seas and Celebrity Flora entered service in April 2019 and at the end of June 2019, respectively.

•In April 2019, we amended our $1.4 billion unsecured revolving credit facility due in 2020 to extend the termination date through April 2024, increase the facility size to $1.7 billion and reduce pricing. Refer to Note 9. Debt to our consolidated financial statements under Item 1. Financial Statements for further information.

•In ~~May 2016, TUI~~April 2019, Silversea Cruises ~~our 50% joint venture, took delivery of~~ ~~Mein Schiff 5~~.

~~In June 2016, we~~ entered into an agreement ~~to sell~~ ~~Legend of the Seas~~ to Thomson Cruises. The sale is scheduled to be completed in March 2017 in order to retain the future revenues to be generated for sailings through that date. We expect to recognize a gain on the sale, which we do not expect will have a material effect to our annual consolidated financial statements.

During 2016, we entered into agreements with STX France to build a fifth Oasis-class ship for Royal Caribbean International and a third and fourth "Project Edge" ship for Celebrity Cruises. Additionally in 2016, we signed a memorandum of understanding with Meyer ~~Turku~~Werft to build two ships of a new generation, known as the Evolution-class. In September 2019, we entered into credit agreements for the unsecured financing of these ships for ~~Royal Caribbean International, known as "Project Icon."~~up to 80% of each ship's contract price. Refer to Note ~~15.~~ 11. Commitments and Contingencies to our consolidated financial statements under Item 8. 1. Financial Statements ~~and Supplementary Data~~ for further information.

•In May 2019, we amended our $1.15 billion unsecured revolving credit facility due in 2022 to reduce pricing to match pricing on our $1.7 billion unsecured revolving credit facility due in 2024.

•In June 2019, we entered into a $300 million unsecured term loan facility for the financing of Silversea Cruises' Silver Moon. Refer to Note 9. Debt to our consolidated financial statements under Item 1. Financial Statements for further information.

•In June 2019, we entered into an agreement with Meyer Turku to build a third Icon-class ship. In December 2019, we entered into a credit agreement for the unsecured financing for up to 80% of the ship's contract price. Refer to Note 19. Commitments and Contingencies to our consolidated financial statements for further information.

•In December 2019, we entered into a credit agreement for the unsecured financing for up to 80% contract price for the sixth Oasis-class ship. Refer to Note 19. Commitments and Contingencies to our consolidated financial statements for further information.

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We reported ~~net income,~~Net Income attributable to Royal Caribbean Cruises Ltd, Adjusted Net Income, earnings per share and Adjusted Earnings per Share as shown in the following table (in thousands, except per share data):


	Year Ended December 31,
	2019		2018		2017
Net Income attributable to Royal Caribbean Cruises Ltd.	$	1,878,887	$	1,811,042	$	1,625,133
Adjusted Net Income attributable to Royal Caribbean Cruises Ltd.	2,002,847		1,873,363		1,625,133
Net Adjustments to Net Income attributable to Royal Caribbean Cruises Ltd. - Increase	$	123,960	$	62,321	$	—
Adjustments to Net Income attributable to Royal Caribbean Cruises Ltd.:
Oasis of the Seas incident, Grand Bahama's drydock write-off and other incidental expenses ⁽¹⁾	35,239		—		—

Loss on extinguishment of debt	6,326		—		—
Change in the fair value of contingent consideration and amortization of Silversea Cruises intangible assets related to Silversea Cruises acquisition ⁽²⁾	30,675		2,046		—
Restructuring charges and other initiatives expense ⁽³⁾	13,707		—		—






Transaction and integration costs related to the Silversea Cruises acquisition ⁽²⁾	2,048		31,759		—

Noncontrolling interest adjustment ⁽⁴⁾	35,965		3,156		—
Impairment loss related to Skysea Holding ⁽⁵⁾	—		23,343		—
Impairment and other costs related to exit of tour operations business ⁽⁶⁾	—		11,255		—
Impact of change in accounting principle ⁽⁷⁾	—		(9,238)		—
Net Adjustments to Net Income attributable to Royal Caribbean Cruises Ltd. - Increase	$	123,960	$	62,321	$	—

Basic:
Earnings per Share	$	8.97	$	8.60	$	7.57
Adjusted Earnings per Share	$	9.56	$	8.90	$	7.57

Diluted:
Earnings per Share	$	8.95	$	8.56	$	7.53
Adjusted Earnings per Share	$	9.54	$	8.86	$	7.53

Weighted-Average Shares Outstanding:
Basic	209,405		210,570		214,617
Diluted	209,930		211,554		215,694

Year Ended December 31,
2016 2015 2014
Net income $ 1,283,388
$ 665,783
$ 764,146
Adjusted Net Income 1,314,689
1,065,066
755,729
Net Adjustments to Net Income - Increase (Decrease) $ 31,301
$ 399,283
$ (8,417 )
Adjustments to Net Income:
Impairment of Pullmantur related assets⁽¹⁾
$ —
$ 399,283
$ —
Net loss related to the elimination of the Pullmantur reporting lag 21,656
—
—
Net gain related to the sale of the Pullmantur and CDF Croisières de France brands (3,834 ) —
—
Restructuring charges 8,452
—
4,318
Other initiative costs 5,027
—
21,211
Estimated impact of divested businesses prior to sales transaction —
—
11,013
Loss on sale of ship included within other operating expenses —
—
17,401
Impact of voyage proration change ⁽²⁾
—
—
(28,877 )
Reversal of a deferred tax valuation allowance —
—
(33,483 )
Net Adjustments to Net Income - Increase (Decrease) $ 31,301
$ 399,283
$ (8,417 )

Basic:
   Earnings per Share $ 5.96
$ 3.03
$ 3.45
   Adjusted Earnings per Share $ 6.10
$ 4.85
$ 3.41

Diluted:
   Earnings per Share $ 5.93
$ 3.02
$ 3.43
   Adjusted Earnings per Share $ 6.08
$ 4.83
$ 3.39

Weighted-Average Shares Outstanding:
Basic 215,393
219,537
221,658
Diluted 216,316
220,689
223,044

(1) ~~Includes a~~Amount includes incidental costs, net ~~deferred income tax benefit~~ of ~~$12.0~~insurance recoveries of $14.5 million related to the ~~Pullmantur impairment.~~

~~(2) Represents~~collapse of the ~~net income amount that would have been recognized in 2013 had we recognized revenues and cruise~~drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas, which were reported primarily within Other operating expenses in our consolidated statements of comprehensive income (loss) for the year ended December 31, 2019; and $20.7 million regarding the Grand Bahama incident involving one of its drydocks, included in our equity investment income within our consolidated statements of comprehensive income (loss) for the year ended December 31, 2019. Refer to Note 8. Other Assets to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for information.

(2)Refer to Note 3. Business Combination to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for information on the Silversea Cruises acquisition.

(3)Represents restructuring charges incurred in relation to the reorganization of our international sales and marketing structure and other initiatives expenses. Refer to Note 20. Restructuring Charges to our consolidated financial statements under item 8. Financial Statements and Supplementary Data for further information on the restructuring activities.

(4)Adjustment made to exclude the impact of the contractual accretion requirements associated with the put option held by Silversea Cruises Group Ltd.'s noncontrolling interest. Refer to Note 11. Noncontrolling Interest to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for further information on noncontrolling interest.

(5)Refer to Note 8. Other Assets to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for information on the impairment loss related to Skysea Holding.

Table of C ontents

(6)In 2014, we created a ~~pro-rata basis~~tour operations business that focused on developing, marketing and selling land based tours around the world through an e-commerce platform. During the second quarter of 2018, we decided to cease operations and exit this business. As a result, we incurred exit costs, primarily consisting of fixed asset impairment charges and severance expense.

(7)In January 2018, we elected to change our accounting policy for ~~all voyages.~~recognizing stock-based compensation expense from the graded attribution method to the straight-line attribution method for time-based stock awards. Refer to Note 2. Summary of Significant Accounting Policies to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for further information on our accounting policy.

The following table presents operating results as a percentage of total revenues for the last three years:


	Year Ended December 31,							Year Ended December 31,
	2016		2015		2014			2019		2018		2017
Passenger ticket revenues	72.4	%	73.0	%	73.0	%	Passenger ticket revenues	71.7	%	71.5	%	71.9	%
Onboard and other revenues	27.6	%	27.0	%	27.0	%	Onboard and other revenues	28.3	%	28.5	%	28.1	%
Total revenues	100.0	%	100.0	%	100.0	%	Total revenues	100.0	%	100.0	%	100.0	%
Cruise operating expenses:							Cruise operating expenses:
Commissions, transportation and other	15.9	%	16.9	%	17.0	%	Commissions, transportation and other	15.1	%	15.1	%	15.5	%
Onboard and other	5.8	%	6.7	%	7.2	%	Onboard and other	5.8	%	5.7	%	5.6	%
Payroll and related	10.4	%	10.4	%	10.5	%	Payroll and related	9.9	%	9.7	%	9.7	%
Food	5.7	%	5.8	%	5.9	%	Food	5.3	%	5.5	%	5.6	%
Fuel	8.4	%	9.6	%	11.7	%	Fuel	6.4	%	7.5	%	7.8	%
Other operating	12.8	%	12.1	%	13.3	%	Other operating	12.8	%	12.0	%	11.5	%
Total cruise operating expenses	59.0	%	61.4	%	65.7	%	Total cruise operating expenses	55.4	%	55.4	%	55.8	%
Marketing, selling and administrative expenses	13.0	%	13.1	%	13.0	%	Marketing, selling and administrative expenses	14.2	%	13.7	%	13.5	%
Depreciation and amortization expenses	10.5	%	10.0	%	9.6	%	Depreciation and amortization expenses	11.4	%	10.9	%	10.8	%
Impairment of Pullmantur related assets	—	%	5.0	%	—	%
Restructuring and related impairment charges	0.1	%	—	%	0.1	%

Operating income	17.4	%	10.5	%	11.7	%	Operating income	19.0	%	20.0	%	19.9	%
Other expense	(2.3	)%	(2.5	)%	(2.2	)%
Net income	15.1	%	8.0	%	9.5	%
Other income (expense):							Other income (expense):
Interest income							Interest income	0.2	%	0.3	%	0.3	%
Interest expense, net of interest capitalized							Interest expense, net of interest capitalized	(3.7)	%	(3.5)	%	(3.4)	%
Equity investment income							Equity investment income	2.1	%	2.2	%	1.8	%

Other (expense) income							Other (expense) income	(0.2)	%	0.1	%	(0.1)	%
								(1.6)	%	(0.8)	%	(1.4)	%
Net Income							Net Income	17.4	%	19.1	%	18.5	%
Less: Net Income attributable to noncontrolling interest							Less: Net Income attributable to noncontrolling interest	0.3	%	0.1	%	—	%
Net Income attributable to Royal Caribbean Cruises Ltd.							Net Income attributable to Royal Caribbean Cruises Ltd.	17.2	%	19.1	%	18.5	%

Selected statistical information is shown in the following table:


	Year Ended December 31,
	2019⁽¹⁾		2018 ⁽¹⁾		2017
Passengers Carried	6,553,865		6,084,201		5,768,496
Passenger Cruise Days	44,803,953		41,853,052		40,033,527
APCD	41,432,451		38,425,304		36,930,939
Occupancy	108.1	%	108.9	%	108.4	%

(1)We acquired Silversea Cruises on July 31, 2018 and report their results on a three-month reporting lag. As a result, 2019 figures include October 2018 through September 2019 Silversea Cruises amounts and 2018 figures include August and September 2018 Silversea Cruises amounts. Refer to Note 1. General and Note 3. Business Combination to our consolidated financial statements

Table of C ontents

Year Ended December 31,

2016 ⁽¹⁾
2015 2014
Passengers Carried 5,754,747
5,401,899
5,149,952
Passenger Cruise Days 40,250,557
38,523,060
36,710,966
APCD 37,844,644
36,646,639
34,773,915
Occupancy 106.4 % 105.1 % 105.6 %

⁽¹⁾~~Does not include November~~under Item 8. Financial Statements and ~~December 2015 amounts related to~~Supplementary Data for further information on the ~~elimination of the Pullmantur~~three-month reporting lag ~~since~~and the ~~impact is included within~~ ~~Other (expense) income~~ ~~in ourconsolidated statements of comprehensive income (loss) for the year ended December 31, 2016. Additionally, effective August 2016, we no longer include Pullmantur Holdings in these amounts.~~Silversea Cruises acquisition.

Gross Yields and Net Yields were calculated as follows (in thousands, except APCD and ~~Yields):~~Yields:


	Year Ended December 31,
	2019		2019 On a Constant Currency basis		2018		2017
Passenger ticket revenues	$	7,857,057	$	7,968,116	$	6,792,716	$	6,313,170
Onboard and other revenues	3,093,604		3,109,939		2,701,133		2,464,675
Total revenues	10,950,661		11,078,055		9,493,849		8,777,845
Less:
Commissions, transportation and other	1,656,297		1,675,941		1,433,739		1,363,170
Onboard and other	639,782		643,350		537,355		495,552




Net Revenues	$	8,654,582	$	8,758,764	$	7,522,755	$	6,919,123

APCD	41,432,451		41,432,451		38,425,304		36,930,939
Gross Yields	$	264.30	$	267.38	$	247.07	$	237.68
Net Yields	$	208.88	$	211.40	$	195.78	$	187.35

Table of C ontents

Year Ended December 31,
2016 2016
On a
Constant
Currency
basis 2015 2014
Passenger ticket revenues $ 6,149,323
$ 6,320,827
$ 6,058,821
$ 5,893,847
Onboard and other revenues 2,347,078
2,363,497
2,240,253
2,180,008
Total revenues 8,496,401
8,684,324
8,299,074
8,073,855
Less:
Commissions, transportation and other 1,349,677
1,382,295
1,400,778
1,372,785
Onboard and other 493,558
495,101
553,104
582,750
Net revenues including other initiative costs and divested businesses 6,653,166
6,806,928
6,345,192
6,118,320
Less:
Other initiative costs included within Net Revenues (2,230 ) (2,129 ) —
—
Net revenues related to divested businesses prior to sales transaction —
—

35,656
Net Revenues $ 6,655,396
$ 6,809,057
$ 6,345,192
$ 6,082,664

APCD 37,844,644
37,844,644
36,646,639
34,773,915
Gross Yields $ 224.51
$ 229.47
$ 226.46
$ 232.18
Net Yields $ 175.86
$ 179.92
$ 173.15
$ 174.92

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


	Year Ended December 31,											Year Ended December 31,
	2016			2016 On a Constant Currency basis			2015		2014			2019			2019 On a Constant Currency basis			2018			2017
Total cruise operating expenses	$	5,015,539		$	5,056,533		$	5,099,393	$	5,306,281	Total cruise operating expenses	$	6,062,765		$	6,099,657		$	5,262,207		$	4,896,579
Marketing, selling and administrative expenses	1,100,290			1,114,855			1,086,504		1,048,952
Marketing, selling and administrative expenses ^{(1) (2)}											Marketing, selling and administrative expenses ^{(1) (2)}	1,543,498			1,555,703			1,269,368			1,186,016
Gross Cruise Costs	6,115,829			6,171,388			6,185,897		6,355,233		Gross Cruise Costs	7,606,263			7,655,360			6,531,575			6,082,595
Less:											Less:
Commissions, transportation and other	1,349,677			1,382,295			1,400,778		1,372,785		Commissions, transportation and other	1,656,297			1,675,941			1,433,739			1,363,170
Onboard and other	493,558			495,101			553,104		582,750		Onboard and other	639,782			643,350			537,355			495,552
Net Cruise Costs including divested businesses and other initiative costs	4,272,594			4,293,992			4,232,015		4,399,698
Net Cruise Costs Including Other Costs											Net Cruise Costs Including Other Costs	5,310,184			5,336,069			4,560,481			4,223,873
Less:											Less:
Net gain related to the sale of Pullmantur and CDF Croisières de France brands included within other operating expenses	(3,834		)	(3,834		)	—		—
Net Cruise Costs related to divested businesses prior to sales transaction	—			—			—		47,854
Other initiative costs included within cruise operating expenses and marketing, selling and administrative expenses	2,433			2,525			—		18,972
Loss on sale of ship included within other operating expenses	—			—			—		17,401

Costs, net of insurance recoveries, related to the Oasis of the Seas incident included within cruise operating expenses											Costs, net of insurance recoveries, related to the Oasis of the Seas incident included within cruise operating expenses	14,530			14,530			—			—

Net Cruise Costs	4,273,995			4,295,301			4,232,015		4,315,471		Net Cruise Costs	5,295,654			5,321,539			4,560,481			4,223,873
Less:											Less:
Fuel ⁽¹⁾	713,252			714,257			795,801		947,391		697,962			697,981			710,617			681,118
Net Cruise Costs Excluding Fuel	$	3,560,743		$	3,581,044		$	3,436,214	$	3,368,080	Net Cruise Costs Excluding Fuel	$	4,597,692		$	4,623,558		$	3,849,864		$	3,542,755

APCD	37,844,644			37,844,644			36,646,639		34,773,915		APCD	41,432,451			41,432,451			38,425,304			36,930,939
Gross Cruise Costs per APCD	$	161.60		$	163.07		$	168.80	$	182.76	Gross Cruise Costs per APCD	$	183.58		$	184.77		$	169.98		$	164.70
Net Cruise Costs per APCD	$	112.94		$	113.50		$	115.48	$	124.10	Net Cruise Costs per APCD	$	127.81		$	128.44		$	118.68		$	114.37
Net Cruise Cost Excluding Fuel per APCD	$	94.09		$	94.62		$	93.77	$	96.86
Net Cruise Costs Excluding Fuel per APCD											Net Cruise Costs Excluding Fuel per APCD	$	110.97		$	111.59		$	100.19		$	95.93

⁽¹⁾ For the year ended December 31, ~~2016,~~2019, the amount does not include ~~fuel expense~~integration costs related to the Silversea Cruises acquisition of ~~$0.4~~$0.9 million, ~~included within~~transaction costs related to the Silversea Cruises acquisition of $1.2 million and restructuring and other initiative costs ~~associated with~~of $13.7 million.

(2) For the ~~redeployment of Pullmantur’s Empress~~year ended December 31, 2018, the amount does not include transaction costs related to the ~~Royal Caribbean International brand.~~Silversea Cruises acquisition of $31.8 million, the impairment and other costs related to the exit of our tour operations business of $11.3 million and the impact of the change in accounting principle of $9.2 million related to the recognition of stock-based compensation expense. Refer to Note 2. Summary of Significant Accounting Policies to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for further information on the change in an accounting principle.

Table of C ontents

Outlook

The widely reported coronavirus outbreak and efforts by China and other countries to move aggressively to contain the spread of the disease have adversely impacted our business, including a drop in demand for cruises, guest cancellations, travel restrictions, an unavailability of ports and/or destinations, cruise cancellations, ship redeployments and an inability to source our crew, provisions or supplies from certain places. We have implemented several measures to protect guest and crew, including denying boarding to those that have travelled from, to or through mainland China or Hong Kong in the past 15 days and performing mandatory specialized health screenings on at-risk guest and crew. These measures have caused us to cancel cruise bookings or restrict certain guests from booking our cruises. We are assessing the developments constantly and will update our protective measures as needed.

As a result of these measures, we have now cancelled 30 sailings in Southeast Asia and modified several itineraries in the region which overall have an estimated impact of $0.90 per share to our 2020 financial performance. If the company were to cancel all of its remaining sailings in Asia through the end of April, it would impact our 2020 financial performance by an additional $0.30.

There are still too many variables and uncertainties regarding the impact of this outbreak on our business in Asia and elsewhere to reasonably forecast the full impact on our business, including what our yields and earnings for 2020 will be. These concerns and restrictions over the outbreak are impacting our bookings and are having, and are likely to continue to have, a material impact on our overall financial performance.

The company does not make predictions about fuel pricing, interest rates or currency exchange rates but does provide guidance about its future business activities. On ~~January 26, 2017,~~February 4, 2020, we announced the following initial full year and first quarter ~~2017~~2020 guidance based on the then current fuel pricing, interest rates and currency exchange ~~rates:~~rates. Given the fluidity of the circumstances related to the recent coronavirus and the actions being taken to contain its spread, the following 2020 guidance does not include any financial impact related to the coronavirus outbreak:

Full Year ~~2017~~

2020



	As Reported	Constant Currency
Net Yields	~~3.3%~~2.5% to ~~5.3%~~4.5%	~~4.0%~~2.25% to ~~6.0%~~4.25%
Net Cruise Costs per APCD	~~Better than flat~~1.75% to 2.25%	~~Flat~~1.75% to 2.25%
Net Cruise Costs per APCD, excluding Fuel	~~Flat~~1.75% to ~~(1%)~~2.25%	~~Flat~~1.75% to 2.25%
Capacity ~~Increase~~Change	~~(1.7%)~~4.8%
Depreciation and Amortization	$~~935~~1,376 to ~~$945~~$1,392 million
Interest Expense, net	$~~280~~368 to ~~$290~~$384 million
Fuel Consumption (metric tons)	~~1,332,000~~1,534,300
Fuel Expenses	$~~704~~744 million
Percent Hedged (fwd consumption)	~~60%~~54%
~~Impact of~~ 10% change in ~~fuel prices~~Fuel Prices	$3037 million
1% Change in Currency	$1721 million
1% Change in Net ~~Yield~~Yields	$6891 million
1% Change in NCC x Fuel	$3548 million
1%100 basis pt. Change in LIBOR	$4337 million
Adjusted Earnings per Share — Diluted	$~~6.90~~10.40 to ~~$7.10~~$10.70

Table of C ontents

First Quarter ~~2017~~

2020

As Reported

Constant Currency

Net Yields

(0.5%) to (1.0%)

Approx. ~~5.0%~~

~~4.5% to 5.0%~~(0.5%)

Net Cruise Costs per APCD

Approx. ~~(4.0%)~~4.25%

~~(3.5%) to (4.0%)~~Approx. 4.5%

Net Cruise Costs per APCD, excluding Fuel

Approx. ~~(5.0%)~~3.0%

Approx. ~~(4.5%)~~3.0%

Capacity ~~Increase~~Change

~~1.0%~~4.5%

Depreciation and Amortization

$~~230 million~~321 to ~~$240~~$325 million

Interest Expense, net

$7085 to ~~$80~~$89 million

Fuel Consumption (metric tons)

~~336,000~~375,200

Fuel Expenses

$~~178~~191 million

Percent Hedged (fwd consumption)

~~59%~~62%

~~Impact of~~ 10% change in ~~fuel prices~~Fuel Prices

$79 million

1% Change in Currency

$34 million

1% Change in Net ~~Yield~~Yields

$1620 million

1% Change in NCC x Fuel

$912 million

1%100 basis pt. Change in LIBOR

$97 million

Adjusted Earnings per Share — Diluted

~~Approx. $0.90~~$0.80 to $0.85

Since our earnings release on ~~January 26, 2017, bookings~~February 4, 2020, fuel prices and foreign currency exchange rates have ~~remained encouraging~~fluctuated and ~~consistent with our previous expectations.~~are likely to continue to do so. Accordingly, except for the impact of the recent coronavirus outbreak, described above, fuel prices and foreign currency exchange rates, our forecast ~~has remained~~remains essentially unchanged.

Volatility in foreign currency exchange rates affects the United States dollar value of our earnings. Based on our highest net exposure for each quarter and the full year ~~2017,~~2020, the top five foreign currencies are ranked below. For example, the Australian Dollar is the most impactful currency in the first and fourth quarters of ~~2017.~~2020. Rankings are based on estimated net exposures.

Ranking

~~FY 2017~~YTD 2020

AUD

GBP

AUD

GBP

CAD

~~CNH~~CAD

CNH

GBP

AUD

GBP

AUD

EUR

CAD

~~CNH~~CAD

~~CNH~~BRL

~~CAD~~CNH

CAD

~~CNH~~EUR

~~CAD~~CNH

~~EUR~~MXN

~~MXN~~EUR

~~MXN~~AUD

~~EUR~~CNH

EUR

The currency abbreviations above are defined as follows:



Currency Abbreviation		Currency
AUD		Australian Dollar
~~CAD~~BRL	~~Canadian Dollar~~	Brazilian Real
~~CNH~~CAD	~~Chinese Yuan~~	Canadian Dollar
~~EUR~~CNH	~~Euro~~	Chinese Yuan
~~GBP~~EUR	~~British Pound~~	Euro
~~MXN~~GBP		British Pound
MXN		Mexican Peso

Table of C ontents

Year Ended December 31, ~~2016~~2019 Compared to Year Ended December 31, ~~2015~~

2018

In this section, references to ~~2016~~2019 refer to the year ended December 31, ~~2016~~2019 and references to ~~2015~~2018 refer to the year ended December 31, ~~2015.~~

2018.

Revenues

Total revenues for ~~2016~~2019 increased ~~$197.3 million,~~$1.5 billion, or ~~2.4%~~15.3%, to ~~$8.5~~$11.0 billion from ~~$8.3~~$9.5 billion in ~~2015.~~2018.

Passenger ticket revenues comprised ~~72.4%~~71.7% of our ~~2016~~2019 total revenues. Passenger ticket revenues increased by ~~$90.5 million,~~$1.1 billion, or ~~1.5%.~~15.7% from 2018. The increase was primarily due to:

~~a 3.3%~~•an 7.8% increase in capacity, which increased ~~passenger~~Passenger ticket revenues by ~~$198.1~~$565.0 million, ~~net~~primarily due to the additions of Spectrum of the ~~capacity decrease~~Seas in the second quarter of 2019, Symphony of the Seas in the second quarter of 2018, Azamara Pursuit in the third quarter of 2018, Celebrity Edge in the fourth quarter of 2018 and the acquisition of Silversea Cruises in the second half of 2018, partially offset by a significant increase in dry dock days in 2019 compared to 2018 and the negative impact of canceled and modified sailings resulting from the ~~sale of our majority interest~~dry-dock incident in ~~Pullmantur Holdings;~~the Grand Bahama shipyard and

hurricane-related disruptions during 2019.

•an increase of ~~$63.9~~$614.0 million in ticket prices primarily driven by ~~our newest shipsas well as~~the addition of Spectrum of the Seas, Symphony of the Seas, Azamara Pursuit, Celebrity Edge and the Silversea Cruises fleet, and the higher pricing on ~~Alaska~~our Caribbean and ~~Caribbean sailings.~~ Asia/Pacific sailings, net of the negative impact to our ticket price on a per passenger basis resulting from itinerary changes related to the travel restrictions to Cuba.

The increase in ~~ticket prices was partially offset by lower pricing on Mediterranean and Asia sailings.~~

~~The increase in passenger~~Passenger ticket revenues was partially offset by the unfavorable effect of changes in foreign currency exchange rates related to our revenue transactions denominated in currencies other than the United States dollar of ~~approximately $171.5~~$(111.1) million.

The remaining ~~27.6%~~28.3% of ~~2016~~2019 total revenues was comprised of Onboard and other revenues, which increased ~~$106.8~~$392.5 million, or ~~4.8%~~14.5%. The increase in Onboard and other revenues was primarily due to:

•a ~~$70.5 million increase attributable to the 3.3% increase in capacity noted above; and~~

~~an $89.9~~$118.4 million increase in onboard revenue attributable to higher spending on a per passenger basis primarily due to ~~our ship upgrade~~shore excursions, Perfect Day at CocoCay, specialty restaurants, internet services, beverage package sales and promotions, gaming initiatives and new programs and activities offered to our guests;

•a $193.6 million increase attributable to the 7.8% increase in capacity noted above, net of the negative impact of canceled and modified sailings resulting from the dry-dock incident in the Grand Bahama shipyard and hurricane-related disruptions in 2019; and

•a $79.7 million increase in other ~~revenue enhancing initiatives, including various beverage and gaming initiatives, the promotion of specialty restaurants and the increased~~revenues primarily due to revenue associated with ~~internet~~our new cruise terminal at PortMiami and cancellation fees associated with non-refundable deposits and higher pricing.

Onboard and other ~~telecommunication services partially offset~~revenues included concession revenues of $363.8 million in 2019 and $339.0 million in 2018.

Cruise Operating Expenses

Total cruise operating expenses for 2019 increased $800.6 million, or 15.2%, to $6.1 billion in 2019 from $5.3 billion in 2018. The increase was primarily due to:

•the 7.8% increase in capacity noted above, which increased cruise operating expenses by $433.3 million;

•a ~~decrease~~$367.3 million increase in ~~port activities revenue mainly~~total cruise operating expenses, excluding capacity, was primarily due to ~~itinerary changes.~~

the addition of Silversea Cruises to our fleet in the second half of 2018 as well as incidental costs related to the collapse of the drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas, expenses associated with operating Perfect Day at CocoCay and our new cruise terminal at PortMiami.

The increase in Cruise operating expenses was partially offset by:

an approximate $16.4 million unfavorable effect of changes in foreign currency exchange rates related to our onboard and other revenue transactions denominated in currencies other than the United States dollar; and

•a $37.2 million decrease in other revenues primarily related to our travel agency business that was sold in 2015 partially offset by an increase in revenue received for our bareboat charter and ship management services associated with our unconsolidated affiliates. The decrease in revenues from our travel agency business sold is mostly offset by the related decrease in travel agency expenses discussed below.

~~Onboard and other revenues~~ ~~included concession revenues of $316.9 million in 2016 and $327.1 million in 2015.~~

~~Cruise Operating Expenses~~

~~Total cruise operating expenses for 2016 decreased $83.9 million, or 1.6%, to $5.0 billion in 2016 from $5.1 billion in 2015. The decrease was primarily due to:~~

~~a $114.4~~$47.0 million decrease in fuel ~~expense,~~expenses, excluding the impact of ~~the increase in~~ capacity. Our cost of fuel (net of the financial impact of fuel swap agreements) for ~~2016~~2019 decreased ~~10.3%~~11% per metric ton compared to ~~2015;~~2018; and

Table of C ontents

~~an approximate $40.9 million~~•a favorable effect of changes in foreign currency exchange rates related to ~~our cruise operating expenses~~costs denominated in currencies other than the United States ~~dollar;~~

~~a $41.2 million decrease in other expenses primarily related to our travel agency business that was sold in 2015, which mostly offsets the related decrease in travel agency revenues discussed above;~~

~~a $25.0 million decrease in air expense primarily due to the decrease in air transportation sales and lower costs; and~~

~~a $20.2 million decrease in shore excursion expense attributable to lower contractual costs incurred and the decrease in port activities revenue discussed above.~~

~~The decrease was partially offset by a $164.7 million increase attributable to the 3.3% increase in capacity noted above.~~

dollar of $37.0 million.

Marketing, Selling and Administrative Expenses

Marketing, selling and administrative expenses for ~~2016 remained consistent compared to 2015.~~

~~Depreciation and Amortization Expenses~~

~~Depreciation and amortization expenses~~ ~~for 2016~~2019 increased ~~$67.9~~$256.1 million, or ~~8.2%~~19.7%, to ~~$894.9 million~~$1.6 billion from ~~$827.0 million~~$1.3 billion in ~~2015.~~2018. The increase was primarily due to the addition of ~~Harmony~~Silversea Cruises in the second half of 2018, higher spending on advertisement and media promotions and an increase in payroll and benefits expense primarily driven by an increase in headcount and higher stock price year over year related to our performance share awards. Additionally, 2019 includes expenses associated with Hurricane Dorian relief efforts, which did not occur in 2018.

Marketing, selling and administrative expenses for 2019 and 2018 include transaction costs incurred by us related to the Silversea Cruises acquisition of $1.2 million and $31.8 million, respectively.

Depreciation and Amortization Expenses

Depreciation and amortization expenses for 2019 increased $212.2 million, or 20.5%, to $1.2 billion. The increase was primarily due to the addition of Spectrum of the Seas ~~and~~ ~~Ovation of the Seas~~ in the second quarter of ~~2016 into our fleet and the addition of~~ ~~Anthem~~2019, Symphony of the Seasin the second quarter of ~~2015~~2018, Azamara Pursuit in the third quarter of 2018, Celebrity Edge in the fourth quarter of 2018 and the addition of Silversea Cruises to our fleet in the second half of 2018. Additionally, to a lesser extent, the increase is also attributable to new shipboard additions associated with our ship upgrade projects and additions related to our shoreside projects.

Other Income (Expense)

Interest expense, net of interest capitalized, increased $74.8 million, or 22.4%, to $408.5 million in 2019 from $333.7 million in 2018. The increase was primarily due to a higher average debt level in 2019 compared to 2018 attributable to the financing of our newbuilds and our acquisition of Silversea Cruises in the second half of 2018 and to lesser extent, higher interest rates in 2019 compared to 2018.

Equity investment income increased $20.2 million, or 9.6%, to $231.0 million in 2019 from $210.8 million in 2018 primarily due to an increase in income from various equity investments, partially offset by equity investment losses from Grand Bahama as a result of a drydock write-off in 2019.

Other expense was $24.5 million in 2019 compared to Other income of $11.1 million in 2018. The increase in expense of $35.6 million was mainly due to higher taxes resulting from a full year of Silversea Cruises activity reported in 2019 and higher U.S. taxable income in 2019; and an increase in the fair value of contingent consideration related to the Silversea Cruises acquisition. In addition, a gain of $21.8 million was reported in 2018 related to the recognition of the remaining balance of a deferred gain from the sale of ~~Splendour~~Celebrity Galaxy to TUI Cruises in March 2009. In April 2018, TUI Cruises sold this ship to an affiliate of TUI AG, resulting in the recognition of the ~~Seas~~remaining balance of the deferred gain. Other income in ~~April 2016.~~

~~Impairment~~2018 also includes a gain of ~~Pullmantur Related Assets~~

~~During 2015,~~$13.7 million related to the sale of our remaining equity interest in a travel agency business that we ~~recognized~~sold in 2015. The gains in 2018 were partially offset by an impairment charge of ~~$411.3~~$23.3 million to write down ~~Pullmantur's goodwill to its implied fair value~~our investment balance, debt facility and ~~to write down trademarks and trade names and certain long-lived assets, consisting of three aircraft owned and operated by Pullmantur Air and two ships owned and operated by Pullmantur,~~other receivables due from Skysea Holding to their ~~fair value.~~

~~Restructuring Charges~~

~~We incurred restructuring charges of approximately $8.5 million~~net realizable value in ~~2016. Refer~~2018. For further information on the deferred gain recognized and impairment charge, refer to Note ~~16.~~ ~~Restructuring Charges~~8. Other Assets to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data~~for further information on our restructuring initiatives.~~.

~~Other Income (Expense)~~

~~Interest expense, net of interest capitalized, increased $29.6 million, or 10.7%, to $307.4 million in 2016 from $277.7 million in 2015. The increase was due to a higher average debt level attributable to the financing of~~ ~~Ovation of the Seas~~Gross and ~~Harmony of the Seas, partially offset by lower pricing on debt refinanced in 2015.~~

~~Equity investment income~~ ~~increased $47.3 million, or 58.4%, to $128.4 million in 2016 from $81.0 million in 2015 mainly due to the increase in income from TUI Cruises, one of our equity method investments.~~

~~Other expense~~ in 2016 was $35.7 million compared to $24.4 million in 2015. The increase in expense of $11.2 million was primarily due to a net loss of $21.7 million related to the elimination of the Pullmantur reporting lag in 2016. The increase in other expense was partially offset by a decrease of $9.6 million in foreign exchange losses from the remeasurement of monetary assets and liabilities denominated in foreign currency.

Net Yields

Gross and Net Yields increased ~~1.6%~~7.0% and 6.7% in ~~2016~~2019, respectively, compared to ~~2015~~2018 primarily due to the increase in passenger ticket and onboard and other revenues discussed above. Gross and Net Yields ~~increased 3.9% in 2016 compared to 2015~~ on a Constant Currency ~~basis.~~basis increased 8.2% and 8.0%, respectively, in 2019 compared to 2018.

Gross and Net Cruise Costs

Gross and Net Cruise Costs increased ~~1.0%~~16.5% and 16.1%, respectively, in ~~2016~~2019 compared to ~~2015~~2018 and Gross and Net Cruise Costs per APCD increased 8.0% and 7.7%, respectively, in 2019, compared to 2018, primarily due to the increase in ~~capacity, partially offset by the decrease in fuel, which are further~~cruise operating expenses discussed above. Gross and Net Cruise Costs ~~per APCD decreased 2.2% in 2016 compared to 2015 primarily due to the decrease in fuel. Net Cruise Costs per APCD~~ on a Constant Currency basis ~~decreased 1.7%~~increased 17.2% and 16.7% respectively, in ~~2016~~2019 compared to ~~2015.~~2018.

Table of C ontents

Net Cruise Costs Excluding Fuel

Net Cruise Costs Excluding Fuel per APCD ~~remained consistent~~increased 10.8% in ~~2016~~2019 compared to ~~2015~~2018 and ~~increased 0.9% in 2016 compared to 2015~~ on a Constant Currency ~~basis.~~

basis increased 11.4% in 2019 compared to 2018.

Other Comprehensive (Loss) Income

Other comprehensive ~~income~~ lossin ~~2016~~2019 was ~~$411.9~~$170.0 millioncompared to aOther comprehensive loss of~~$431.4~~ $293.5 million in ~~2015.~~2018. The ~~change~~decrease in loss of ~~$843.4~~$123.5 million was primarily due to the ~~Gain on cash flow derivative hedges~~ ~~in 2016 of $411.2 million compared to the~~ Loss on cash flow derivative hedges in 2019 of ~~$406.0~~$151.3 million compared to the Loss on cash flow derivative hedges of $286.9 million in ~~2015.~~2018. The ~~gain~~decrease of $135.5 million in ~~2016 resulted mostly from the reclassification of losses to earnings during 2016 from fuel~~Loss on cash flow ~~hedges. In addition, there~~derivative hedges in 2019 was primarily due to an increase in the fair value of our fuel ~~swaps~~swap instruments held in ~~2016 as a result of higher forward fuel prices. The loss in 2015 was primarily due~~2019 compared to the decrease in the fair value of our fuel swaps and of our foreign currency forward contracts as a result of decreases in fuel prices and forward currency rates, somewhat offset by the reclassification of losses to earnings during 2015 from fuel cash flow hedges.

2018.

Year Ended December 31, ~~2015~~2018 Compared to Year Ended December 31, ~~2014~~

2017

In this section, references to ~~2015~~2018 refer to the year ended December 31, ~~2015~~2018 and references to ~~2014~~2017 refer to the year ended December 31, ~~2014.~~

2017.

Revenues

Total revenues for ~~2015~~2018 increased ~~$225.2~~$716.0 million, or ~~2.8%~~8.2%, to ~~$8.3~~$9.5 billion from ~~$8.1~~$8.8 billion in ~~2014.~~2017.

Passenger ticket revenues comprised ~~73.0%~~71.5% of our ~~2015~~2018 total revenues. Passenger ticket revenues increased by ~~$165.0~~$479.5 million, or ~~2.8%, to $6.1 billion in 2015~~7.6% from ~~$5.9 billion in 2014.~~2017. The increase was primarily due to:

•a ~~5.4%~~4.0% increase in capacity, which increased Passenger ticket revenues by ~~$317.4~~$255.5 million, ~~net of the unfavorable impact of the change in our voyage proration. The increase in capacity was~~ primarily due to the addition of ~~Anthem~~Symphony of the Seasin the second quarter of 2018, Azamara Pursuit in the third quarter of 2018 and, ~~Quantum~~to a lesser extent, Celebrity Edge in the fourth quarter of 2018 and the Silversea Cruises fleet, partially offset by the sale of Legend of the Seas in 2017 and additional dry dock days in 2018 compared to 2017. Additionally, 2017 includes the impact of canceled sailings from hurricane-related disruptions which ~~entered service~~did not recur in ~~April 2015 and October 2014, respectively; and~~

2018;

•an increase of ~~$181.1~~$216.3 million in ticket prices primarily driven by higher pricing on ~~Anthem~~Asia/Pacific and Europe sailings and the increase to our ticket price on a per passenger basis due to the addition of Symphony of the Seas, Azamara Pursuit, Celebrity Edge and ~~Quantum of~~ the ~~Seas~~ ~~as well as higher pricing on Europe, Alaska and Caribbean sailings.~~

~~The increase in passenger ticket revenues was~~Silversea Cruises fleet, partially offset by a decrease in pricing on Caribbean sailings; and

•the ~~unfavorable~~favorable effect of changes in foreign currency exchange rates related to our revenue transactions denominated in currencies other than the United States dollar of approximately ~~$333.6~~$7.8 million.

The remaining ~~27.0%~~28.5% of ~~2015~~2018 total revenues was comprised of Onboard and other revenues, which increased ~~$60.2~~$236.5 million, or ~~2.8%~~9.6%. The increase in Onboard and other revenues was primarily due to:

•a ~~$111.3 million increase attributable to the 5.4% increase in capacity noted above, net of the unfavorable impact of the change in our voyage proration; and~~

~~a $35.5~~$112.5 million increase in onboard revenue attributable to higher spending on a per passenger basis primarily due to our ~~ship upgrade programs and other~~ revenue enhancing initiatives, including ~~various~~ beverage package sales and promotions, gaming initiatives, and new strategies and promotions on our shore excursion, specialty restaurant and Internet services;

•a $97.4 million increase attributable to the 4.0% increase in capacity noted above; and

•a $23.2 million increase in other revenue primarily due to cancellation fees mostly associated with non-refundable deposit promotions and the addition ~~and promotion~~ of ~~specialty restaurants, the increased revenue associated with internet and other telecommunication services and other onboard activities.~~Silversea Cruises.

~~The increase was partially offset by:~~

an approximate $50.8 million unfavorable effect of changes in foreign currency exchange rates related to our onboard and other revenue transactions denominated in currencies other than the United States dollar; and

~~a $38.1 million decrease in revenues related to Pullmantur's non-core businesses that were sold in 2014.~~

Onboard and other revenues included concession revenues of ~~$327.1~~$339.0 million in ~~2015~~2018 and ~~$324.3~~$326.5 million in ~~2014.~~

2017.

Cruise Operating Expenses

Total cruise operating expenses for ~~2015~~2018 decreased ~~$206.9~~$365.6 million, or ~~3.9%~~7.5%, to ~~$5.1 billion in 2015 from~~ $5.3 billion in ~~2014.~~2018 from $4.9 billion in 2017. The decrease was primarily due to:

~~a $195.1 million decrease in fuel expense, excluding~~ •the ~~impact of the increase in capacity. Our cost of fuel (net of the financial impact of fuel swap agreements) for 2015 decreased 16.0% per metric ton compared to 2014;~~

~~an approximate $157.6 million favorable effect of changes in foreign currency exchange rates related to our cruise operating expenses denominated in currencies other than the United States dollar;~~

~~a $40.4 million decrease in expenses related to Pullmantur's non-core businesses that were sold in 2014;~~

~~a $24.6 million decrease in shore excursion expense attributable to lower contractual costs incurred and itinerary changes;~~

~~a $19.4 million decrease in lease expense due to the lease termination and purchase of~~ ~~Brilliance of the Seas~~ ~~in 2014; and~~

~~a $17.4 million loss incurred in 2014 due to the sale of~~ ~~Celebrity Century~~ ~~that did not recur in 2015.~~

~~The decrease was partially offset by a $276.7 million increase attributable to a 5.4%~~4.0% increase in capacity noted above, ~~net~~which increased cruise operating expenses by $198.6 million;

Table of ~~the favorable impact of the change~~C ontents

•a $30.9 million gain recognized in ~~our voyage proration.~~

~~Marketing, Selling and Administrative Expenses~~

~~Marketing, selling and administrative expenses~~ for 2015 increased $37.6 million, or 3.6%. The increase was primarily due to an increase in advertising spending mainly relating to our initiatives in the North American, Australian and Asian markets, an increase in payroll and benefits primarily due to an increase in our stock price over the past year related to our performance share awards and higher IT labor costs2017 resulting from the ~~addition of projects and initiatives in 2015. The increase was partially offset by a decrease in administrative expenses mainly driven by the~~ sale of ~~Pullmantur's non-core businesses in 2014 and savings realized from our cost containment initiatives.~~

~~Depreciation and Amortization Expenses~~

~~Depreciation and amortization expenses~~ ~~for 2015 increased $54.6 million, or 7.1%, to $827.0 million from $772.4 million in 2014. The increase was primarily due to the addition of~~ ~~Quantum~~Legend of the Seas, ~~and~~ ~~Anthem of the Seas~~ ~~into our fleet, new shipboard additions associated with our ship upgrade projects and the acquisition of the~~ ~~Brilliance of the Seas, which was previously under lease, partially offset by the sale of~~ ~~Celebrity Century~~ ~~in September 2014.~~

~~Impairment of Pullmantur Related Assets~~

During 2015, we recognized an impairment charge of $411.3 million to write down Pullmantur's goodwill to its implied fair value and to write down trademarks and trade names and certain long-lived assets, consisting of three aircraft owned by Pullmantur and two ships owned and operated by Pullmantur, to their fair value. Refer to ~~Note 3. Goodwill~~ ~~and~~ ~~Note 4. Intangible Assets~~ ~~to our consolidated financial statements for further information on the impairment of these assets.~~

~~Restructuring Charges~~

~~We incurred restructuring charges of approximately $4.3 million in 2014,~~ which did not recur in ~~2015.~~2018;

~~Other Income (Expense)~~

~~Interest expense, net of interest capitalized, increased $19.4~~•a $37.3 million ~~or 7.5%, to $277.7 million in 2015 from $258.3 million in 2014. The increase was primarily due to a higher average debt level attributable to the financing of~~ ~~Quantum of the Seas~~ ~~and~~ ~~Anthem of the Seas, partially offset by lower pricing on debt refinanced in 2015 and 2014.~~

~~Equity investment income~~ ~~increased $29.4 million, or 56.9%, to $81.0 million in 2015 from $51.6 million in 2014 mainly due to the~~ increase in ~~income from TUI Cruises, one of our equity method investments.~~

~~Other expense~~ ~~in 2015 was $24.4 million compared~~payroll and related expenses primarily driven by Silversea Cruises' higher crew to ~~Other income~~ ~~of $18.6 million in 2014. The~~passenger ratio, an increase in employee bonuses and changes in our gratuity structure;

•a $23.5 million increase in air expense ~~of $43.0 million was~~ primarily ~~due to a $33.5 million tax benefit~~ related to the ~~reversal~~addition of Silversea Cruises and itinerary changes;

•a ~~deferred tax asset valuation allowance resulting from Spanish tax reform in 2014, which did not recur in 2015 and $20.9~~$19.7 million ~~in foreign exchange losses from the remeasurement of monetary assets and liabilities denominated in foreign currency in 2015 compared to $0.9 million in gains in 2014. The~~ increase in ~~other expense was partially offset by a net deferred tax~~

~~benefit of $12.0 million resulting from the impairment of the Pullmantur related assets in 2015, which did not occur in 2014.~~

~~Net Yields~~

~~Net Yields decreased 1.0% in 2015 compared to 2014~~vessel maintenance primarily due to the ~~unfavorable effect~~timing of changes in foreign currency exchange rates related to our passenger ticket revenue transactions denominated in currencies other than the United States dollar noted above. Net Yields increased 3.5% in 2015 compared to 2014 on a Constant Currency basis primarily due to the increase in passenger ticketscheduled drydocks; and ~~onboard and other revenues discussed above.~~

~~Net Cruise Costs~~

~~Net Cruise Costs decreased 1.9% in 2015 compared to 2014 primarily due to the decrease in fuel and the favorable~~•an unfavorable effect of changes in foreign currency, exchange rates related to our cruise operating expenses denominated in currencies other than the United States dollar of $8.1 million.

Marketing, Selling and Administrative Expenses

Marketing, selling and administrative expenses for 2018 increased $117.1 million, or 9.9%, to $1.3 billion from $1.2 billion in 2017. The increase was primarily due to transaction costs incurred by us related to the Silversea Cruises acquisition, marketing, selling and administrative expenses due to the addition of Silversea Cruises, the impairment and other costs related to the exit of our tour operations business, which occurred in 2018, and an increase in payroll and benefits expense primarily driven by an increase in headcount, partially offset by lower stock prices year over year related to our performance share awards, as well as higher spending on advertisement.

Depreciation and Amortization Expenses

Depreciation and amortization expenses for 2018 increased $82.5 million, or 8.7%, to $1.0 billion. The increase was primarily due to the addition of Symphony of the Seas,Azamara Pursuit and Silversea Cruises to our fleet and, to a lesser extent, the addition of Celebrity Edge, new shipboard additions associated with our ship upgrade projects and additions related to our shoreside projects. The increase was partially offset by the sale of Legend of the Seas in 2017.

Other Income (Expense)

Interest expense, net of interest capitalized, increased $33.7 million, or 11.2%, to $333.7 million in 2018 from $300.0 million in 2017. The increase was mostly due to a higher average debt level in 2018 compared to 2017, attributable to the financing of Symphony of the Seas, Celebrity Edge and our acquisition of Silversea Cruises in 2018, and higher interest rates in 2018 compared to 2017, partially offset by an increase in ~~capacity.~~capitalized interest due to our ships on order.

Equity investment income increased $54.5 million, or 34.9%, to $210.8 million in 2018 from $156.2 million in 2017 primarily due to an increase in income from TUI Cruises.

Other income was $11.1 million in 2018 compared to Other expense of $5.3 million in 2017. The change of $16.4 million was mainly due to a gain of $21.8 million in 2018 related to the recognition of the remaining balance of a deferred gain from the sale of Celebrity Galaxy to TUI Cruises in March 2009. In April 2018, TUI Cruises sold this ship to an affiliate of TUI AG, resulting in the recognition of the remaining balance of the deferred gain. In addition, Other income in 2018 includes a gain of $13.7 million related to the sale of our remaining equity interest in a travel agency business that we sold in 2015. The increase in Other income was partially offset by an impairment charge of $23.3 million to write down our investment balance, debt facility and other receivables due from Skysea Holding to their net realizable value in 2018. For further information on the deferred gain recognized and impairment charge, refer to Note 8. Other Assets to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data.

Gross and Net Yields

Gross and Net Yields increased 4.0% and 4.5% in 2018, respectively, compared to 2017 primarily due to the increase in passenger ticket and onboard and other revenues, which are further discussed above. Gross and Net Yields on a Constant Currency basis increased 3.8% and 4.4%, respectively, in 2018 compared to 2017.

Gross and Net Cruise Costs

Table of C ontents

Gross and Net Cruise Costs increased 7.4% and 8.0%, respectively, in 2018 compared to 2017 and Gross and Net Cruise Costs per APCD ~~decreased 6.9%~~increased 3.2% and 3.8%, respectively, in ~~2015~~2018 compared to ~~2014.~~2017, primarily due to the increase in cruise operating expenses discussed above. Gross and Net Cruise Costs ~~per APCD~~ on a Constant Currency basis ~~decreased 4.7%~~increased 7.2% and 7.7%, respectively, in ~~2015~~2018 compared to ~~2014.~~

2017.

Net Cruise Costs Excluding Fuel

Net Cruise Costs Excluding Fuel per APCD ~~decreased 3.2%~~increased 4.4% in ~~2015~~2018 compared to ~~2014~~2017 and ~~remained consistent in 2015 compared to 2014~~ on a Constant Currency ~~basis.~~

basis increased 4.1% in 2018 compared to 2017.

Other Comprehensive ~~Loss~~(Loss) Income

Other comprehensive loss~~decreased by $471.2~~ in 2018 was $293.5 million compared to Other comprehensive income of $582.2 million in ~~2015 compared to 2014~~2017. The change of $875.7 million was primarily due to ~~a $463.3 million decrease in losses~~the Loss on cash flow derivative hedges ~~resulting mostly from~~ in 2018 of $286.9 million compared to the ~~reclassification of losses to earnings during 2015 from fuel~~Gain on cash flow ~~hedges.~~derivative hedges of $570.5 million in 2017. The change of $857.4 million in 2018 was primarily due to a decrease in foreign currency forward contract values in 2018 compared to an increase in 2017, a decrease in fuel swap instrument values in 2018 compared to an increase in 2017 and fuel swap losses recognized in income in 2017 compared to fuel swap gains recognized in income in 2018.

Table of C ontents

Future Application of Accounting Standards

Refer to Note 2. Summary of Significant Accounting Policies to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for further information on Recent Accounting Pronouncements.

Liquidity and Capital Resources

Sources and Uses of Cash

Cash flow generated from operations provides us with a significant source of liquidity. Net cash provided by operating activities increased ~~$570.3~~$237.2 million to ~~$2.5~~$3.7 billion ~~for 2016~~in 2019 compared to ~~$1.9~~$3.5 billion ~~for 2015.~~in 2018. The increase in cash provided by operating activities was primarily attributable to an increase in proceeds from customer deposits and an increase in cash receipts from onboard spending. The increase was partially offset by a decrease in dividends received from unconsolidated affiliates of $92.9 million.

Net cash provided by operating activities increased $604.6 million to $3.5 billion in 2018 compared to $2.9 billion in 2017. The increase in cash provided by operating activities was primarily attributable to an increase in proceeds from customer deposits, an increase in cash receipts from onboard spending and a decrease in fuel costs in ~~2016~~2018 compared to ~~2015.~~2017. Additionally, dividends received from unconsolidated affiliates increased by ~~$42.6~~$133.4 million.

~~Net cash provided by operating activities~~ increased $202.6 million to $1.9 billion for 2015 compared to $1.7 billion for 2014. The increase in cash provided by operating activities was primarily attributable to an increase in proceeds from customer deposits, an increase in cash receipts from onboard spending and a decrease in fuel costs and interest paid in 2015 compared to the same period in 2014.

Net cash used in investing activities ~~increased $981.9 million~~decreased $1.4 billion to ~~$2.7~~$3.1 billion in ~~2016~~2019 compared to ~~$1.7~~$4.5 billion in ~~2015.~~2018. The decrease was primarily attributable to the $916.1 million of cash paid for the acquisition of Silversea Cruises, net of cash acquired, in 2018, which did not recur in 2019 and a decrease in capital expenditures of $635.4 million due mostly to the delivery of two more ships in 2018 compared to 2019, partially offset by higher fleet modernization costs in 2019 compared to 2018.

Net cash used in investing activities increased $4.3 billion to $4.5 billion in 2018 compared to $213.6 million in 2017. The increase was primarily attributable to an increase in capital expenditures of ~~$881.0 million in 2016 compared to the same period in 2015~~$3.1 billion primarily due to the ~~deliveries~~delivery of ~~Ovation~~Symphony of the Seas and ~~Harmony of the Seas~~ ~~in 2016. Additionally, cash repayments received on loans~~Celebrity Edge and to ~~our unconsolidated affiliates decreased $86.0 million in 2016~~

~~compared to the same period in 2015 mainly due to TUI Cruises repaying in 2015 the outstanding balance of the debt facility we originally provided to them in 2011.~~

~~Net cash used in investing activities~~ decreased $27.4 million in 2015 compared to 2014. During 2015, our use of cash was primarily related to capital expenditures of $1.6 billion, down from $1.8 billion in 2014. The decrease in capital expenditures during 2015 was primarily attributable toa lesser extent the purchase of ~~Brilliance of the Seas~~ Azamara Pursuitin ~~2014. The decrease in cash used in investing activities was also due to a decrease in investments in and loans to unconsolidated affiliates of $132.4 million in 2015~~2018 compared to ~~2014~~no ship deliveries or purchases in 2017 and ~~an increase~~$916.1 million of cash paid for the acquisition of Silversea Cruises, net of cash acquired, in ~~cash repayments received on loans to unconsolidated affiliates of $48.1 million in 2015 compared to 2014. The decrease was partially offset by $220.0~~2018 as well as $230.0 million of proceeds received from the sale of ~~Celebrity Century~~property and equipment in ~~2014 that~~2017, which did not recur in ~~2015. Additionally, there~~ 2018.

Net cash used in financing activities was ~~an increase~~$670.4 million in 2019 compared to Net cash ~~paid~~provided in financing activities of $1.2 billion in 2018. The change was primarily attributable to a decrease in debt proceeds of $5.1 billion in 2019 compared to 2018 primarily due to a decrease in borrowings on our revolving credit facilities and less unsecured term loan borrowings resulting from less ship deliveries in 2019 and the ~~settlement~~financing of ~~derivative financial instruments~~the acquisition of ~~$110.5 million.~~Silversea Cruises in 2018. This decrease in proceeds was partially offset by a decrease in repayments of debt of $2.9 billion and a decrease in stock repurchases of $475.5 million in 2019 compared to 2018.

Net cash provided by financing activities was ~~$243.8 million for 2016~~$1.2 billion in 2018 compared to Net cash used in financing activities of$~~253.5 million~~2.7 billion in ~~2015.~~2017. The ~~increase~~change was primarily attributable to an increase in ~~debt~~ proceeds from the issuance of ~~$2.9~~commercial paper notes of $4.7 billion ~~during 2016~~in 2018 compared to ~~2015, partially offset by an increase~~none issued in ~~repayment of debt of $2.2 billion, an increase in~~ ~~stock repurchases of~~ ~~$100.0 million~~2017 and an increase in ~~dividends paid~~debt proceeds of ~~$66.3 million during 2016~~$2.7 billion in 2018 compared to ~~2015.~~2017. The increase in debt proceeds in 2018 was primarily due to the ~~$841.8~~$1.2 billion unsecured term loan borrowed to finance Symphony of the Seas, and the $729.0 million unsecured term loan borrowed ~~in April 2016~~ to finance ~~Ovation of~~ Celebrity Edge, the ~~Seas, the €700.7 million and $226.1 million unsecured term loans borrowed in May 2016 to finance~~ ~~Harmony of the Seas~~, the $200.0 million unsecured term loan borrowed in April 2016 and higher drawings on our revolving credit facilities during 2016 compared to the $742.1 million unsecured term loan borrowed in April 2015 to finance ~~Anthem of the Seas.~~ ~~The increase in repayment of debt was primarily due to higher payments on our revolving credit facilities.~~

~~Net cash used in financing activities~~ ~~was $253.5 million for 2015 compared to~~ ~~Net cash provided by financing activities of~~ $17.5 million in 2014. This change was primarily due to an increase of $394.3 million in repayment of debt, an increase of dividends paid of $81.3 million and a decrease in the proceeds from the exercise of common stock options of $59.6 million. The increase in cash used in financing activities was partially offset by a $245.5 million increase in debt proceeds and a $36.1 million decrease in the repurchase of treasury stock. The increase in repayment of debt was due to higher payments of $1.1 billion on our revolving credit facilities and a payment at maturity of $279.0 million on our 11.875% unsecured senior notes during 2015 compared to the payment at maturity of our €745.0 million 5.625% unsecured senior notes during 2014. The increase in debt proceeds was primarily due to the $742.1$700.0 million unsecured term loan borrowed to finance the ~~purchase~~acquisition of ~~Anthem of the Seas~~ ~~and higher drawings of $706.0 million~~Silversea Cruises,an increase in borrowings on our revolving credit facilities ~~in 2015 compared to proceeds received on an unsecured term loan~~and the $130.0 million credit agreement.

Table of ~~$791.1 million due to the delivery of~~ ~~Quantum of the Seas~~ ~~and proceeds received on our $380.0 million unsecured term loan facility during 2014.~~C ontents

Future Capital Commitments

Our future capital commitments consist primarily of new ship orders. As of December 31, ~~2016,~~2019, we have two ~~Quantum-class ships and two~~ Oasis-class ships, one Quantum-class ship, and three ships of a new generation, known as our Icon-class, on order for our Royal Caribbean International brand with an aggregate capacity of approximately ~~19,200~~32,400 berths. As of December 31, 2019, we have three Edge-class ships with an aggregate capacity of approximately 9,400 berths. Additionally as of December 31, 2019, we have ~~four "Project Edge"~~five ships on order for our ~~Celebrity~~Silversea Cruises brand with an aggregate capacity of approximately ~~11,600~~2,400 berths. Refer to Item 1. Business-Operations for further information on our ships on order. For each of these orders, we have committed ~~unsecured~~ financing arrangements in place covering 80% of the cost of the ship, ~~each~~almost all of which include sovereign financing guarantees.

As of December 31, ~~2016,~~2019, the aggregate cost of our ships on order, not including ~~the TUI Cruises'~~any ships on order by our Partner Brands and the ~~"Project Icon"~~Silversea Cruises ships ~~which~~that remain ~~subject to conditions of effectiveness,~~contingent upon final documentation and financing, was approximately ~~$8.4~~$14.8 billion, of which we had deposited ~~$316.1~~$881.5 million as of such date. Approximately ~~66.7%~~65.9% of the aggregate cost was exposed to fluctuations in the Euro exchange rate at December 31, ~~2016.~~2019. (Refer to Note ~~14.~~ 18. Fair Value Measurements and Derivative Instruments and Note ~~15.~~ 19. Commitments and Contingencies to our consolidated financial statements under Item 8. Financial Statements and Supplementary ~~Data)~~Data).

As of December 31, ~~2016,~~2019, anticipated overall capital expenditures, based on our existing ships on order, are approximately ~~$0.6~~$4.7 billion for ~~2017, $2.6~~2020, $3.5 billion for ~~2018, $1.5~~2021, $3.6 billion for ~~2019~~2022 and ~~$2.0~~$2.9 billion for ~~2020.~~2023.

Contractual Obligations

As of December 31, ~~2016,~~2019, our contractual obligations were as follows (in thousands):


	Payments due by period											Payments due by period
			Less than		1-3		3-5		More than					Less than		1-3		3-5		More than
	Total		1 year		years		years		5 years			Total		1 year		years		years		5 years
Operating Activities:											Operating Activities:
Operating lease obligations⁽¹⁾	$	309,797	$	20,749	$	33,025	$	24,135	$	231,888	Operating lease obligations⁽¹⁾	$	938,354	$	126,234	$	217,941	$	177,057	$	417,122
Interest on long-term debt⁽²⁾	1,294,426		281,066		416,711		277,028		319,621		Interest on long-term debt⁽²⁾	1,918,714		348,821		588,296		383,167		598,430
Other⁽³⁾	795,247		232,055		292,353		160,520		110,319		Other⁽³⁾	455,404		202,879		194,936		23,356		34,233
Investing Activities:	0										Investing Activities:
Ship purchase obligations⁽⁴⁾	6,454,147		108,084		2,746,358		3,005,993		593,712		Ship purchase obligations⁽⁴⁾	11,418,681		2,195,931		4,958,432		3,060,998		1,203,320

Financing Activities:	0										Financing Activities:
Long-term debt obligations⁽⁵⁾	9,147,052		1,078,719		3,057,417		2,233,047		2,777,869
Capital lease obligations⁽⁶⁾	40,384		7,016		7,031		8,060		18,277
Other⁽⁷⁾	51,744		18,364		25,286		7,805		289
Commercial paper⁽⁵⁾											Commercial paper⁽⁵⁾	1,434,180		1,434,180		—		—		—
Debt obligations⁽⁶⁾											Debt obligations⁽⁶⁾	9,370,438		1,153,024		3,270,006		1,476,538		3,470,870
Capital lease obligations⁽⁷⁾											Capital lease obligations⁽⁷⁾	230,258		33,562		53,203		10,541		132,952
Other⁽⁸⁾											Other⁽⁸⁾	15,008		4,841		7,406		2,761
Total	$	18,092,797	$	1,746,053	$	6,578,181	$	5,716,588	$	4,051,975	Total	$	25,781,037	$	5,499,472	$	9,290,220	$	5,134,418	$	5,856,927

(1) We are obligated under noncancelable operating leases primarily for offices, warehouses and motor vehicles. Amounts represent contractual obligations with initial terms in excess of one year.

(2) ~~Long-term debt~~Debt obligations mature at various dates through fiscal year ~~2028~~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 December 31, ~~2016.~~2019. Debt denominated in other currencies is calculated based on the applicable exchange rate at December 31, ~~2016.~~2019.

(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. ~~Amounts do not include the PortMiami lease further discussed below under~~ ~~Off-Balance Sheet Arrangements~~.

(4) Amounts do not include potential obligations which remain subject to cancellation at our sole ~~discretion. In addition,~~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 ~~conditional agreements with Meyer Turku~~three-month reporting lag period. Refer to the Capital Expenditure section.

(5) Refer to Note 9. Debt to our consolidated financial statements under Item 8. Financial Statements and Supplemental Datato our consolidated financial statements for ~~the two "Project Icon" ships.~~further information.

~~(5) Amounts represent debt obligations with initial terms in excess~~

Table of ~~one year.~~C ontents

(6) Debt denominated in other currencies is calculated based on the applicable exchange rate at December 31, ~~2016.~~2019. In addition, debt obligations presented above are net of debt issuance costs of $206.6 million as of December 31, 2019.

~~(6)~~(7) Amounts represent capital lease obligations with initial terms in excess of one year.

~~(7)~~(8) 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 below 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

We and TUI AG have each guaranteed the repayment by TUI Cruises of 50% of a bank ~~loan provided to TUI Cruises which is due 2022. Notwithstanding this, the lenders have agreed to release each shareholder’s guarantee in 2018.~~loan. As of December 31, ~~2016, €116.3~~2019, the outstanding principal amount of the loan was €26.4 million, or approximately ~~$122.7~~$29.7 million, based on the exchange rate at December 31, ~~2016, remains outstanding.~~2019. The loan amortizes quarterly and is currently secured by a first mortgage on Mein Schiff Herz, previously known as Mein Schiff 2. Based on current facts and circumstances, we do not believe potential obligations under our guarantee of this ~~guarantee~~bank loan are probable.

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 ~~2021.~~

In July 2016, we executed an agreement with Miami Dade County (“MDC”), which was simultaneously assigned to Sumitomo Banking Corporation (“SMBC”), to lease land from MDC and construct a new cruise terminal at PortMiami in Miami, Florida. The terminal is expected to be approximately 170,000 square feet and will serve as a homeport. During the construction period, SMBC will fund the costs of the terminal’s construction and land lease. Upon completion of the terminal's construction, we will operate and lease the terminal from SMBC for a five-year term. We determined that the lease arrangement between SMBC and us should be accounted for as an operating lease upon completion of the terminal.May 2031.

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.

As of December 31, ~~2016,~~2019, 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

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 December 31, ~~2016,~~2019, we ~~have~~had approximately ~~$1.7~~$5.5 billion in contractual obligations due through December 31, ~~2017~~2020 of which approximately ~~$1.1~~$2.6 billion relates to ~~long-term~~ debt maturities ~~$108.1~~including our commercial paper notes, $348.8 million relates to interest on debt and $2.2 billion relates to progress payments on our ship ~~purchases~~orders and ~~$281.1 million relates to interest on long-term debt.~~the final installments payable due upon the deliveries of Celebrity Apex, Silver Origin, Silver Moon and Odyssey of the Seas in 2020. We have historically relied on a combination of cash flows provided by operations, drawdowns under our available credit facilities and our commercial paper program, the incurrence of additional debt and/or the refinancing of our existing debt and the issuance of additional shares of equity securities to fund these obligations.

WeAs of December 31, 2019, we had a working capital deficit of ~~$3.7~~$6.8 billion, ~~as of December 31, 2016 as compared to a working capital deficit of $3.5~~which included $1.2 billion ~~as of December 31, 2015. Included within our working capital deficit is $1.3 billion and $899.5 million~~ of current portion of debt, including ~~capital~~finance leases, asand $1.4 billion of commercial paper. As of December 31, ~~2016 and December 31, 2015, respectively. The increase in~~2018, we had a working capital deficit ~~was primarily due to the increase in~~of $5.9 billion, which included $1.6 billion of current ~~liabilities~~portion of ~~our long-term~~ debt, including finance leases and ~~customer deposits.~~$0.8 million of commercial paper. Similar to others in our industry, we operate with a substantial working capital deficit. This deficit is mainly attributable to the fact that, under our business model, a vast majority of our passenger ticket receipts are collected in advance of the applicable sailing date. These advance passenger

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receipts remain a current liability until the sailing date. The cash generated from these advance receipts is used interchangeably with cash on hand from other sources, such as our revolving credit facilities, commercial paper and other cash from operations. The cash received as advanced receipts can be used to fund operating expenses for the applicable future sailing or otherwise, pay down our revolving credit facilities and commercial paper, invest in long term investments or any other use of cash. In addition, we have a relatively low-level of accounts receivable and rapid turnover results in a limited investment in inventories. We generate substantial cash flows from operations, and our business model, along with our unsecured revolving credit facilities, has historically allowed us to maintain this working capital deficit and still meet our operating, investing and financing needs. We expect that we will continue to have working capital deficits in the future.

As of December 31, ~~2016,~~2019, we had liquidity of ~~$980.6 million,~~$1.5 billion, consisting of ~~approximately $132.6~~$243.7 million in cash and cash equivalents and ~~$848.0 million~~$1.3 billion available under our unsecured credit ~~facilities.~~ facilities, net of our outstanding commercial paper notes.

We anticipate that our cash flows from operations and our current financing arrangements, as described above, will be adequate to meet our capital expenditures and debt repayments over the next ~~12-month~~twelve-month period.

~~In October 2015, our board~~As of ~~directors authorized~~December 31, 2019, we have approximately $600.0 million that remains available for future common stock repurchase transactions under a 24-month common stock repurchase program for up to ~~$500 million that was completed~~$1.0 billion authorized by our board of directors in ~~August 2016. During 2016, we purchased 4.1 million shares for a total of $300.0 million in~~May 2018. Repurchases under the program may be made at management's discretion from time to time on the open market ~~transactions. These~~or through privately negotiated transactions ~~were recorded within Treasury stock in~~and are expected to be funded from available cash or borrowings. Refer to Note 12. Shareholders' Equity to our consolidated ~~balance sheet. Our repurchases~~financial statements under ~~this program, including the 2.1 million shares repurchased~~ Item 8. Financial Statements and Supplemental Data for ~~$200.0 million during the fourth quarter of 2015, totaled $500.0 million.~~

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 ~~the Board~~our board of directors is no longer comprised of individuals who were members of ~~the Board~~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.

Debt Covenants

Certain of our financing agreements contain ~~financial~~ covenants that require us, among other things, to maintain minimum net worth of at least ~~$7.2~~$9.9 billion, a fixed charge coverage ratio of at least 1.25x and limit our net debt-to-capital ratio to no more than 62.5%. 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. We ~~are~~were well in excess of all ~~financial~~debt covenant requirements as of December 31, ~~2016.~~2019. The specific covenants and related definitions can be found in the applicable debt agreements, the majority of which have been previously filed with the Securities and Exchange Commission.

Dividends

In December ~~2016,~~2019, we declared a cash dividend on our common stock of ~~$0.48~~$0.78 per share which was paid in the first quarter of ~~2017.~~2020. We declared a cash dividend on our common stock of ~~$0.48~~$0.78 per share during the third quarter of ~~2016~~2019 which was paid in the fourth quarter of ~~2016.~~2019. During the first and second quarters of ~~2016,~~2019, we declared ~~and paid~~ a cash dividend on our common stock of ~~$0.375~~$0.70 per ~~share.~~share which was paid in the second and third quarters of 2019, respectively. During the first quarter of ~~2016,~~2019, we also paid a cash dividend on our common stock of ~~$0.375~~$0.70 per share which was declared during the fourth quarter of ~~2015.~~2018.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Financial Instruments and Other

General

We are exposed to market risk attributable to changes in interest rates, foreign currency exchange rates and fuel prices. We ~~manage~~try to mitigate these risks through a combination of our normal operating and financing activities and through the use of derivative financial instruments pursuant to our hedging practices and policies. The financial impact of these hedging instruments is primarily offset by corresponding changes in the underlying exposures being hedged. We achieve this by closely matching the amount, term and conditions of the derivative instrument with the underlying risk being hedged. Although certain of our derivative financial instruments do not qualify or are not accounted for under hedge accounting, ~~we do~~our objective is not to hold or issue derivative financial instruments for trading or other speculative purposes. ~~We monitor our derivative positions using techniques including market valuations and sensitivity analyses.~~ (Refer to Note ~~14.~~ 18. Fair Value Measurementsand Derivative Instruments to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data.)

Interest Rate Risk

Our exposure to market risk for changes in interest rates relates to our long-term debt obligations including future interest payments. At December 31, ~~2016,~~2019, approximately ~~40.5%~~62.1% of our long-term debt was effectively fixed as compared to ~~31.2%~~59.1% as of December 31, ~~2015.~~2018. We use interest rate swap agreements to modify our exposure to interest rate movements and to manage our interest expense.

Market risk associated with our long-term fixed rate debt is the potential increase in fair value resulting from a decrease in interest rates. We use interest rate swap agreements that effectively convert a portion of our fixed-rate debt to a floating-rate basis to manage this risk. At December 31, ~~2016~~2019 and ~~December 31, 2015,~~2018, we maintained interest rate swap agreements on the following fixed-rate debt instruments:


Debt Instrument	Swap Notional as of December 31, 2016 (In thousands)		Maturity	Debt Fixed Rate	Swap Floating Rate: LIBOR plus	All-in Swap Floating Rate as of December 31, 2016	Debt Instrument	Swap Notional as of December 31, 2019 (In thousands)		Maturity	Debt Fixed Rate	Swap Floating Rate: LIBOR plus	All-in Swap Floating Rate as of December 31, 2019
Oasis of the Seas term loan	$	175,000	October 2021	5.41%	3.87%	5.13%	Oasis of the Seas term loan	$	70,000	October 2021	5.41%	3.87%	5.8%
Unsecured senior notes	650,000		November 2022	5.25%	3.63%	4.54%	Unsecured senior notes	650,000		November 2022	5.25%	3.63%	5.54%
	$	825,000						$	720,000

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

The estimated fair value of our long-term fixed-rate debt at December 31, ~~2016~~2019 was ~~$1.6~~$5.6 billion, using quoted market prices, where available, or using the present value of expected future cash flows which incorporates risk profile. The fair value of our fixed to floating interest rate swap agreements was estimated to be a liability of ~~$16.2~~$1.6 million as of December 31, ~~2016,~~2019, based on the present value of expected future cash flows. A hypothetical one percentage point decrease in interest rates at December 31, ~~2016~~2019 would increase the fair value of our hedged and unhedged long-term fixed-rate debt by approximately ~~$83.4~~$266.2 million and would increase the fair value of our fixed to floating interest rate swap agreements by approximately ~~$39.8~~$16.5 million.

Market risk associated with our long-term floating-rate debt is the potential increase in interest expense from an increase in interest rates. We use interest rate swap agreements that effectively convert a portion of our floating-rate debt to a fixed-rate basis to manage this risk. A hypothetical one percentage point increase in interest rates would increase our forecasted ~~2017~~2020 interest expense by approximately ~~$42.7~~$37.4 million, assuming no change in foreign currency exchange rates.

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At December 31, ~~2016~~2019 and ~~December 31, 2015,~~2018, we maintained interest rate swap agreements on the following floating-rate debt instruments:


Debt Instrument	Swap Notional as of December 31, 2019 (In thousands)		Maturity	Debt Floating Rate			All-in Swap Fixed Rate
Celebrity Reflection term loan	$	272,708	October 2024	LIBOR plus	0.40%	2.85%
Quantum of the Seas term loan	428,750		October 2026	LIBOR plus	1.30%	3.74%
Anthem of the Seas term loan	453,125		April 2027	LIBOR plus	1.30%	3.86%
Ovation of the Seas term loan	587,917		April 2028	LIBOR plus	1.00%	3.16%
Harmony of the Seas term loan ⁽¹⁾	551,325		May 2028	EURIBOR plus	1.15%	2.26%
Odyssey of the Seas term loan ⁽²⁾	460,000		October 2032	LIBOR plus	0.95%	3.20%
	$	2,753,825

Debt Instrument Swap Notional as of December 31, 2016 (In thousands) Maturity Debt Floating Rate All-in Swap Fixed Rate
Celebrity Reflection term loan
436,333
October 2024 LIBOR plus 0.40% 2.85%
Quantum of the Seas term loan
612,500
October 2026 LIBOR plus 1.30% 3.74%
Anthem of the Seas term loan
634,375
April 2027 LIBOR plus 1.30% 3.86%
Ovation of the Seas term loan
795,417
April 2028 LIBOR plus 1.00% 3.16%
Harmony of the Seas term loan ⁽¹⁾
701,056
May 2028 EURIBOR plus 1.15% 2.26%
3,179,681

⁽¹⁾Interest rate swap agreements hedging the Euro-denominated term loan for Harmony of the Seas include EURIBOR zero-floors matching the hedged debt EURIBOR zero-floor. Amount presented is based on the exchange rate as of December 31, ~~2016.~~2019.

(2) Interest rate swap agreements hedging the term loan for Odyssey of the Seas include LIBOR zero-floors matching the hedged debt LIBOR zero-floor. The anticipated unsecured term loan for the financing of Odyssey of the Seas is expected to be drawn in October 2020.

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

The fair value of our floating to fixed interest rate swap agreements was estimated to be a liability of ~~$42.8~~$65.4 million as of December 31, ~~2016~~2019 based on the present value of expected future cash flows. These interest rate swap agreements are accounted for as cash flow hedges.

Foreign Currency Exchange Rate Risk

Our primary exposure to foreign currency exchange rate risk relates to our ship construction contracts denominated in Euros, our foreign currency denominated debt and our international business operations. WeOn a regular basis, we enter into foreign currency forward contracts ~~collar options~~ and, from time to time, we utilize cross-currency swap agreements and collar options to manage portions of the exposure to movements in foreign currency exchange rates.

The estimated fair value, as of December 31, ~~2016,~~2019, of our Euro-denominated forward contracts associated with our ship construction contracts was a liability of ~~$73.7~~$139.2 million, based on the present value of expected future cash flows. As of December 31, ~~2016,~~2019, the aggregate cost of our ships on order, not including ~~the TUI Cruises'~~ ships on order by our Partner Brands and ~~those subject to conditions to effectiveness,~~the Silversea Cruises ships that remain contingent upon final documentation and financing, was approximately ~~$8.4~~$14.8 billion, of which we had deposited ~~$316.1~~$881.5 million as of such date. Approximately ~~66.7%~~65.9% and ~~58.2%~~53.5% of the aggregate cost of the ships under construction was exposed to fluctuations in the Euro exchange rate at December 31, ~~2016~~2019 and ~~December 31, 2015,~~2018, respectively. A hypothetical 10% strengthening of the Euro as of December 31, ~~2016,~~2019, assuming no changes in comparative interest rates, would result in a ~~$558.0~~$972.2 million increase in the United States dollar cost of the foreign currency denominated ship construction contracts exposed to fluctuations in the Euro exchange rate. ~~The majority of our~~Our foreign currency forward ~~contracts, collar options and cross-currency swap~~contract agreements are accounted for as cash flow ~~fair value~~ or net investment hedges depending on the designation of the related hedge.

Our international business operations subject us to foreign currency exchange risk. We transact business in many different foreign currencies and maintain investments in foreign operations which may expose us to financial market risk resulting from fluctuations in foreign currency exchange rates. Movements in foreign currency exchange rates may affect the value of our earnings in foreign currencies and cash flows. We manage most of this exposure on a consolidated basis, which allows us to take advantage of any natural offsets. Therefore, weakness in one particular currency might be offset by strengths in other currencies over time. The extent to which one currency is effective as a natural offset of another currency fluctuates over time. In addition, some foreign currency exposures have little to no mitigating natural offsets available.

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We consider our investments in our foreign operations to be denominated in relatively stable currencies and of a long-term nature. As of December 31, 2019, we maintained foreign currency forward contracts and designated them as hedges of a portion of our net investment in TUI Cruises of €173.0 million, or approximately $194.2 million based on the exchange rate at December 31, 2019. These forward currency contracts mature in October 2021.

We ~~partially mitigate~~also address the exposure of our investments in foreign operations by denominating a portion of our debt in our ~~subsidiaries’~~subsidiaries' and ~~investments’~~investments' functional currencies and designating it as a hedge of these subsidiaries and investments. We had designated debt as a hedge of our net investments primarily in TUI Cruises of approximately ~~€295.0~~

€319.0 million, or approximately ~~$311.2~~$358.1 million, through December 31, ~~2016.~~2019. As of December 31, ~~2015, no~~2018, we had designated debt ~~was designated~~ as a hedge of our net investments primarily in ~~Pullmantur and~~ TUI ~~Cruises.~~ Cruises of approximately €280.0 million, or approximately $320.2 million.

We have included net gains of approximately ~~$114.0~~$96.8 million and ~~$104.5~~$86.1 million of foreign-currency transaction ~~losses~~remeasurement and of changes in the fair value of derivatives in the foreign currency translation adjustment component of Accumulated other comprehensive loss at December 31, ~~2016~~2019 and ~~December 31, 2015,~~2018, respectively.

~~Lastly, on~~On a regular basis, we enter into foreign currency forward contracts and, from time to time, we utilize cross-currency swap agreements and collar options to minimize the volatility resulting from the remeasurement of net monetary assets and liabilities denominated in a currency other than our functional currency or the functional currencies of our foreign subsidiaries. During ~~2016,~~2019, we maintained an average of approximately ~~$642.4~~$689.7 million of these foreign currency forward contracts. These instruments are not designated as hedging instruments. ~~In 2016, 2015~~For the years ended December 31, 2019, 2018 and ~~2014~~2017 changes in the fair value of the foreign currency forward contracts ~~were losses~~resulted in gains (losses) of approximately ~~$51.1~~$1.4 million,, ~~$55.5~~ $(62.4) million and ~~$48.6~~$62.0 million, respectively, which offset gains (losses) arising from the remeasurement of monetary assets and liabilities denominated in foreign currencies in those same years of ~~$39.8~~$0.4 million,, $57.6 million and $~~34.6 million~~ ~~and~~ ~~$49.5~~(75.6) million, respectively. These changes were recognized in earnings within Other income (expense) in our consolidated statements of comprehensive income (loss).

Fuel Price Risk

Our exposure to market risk for changes in fuel prices relates primarily to the consumption of fuel on our ships. Fuel cost (net of the financial impact of fuel swap agreements), as a percentage of our total revenues, was approximately ~~8.4%~~6.4% in ~~2016, 9.6%~~2019, 7.5% in ~~2015~~2018 and ~~11.7%~~7.8% in ~~2014.~~2017. We use fuel swap agreements to mitigate the financial impact of fluctuations in fuel prices.

As of December 31, ~~2016,~~2019, we had fuel swap agreements to pay fixed prices for fuel with an aggregate notional amount of approximately ~~$1.0 billion,~~$810.0 million, maturing through ~~2020.~~2023. The fuel swap agreements represented ~~60%~~54% of our projected ~~2017~~2020 fuel requirements, ~~44%~~30% of our projected ~~2018~~2021 fuel requirements, ~~35%~~19% of our projected ~~2019~~2022 fuel requirements and ~~20%~~5% of our projected ~~2020~~2023 fuel requirements. These fuel swap agreements are generally accounted for as cash flow hedges. The estimated fair value of these contracts at December 31, ~~2016~~2019 was estimated to be a liability of ~~$227.9~~$23.8 million. We estimate that a hypothetical 10% increase in our weighted-average fuel price from that experienced during the year ended December 31, ~~2016~~2019 would increase our forecasted ~~2017~~2020 fuel cost by approximately ~~$30.0~~$36.8 million, net of the impact of fuel swap agreements.

Item 8. Financial Statements and Supplementary Data

Our Consolidated Financial Statements and Quarterly Selected Financial Data are included beginning on page F-1 of this report.

Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

None.

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Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chairman and Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures, as such term is defined in Exchange Act Rule 13a-15(e), as of the end of the period covered by this report. Based upon such evaluation, our Chairman and Chief Executive Officer and Chief Financial Officer concluded that those controls and procedures are effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our Chairman and Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure and are effective to provide reasonable assurance that such information is recorded, processed, summarized and reported within the time periods specified by the ~~SEC’s~~Securities and Exchange Commission's (the "SEC") rules and forms.

Management's Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our management, with the participation of our Chairman and Chief Executive Officer and our Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting based on the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations ~~("COSO")~~ of the Treadway Commission. Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, ~~2016.~~ 2019.

The effectiveness of our internal control over financial reporting as of December 31, ~~2016~~2019 has been audited by PricewaterhouseCoopers LLP, the independent registered ~~certified~~ public accounting firm that audited our consolidated financial statements included in this Annual Report on Form 10-K, as stated in its report, which is included herein on page F-2.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Exchange Act Rule 13a-15(d) during the quarter ended December 31, ~~2016~~2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there is only reasonable assurance that our controls will succeed in achieving their goals under all potential future conditions.

Item 9B. Other Information

None.

Table of C ontents

PART III

Items 10, 11, 12, 13 and 14. Directors, Executive Officers and Corporate Governance; Executive Compensation; Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters; Certain Relationships and Related Transactions; and Director Independence and Principal Accountant Fees and Services.

Except for information concerning executive officers (called for by Item 401(b) of Regulation S-K), which is included in Part I of this Annual Report on Form 10-K, the information required by Items 10, 11, 12, 13 and 14 is incorporated herein by reference to certain sections of the Royal Caribbean Cruises Ltd. Definitive Proxy Statement relating to our ~~2017~~2020 Annual Meeting of Shareholders (the "Proxy Statement") to be filed with the Securities and Exchange Commission no later than 120 days after the close of the fiscal year. Please refer to the following sections in the Proxy Statement for more ~~information regarding our corporate governance:~~information: "Corporate Governance"; "Proposal 1—Election of Directors"; ~~and~~ "Certain Relationships and Related Person ~~Transactions.~~Transactions"; "Section 16(a) Beneficial Ownership Reporting Compliance"; "Executive Compensation"; "Security Ownership of Certain Beneficial Owners and Management"; and "Proposal 3—Ratification of Principal Independent Registered Public Accounting Firm." Copies of the Proxy Statement will become available when filed through our Investor Relations website at ~~www.rclinvestor.com~~www.rclcorporate.com (please see "Financial Reports" under "Financial Information"); by contacting our Investor Relations department at 1050 Caribbean Way, Miami, Florida 33132—telephone (305) 982-2625; or by visiting the SEC's website at www.sec.gov.

We have adopted a Code of Business Conduct and Ethics that applies to all of our employees, including our executive officers, and our directors. A copy of the Code of Business Conduct and Ethics is posted in the corporate governance section of our website at ~~www.rclinvestor.com~~www.rclcorporate.com and is available in print, without charge, to shareholders upon written request to our Corporate Secretary at Royal Caribbean Cruises, Ltd., 1050 Caribbean Way, Miami, Florida 33132. Any amendments to the code or any waivers from any provisions of the code granted to executive officers or directors will be promptly disclosed to investors by posting on our website at ~~www.rclinvestor.com.~~www.rclcorporate.com. None of the websites referenced in this Annual Report on Form 10-K or the information contained therein is incorporated herein by reference.

Table of C ontents

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a)(1) Financial Statements

Our Consolidated Financial Statements have been prepared in accordance with Item 8. Financial Statements and Supplementary Data and are included beginning on page F-1 of this report.

(1)Financial Statement Schedules

None.

(1)Exhibits

Exhibits 10.36 through 10.57 represent management compensatory plans or arrangements.

Incorporated By Reference

Exhibit Number

Exhibit Description

Form

Exhibit

Filing Date/ Period End Date

3.1

Restated Articles of Incorporation of the Company, as amended (composite)

S-3

3.1

3/23/2009

3.2

Amended and Restated By-Laws of the Company, as amended

8-K

3.1

12/6/2018

4.1

Indenture dated as of July 15, 1994, by and between the Company, as issuer, and The Bank of New York Trust Company, N.A., successor to NationsBank of Georgia, National Association, as Trustee

20-F

2.4

12/31/1994

4.2

Sixth Supplemental Indenture dated as of October 14, 1997, to the Indenture, dated as of July 15, 1994, by and between the Company, as issuer, and The Bank of New York Trust Company, N.A., as Trustee

20-F

2.11

12/31/1997

4.3

Eighth Supplemental Indenture dated as of March 16, 1998, to the Indenture, dated as of July 15, 1994, by and between the Company, as issuer, and The Bank of New York Trust Company, N.A., as Trustee

20-F

2.13

12/31/1997

4.4

Form of Indenture, dated as of July 31, 2006, by and between the Company, as issuer, and The Bank of New York Trust Company, N.A., as Trustee

S-3

4.1

7/31/2006

4.5

Second Supplemental Indenture dated as of November 7, 2012 between the Company, as issuer, and The Bank of New York Mellon Trust Company, N.A., as Trustee

8-K

4.1

11/7/2012

4.6

Third Supplemental Indenture, dated as of November 28, 2017 between the Company, as issuer, and The Bank of New York Mellon Trust Company, N.A., as Trustee

8-K

4.1

11/28/2017

4.7

Indenture dated as of January 30, 2017 among Silversea Cruise Finance Ltd., as issuer, Citibank, N.A., London Branch, as Trustee, as Principal Paying Agent and as Security Agent, and Citigroup Global Markets Deutschland AG, as Registrar

10-K

4.7

12/31/2018

4.8

Supplemental Indenture dated as of February 1, 2017 by and among Silversea Cruise Finance Ltd., as issuer, the other parties listed as New Guarantors, and Citibank, N.A., London Branch, as Trustee

10-K

4.8

12/31/2018

4.9

Second Supplemental Indenture dated as of February 1, 2019 by and between Silversea Cruise Finance Ltd., as issuer, and Citibank, N.A., London Branch, as Trustee

10-K

4.9

12/31/2018

4.10

Description of the Company's Securities*

10.1

Amended and Restated Registration Rights Agreement dated as of July 30, 1997, by and among the Company, A. Wilhelmsen AS., Cruise Associates, Monument Capital Corporation, Archinav Holdings, Ltd. and Overseas Cruiseship, Inc.

20-F

2.20

12/31/1997

10.2

Amendment to the Credit Agreement, dated as of December 4, 2017, by and among the Company, the various financial institutions as are or shall become parties thereto and The Bank of Nova Scotia, as administrative agent for the lender parties

8-K

10.1

12/7/2017

Table of C ontents

Incorporated By Reference

Exhibit Number

Exhibit Description

Form

Exhibit

Filing Date/ Period End Date

10.3

Amendment to the Credit Agreement, dated as of April 5, 2019, among Royal Caribbean Cruises Ltd., the various financial institutions as are or shall become parties thereto and The Bank of Nova Scotia, as administrative agent for the lender parties

8-K

10.1

4/10/2019

10.4

Amendment No. 1 to the Amended and Restated Credit Agreement, dated as of May 24, 2019, among the Company, the various financial institutions party thereto and Nordea Bank ABP, as administrative agent

10-Q

10.3

7/25/2019

10.5

Amendment to the Credit Agreement, dated as of October 12, 2017, by and among the Company, the various financial institutions as are or shall become parties thereto and Nordea Bank AB (PUBL), New York branch, as administrative agent for the lender parties

8-K

10.3

10/17/2017

10.6

Amendment No. 4 to Hull No. S-697 Credit Agreement, dated as of February 2, 2016, by and between the Company, the Lenders from time to time party thereto, the Mandated Lead Arrangers and KfW IPEX-Bank GmbH, as Hermes Agent and Facility Agent

10-K

10.7

12/31/2015

10.7

Amendment No. 5 to Hull No. S-697 Credit Agreement, dated as of July 3, 2018, by and between the Company, the Lenders from time to time party thereto, the Mandated Lead Arrangers and KfW IPEX-Bank GmbH, as Hermes Agent and Facility Agent

10-Q

10.4

6/30/2018

10.8

Amendment No. 4 to Hull No. S-698 Credit Agreement, dated as of February 3, 2016, by and between the Company, the Lenders from time to time party thereto, the Mandated Lead Arrangers and KfW IPEX-Bank GmbH, as Hermes Agent and Facility Agent

10-K

10.8

12/31/2015

10.9

Amendment No. 5 to Hull No. S-698 Credit Agreement, dated as of July 3, 2018, by and between the Company, the Lenders from time to time party thereto, the Mandated Lead Arrangers and KfW IPEX-Bank GmbH, as Hermes Agent and Facility Agent

10-Q

10.5

6/30/2018

10.10

Amendment No. 1 to Hull No. S-699 Credit Agreement, dated as of March 31, 2016, by and between the Company, the Lenders from time to time party thereto, the Mandated Lead Arrangers and KfW IPEX-Bank GmbH, as Hermes Agent and Facility Agent

10-Q

10.1

3/31/2016

10.11

Amendment No. 2 to Hull No. S-699 Credit Agreement, dated as of July 3, 2018, by and between the Company, the Lenders from time to time party thereto, the Mandated Lead Arrangers and KfW IPEX-Bank GmbH, as Hermes Agent and Facility Agent

10-Q

10.6

6/30/2018

10.12

Amendment and Restatement Agreement, dated as of January 15, 2016, in respect of a Facility Agreement dated, as of July 9, 2013, by and between the Company, the Lenders from time to time party thereto, Société Générale, as Facility Agent and Mandated Lead Arranger, BNP Paribas, as Documentation Bank and Mandated Lead Arranger, and HSBC France, as Mandated Lead Arranger

10-K

10.10

12/31/2015

10.13

Amendment and Restatement Agreement, dated as of August 15, 2019, in respect of a Facility Agreement dated, as of July 9, 2013, by and between the Company, the Lenders from time to time party thereto, Société Générale, as Facility Agent and Mandated Lead Arranger, BNP Paribas, as Documentation Bank and Mandated Lead Arranger, and HSBC France, as Mandated Lead Arranger

10-Q

10.1

10/30/2019

10.14

Hull No. B34 Credit Agreement, dated as of January 30, 2015, as novated, amended and restated on the Actual Delivery Date pursuant to a novation agreement dated January 30, 2015 (as amended),between Royal Caribbean Cruises Ltd., Citibank N.A., London Branch, Citibank Europe plc, UK Branch, and the banks and financial institutions as lender parties thereto

10-Q

10.1

3/31/2018

10.15

Hull No. S-700 Credit Agreement, dated as of November 13, 2015, by and among the Company, the Lenders from time to time party thereto and KfW IPEX-Bank GmbH, as Hermes Agent, Facility Agent and Initial Mandated Lead Arranger

8-K

10.1

11/19/2015

Table of C ontents

Incorporated By Reference

Exhibit Number

Exhibit Description

Form

Exhibit

Filing Date/ Period End Date

10.16

Amendment No. 1 to Hull No. S-700 Credit Agreement, dated as of November 13, 2015, by and among the Company, the Lenders from time to time party thereto and KfW IPEX-Bank GmbH, as Hermes Agent, Facility Agent and Initial Mandated Lead Arranger

10-Q

10.7

6/30/2018

10.17

Amendment No. 2 to Hull No. S-700 Credit Agreement, dated as of July 3, 2018, by and among the Company, the Lenders from time to time party thereto and KfW IPEX-Bank GmbH, as Hermes Agent, Facility Agent and Initial Mandated Lead Arranger

10-Q

10.8

6/30/2018

10.18

Hull No. S-713 Credit Agreement, dated as of November 13, 2015, by and among the Company, the Lenders from time to time party thereto and KfW IPEX-Bank GmbH, as Hermes Agent, Facility Agent and Initial Mandated Lead Arranger

8-K

10.2

11/19/2015

10.19

Amendment No. 1 to Hull No. S-713 Credit Agreement, dated as of September 7, 2016, by and among the Company, the Lenders from time to time party thereto and KfW IPEX-Bank GmbH, as Hermes Agent, Facility Agent and Initial Mandated Lead Arranger

10-Q

10.9

6/30/2018

10.20

Amendment No. 2 to Hull No. S-713 Credit Agreement, dated as of July 3, 2018, by and among the Company, the Lenders from time to time party thereto and KfW IPEX-Bank GmbH, as Hermes Agent,Facility Agent and Initial Mandated Lead Arranger

10-Q

10.10

6/30/2018

10.21

Hull No. J34 Credit Agreement, dated as of June 22, 2016, as novated, amended and restated on the Actual Delivery Date pursuant to a novation agreement dated June 22, 2016 (as amended), between Royal Caribbean Cruises Ltd., Citibank N.A., London Branch, Citibank Europe plc, UK Branch, and the banks and financial institutions as lender parties thereto

10-K

10.18

12/31/2018

10.22

Novation Agreement, dated as of June 22, 2016, by and between Azairemia Finance Ltd., Royal Caribbean Cruises Ltd., Citibank Europe Plc, UK Branch, Citicorp Trustee Company Limited, Citibank N.A., London Branch, HSBC France, Sumitomo Mitsui Banking Corporation Europe Limited, Paris Branch and the banks and financial institutions as lender parties thereto

8-K

10.2

6/28/2016

10.23

First Supplemental Agreement, dated as of October 5, 2018, relating to Hull No. K34 and the Novation Agreement, dated as of June 22, 2016, by and between Azairemia Finance Ltd., Royal Caribbean Cruises Ltd., Citibank Europe Plc, UK Branch, Citicorp Trustee Company Limited, Citibank N.A., London Branch, HSBC France, Sumitomo Mitsui Banking Corporation Europe Limited, Paris Branch, and the banks and financial institutions as lender parties thereto

10-K

10.20

12/31/2018

10.24

Novation Agreement, dated as of July 24, 2017, between Hibisyeu Finance Ltd., Royal Caribbean Cruises Ltd., Citibank Europe Plc, UK Branch, Citicorp Trustee Company Limited, Citibank N.A., London Branch, HSBC France, Sumitomo Mitsui Banking Corporation Europe Limited, Paris Branch and the banks and financial institutions as lender parties thereto

8-K

10.1

7/28/2017

10.25

Novation Agreement, dated as of July 24, 2017, between Hoediscus Finance Ltd., Royal Caribbean Cruises Ltd., Citibank Europe Plc, UK Branch, Citicorp Trustee Company Limited, Citibank N.A., London Branch, HSBC France, Sumitomo Mitsui Banking Corporation Europe Limited, Paris Branch and the banks and financial institutions as lender parties thereto

8-K

10.2

7/28/2017

10.26

Novation Agreement, dated as of July 24, 2017, between Houatorris Finance Ltd., Royal Caribbean Cruises Ltd., Citibank Europe Plc, UK Branch, Citicorp Trustee Company Limited, Citibank N.A., London Branch, HSBC France, Sumitomo Mitsui Banking Corporation Europe Limited, Paris Branch and the banks and financial institutions as lender parties thereto

8-K

10.3

7/28/2017

Table of C ontents

Incorporated By Reference

Exhibit Number

Exhibit Description

Form

Exhibit

Filing Date/ Period End Date

10.27

Novation Agreement, dated as of December 13, 2019, between Palmeraie Finance Limited, Royal Caribbean Cruises Ltd., Citibank Europe Plc, UK Branch, Citicorp Trustee Company Limited, Citibank N.A., London Branch HSBC France, Banco Santander S.A., Banco Bilbao Vizcaya Argentaria S.A., Paris Branch, BNP Paribas SA, Sumitomo Mitsui Banking Corporation Europe Limited, Paris Branch, Société Générale, Unicredit Bank AG and the banks and financial institutions as lender parties thereto

8-K

10.1

12/18/2019

10.28

Icon 1 Hull No. S-1400 Credit Agreement, dated as of October 11, 2017, between Royal Caribbean Cruises Ltd., as the Borrower, the Lenders from time to time party thereto, KfW IPEX-Bank GmbH, as Hermes Agent, Facility Agent, Documentation Agent and Initial Mandated Lead Arranger and BNP Paribas Fortis SA/NV as Finnvera Agent

8-K

10.1

10/17/2017

10.29

Amendment No. 1 to Icon 1 Hull No. S-1400 Credit Agreement, dated as of July 3, 2018, between Royal Caribbean Cruises Ltd., as the Borrower, the Lenders from time to time party thereto, KfW IPEX-Bank GmbH, as Hermes Agent, Facility Agent, Documentation Agent and Initial Mandated Lead Arranger and BNP Paribas Fortis SA/NV as Finnvera Agent

10-Q

10.11

6/30/2018

10.30

Icon 2 Hull No. S-1401 Credit Agreement, dated as of October 11, 2017, between Royal Caribbean Cruises Ltd., as the Borrower, the Lenders from time to time party thereto, KfW IPEX-Bank GmbH, as Hermes Agent, Facility Agent, Documentation Agent and Initial Mandated Lead Arranger and BNP Paribas Fortis SA/NV as Finnvera Agent

8-K

10.2

10/17/2017

10.31

Amendment No. 1 to Icon 2 Hull No. S-1401 Credit Agreement, dated as of July 3, 2018, between Royal Caribbean Cruises Ltd., as the Borrower, the Lenders from time to time party thereto, KfW IPEX-Bank GmbH, as Hermes Agent, Facility Agent, Documentation Agent and Initial Mandated Lead Arranger and BNP Paribas Fortis SA/NV as Finnvera Agent

10-Q

10.12

6/30/2018

10.32

Icon 3 Hull No. 1402 Credit Agreement, dated as of December 18, 2019, between Royal Caribbean Cruises Ltd., as the Borrower, KfW IPEX-Bank GmbH, as Facility Agent CIRR Agent, Documentation Agent, Hermes Agent, Initial Manadated Lead Arranger and Sole Bookrunner, and the Lenders and Residual Risk Guarantors from time to time party thereto

8-K

10.1

12/20/2019

10.33

Loan Agreement, dated as of June 29, 2018, among Royal Caribbean Cruises Ltd., as the Borrower, the Lenders from time to time party thereto, and JP Morgan Chase Bank, N.A. as Administrative Agent and Bank of America, N.A., Citigroup Global Markets Limited, Goldman Sachs Bank USA and Morgan Stanley Senior Funding,Inc. as Co-Syndication Agents

8-K

10.1

7/5/2018

10.34

Loan Agreement, dated as of April 5, 2019, among Royal Caribbean Cruises Ltd., as the Borrower, the Lenders from time to time party thereto, Bank of America, N.A. as Administrative Agent and Banco Bilbao Vizcaya Argentaria, S.A. New York Branch, Sumitomo Mitsui Banking Corporation, The Bank of Nova Scotia, Wells Fargo Bank, National Association and DNB Markets Inc. as Co-Syndication Agents

8-K

10.2

4/10/2019

10.35

Commercial Paper Dealer Agreement, dated June 14, 2018, between Royal Caribbean Cruises Ltd., as issuer, and the dealer party thereto

8-K

10.1

6/18/2018

10.36

Royal Caribbean Cruises Ltd. 2008 Equity Incentive Plan (as amended)

10-K

10.17

12/31/2016

10.37

Form of 2008 Equity Incentive Plan Stock Option Award Agreement—Incentive Options

10-Q

10.3

9/30/2008

10.38

Form of 2008 Equity Incentive Plan Stock Option Award Agreement—Nonqualified Options

10-Q

10.4

9/30/2008

10.39

Form of 2008 Equity Incentive Plan Restricted Stock Unit Agreement— Executive Officer Grants

10-K

10.23

12/31/2013

10.40

Form of 2008 Equity Incentive Plan Restricted Stock Unit Agreement— Executive Officer Grants (Non-Vesting Into Retirement)

10-Q

10.7

9/30/2017

10.41

Form of 2008 Equity Incentive Plan Restricted Stock Unit Agreement—Director Grants

10-K

10.31

12/31/2010

10.42

Form of 2008 Equity Incentive Plan Performance Shares Agreement

10-K

10.27

12/31/2014

Table of C ontents

Incorporated By Reference

Exhibit Number

Exhibit Description

Form

Exhibit

Filing Date/ Period End Date

10.43

Form of 2008 Equity Incentive Plan Performance-Based Restricted Shares Agreement

10-K

10.26

12/31/2015

10.44

Employment Agreement, dated as of December 31, 2012, by and between the Company and Richard D. Fain

10-K

10.22

12/31/2012

10.45

Employment Agreement, dated as of May 20, 2013, by and between the Company and Jason T. Liberty

10-Q

10.2

6/30/2013

10.46

Employment Agreement, dated as of July 16, 2015, by and between the Company and Michael W. Bayley

10-Q

10.3

6/30/2015

10.47

Form of First Amendment to Employment Agreement, dated as of February 6, 2015 (entered into between the Company and each of Messrs. Fain and Liberty)

10-K

10.33

12/31/2014

10.48

Employment Agreement dated as of August 3, 2015, by and between Celebrity Cruises Inc. and Lisa Lutoff-Perlo

10-K

10.31

12/31/2016

10.49

Employment Agreement, dated as of December 31, 2012, by and between the Company and Harri U. Kulovaara

10-K

10.26

2/25/2013

10.50

Form of First Amendment to Employment Agreement, dated as of February 6, 2015 (entered into between the Company and each of Messrs. Fain, Kulovaara and Liberty)

10-K

10.33

12/31/2014

10.51

Royal Caribbean Cruises Ltd. Executive Short-Term Bonus Plan

10-Q

10.4

6/30/2015

10.52

Royal Caribbean Cruises Ltd. Supplemental Executive Retirement Plan

8-K

10.3

12/8/2005

10.53

Amendment to Royal Caribbean Cruises Ltd. Supplemental Executive Retirement Plan

10-K

10.31

12/31/2006

10.54

Amendment to Royal Caribbean Cruises Ltd. Supplemental Executive Retirement Plan

10-K

10.31

12/31/2007

10.55

Amendment to Royal Caribbean Cruises Ltd. Supplemental Executive Retirement Plan

10-Q

10.1

9/30/2008

10.56

Amendment to Royal Caribbean Cruises Ltd. Supplemental Executive Retirement Plan

10-K

10.38

12/31/2008

10.57

Cruise Policy for Members of the Board of Directors of the Company

10-K

10.35

12/31/2013

21.1

List of Subsidiaries*

23.1

Consent of PricewaterhouseCoopers LLP, an independent registered public accounting firm*

23.2

Consent of Drinker Biddle & Reath LLP*

24.1

Power of Attorney*

31.1

Certification of Richard D. Fain required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934*

31.2

Certification of Jason T. Liberty required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934*

32.1

Certification of Richard D. Fain and Jason T. Liberty pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code**

* Filed herewith

** Furnished herewith

Interactive Data File

Table of C ontents


~~(2)~~101		~~Financial Statement Schedules~~

~~None.~~

The following financial statements from Royal Caribbean Cruises Ltd.'s Annual Report on Form 10-K for the year ended December 31, 2019 formatted in iXBRL (Inline eXtensible Business Reporting Language) are as follows:
~~(3)~~	~~Exhibits~~(i)	the Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2019, 2018 and 2017;
	(ii)	the Consolidated Balance Sheets at December 31, 2019 and 2018;
	(iii)	the Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017;
	(iv)	the Consolidated Statements of Shareholders' Equity for the years ended December 31, 2019, 2018 and 2017; and
	(v)	the Notes to the Consolidated Financial Statements, tagged in summary and detail.
104		Cover Page Interactive Data File, formatted in iXBRL and contained in Exhibit 101

The exhibits listed on the accompanying Index to Exhibits are filed or incorporated by reference as part of this Annual Report on Form 10-K and such Index to Exhibits is hereby incorporated herein by reference.

Item 16. Form 10-K Summary

None.

SIGNATURES

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



ROYAL CARIBBEAN CRUISES LTD. (Registrant)
By:			/s/ JASON T. LIBERTY
			Jason T. Liberty Executive Vice President, Chief Financial Officer (Principal Financial Officer and duly authorized signatory)

February ~~23, 2017~~25, 2020

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on February ~~23, 2017.~~

25, 2020.



/s/ RICHARD D. FAIN
Richard D. Fain Director, Chairman and Chief Executive Officer (Principal Executive Officer)

/s/ JASON T. LIBERTY
Jason T. Liberty Executive Vice President, Chief Financial Officer (Principal Financial Officer)

/s/ HENRY L. PUJOL
Henry L. Pujol Senior Vice President, Chief Accounting Officer (Principal Accounting Officer)

*
John F. Brock Director

*
Stephen R. Howe Jr. Director

*
William L. Kimsey Director

*
Maritza G. Montiel Director

*
Ann S. Moore Director

*
Eyal M. Ofer Director

*
Thomas J. Pritzker Director

*
William K. Reilly Director

*
~~Bernt Reitan~~ ~~Director~~

*
Vagn O. Sørensen Director

*
Donald Thompson Director

*
Arne Alexander Wilhelmsen Director



*By:	~~/s/ JASON T. LIBERTY~~
	~~Jason T. Liberty,~~ ~~as Attorney-in-Fact~~

~~INDEX TO EXHIBITS~~

~~Exhibits 10.15 through 10.43 represent management compensatory plans or arrangements.~~

Incorporated By Reference
Exhibit Number Exhibit Description Form Exhibit Filing Date/ Period End Date
3.1 Restated Articles of Incorporation of the Company, as amended (composite) S-3 3.1 3/23/2009
3.2 Amended and Restated By-Laws of the Company 8-K 3.1 9/11/2013
4.1 Indenture dated as of July 15, 1994, by and between the Company, as issuer, and The Bank of New York Trust Company, N.A., successor to NationsBank of Georgia, National Association, as Trustee 20-F 2.4 12/31/1994
4.2 Sixth Supplemental Indenture dated as of October 14, 1997, to the Indenture, dated as of July 15, 1994, by and between the Company, as issuer, and The Bank of New York Trust Company, N.A., as Trustee 20-F 2.11 12/31/1997
4.3 Eighth Supplemental Indenture dated as of March 16, 1998, to the Indenture, dated as of July 15, 1994, by and between the Company, as issuer, and The Bank of New York Trust Company, N.A., as Trustee 20-F 2.13 12/31/1997
4.4 Form of Indenture, dated as of July 31, 2006, by and between the Company, as issuer, and The Bank of New York Trust Company, N.A., as Trustee S-3 4.1 7/31/2006
4.5 Second Supplemental Indenture dated as of November 7, 2012 between the Company, as issuer, and The Bank of New York Mellon Trust Company, N.A., as Trustee 8-K 4.1 11/7/2012
10.1 Amended and Restated Registration Rights Agreement dated as of July 30, 1997, by and among the Company, A. Wilhelmsen AS., Cruise Associates, Monument Capital Corporation, Archinav Holdings, Ltd. and Overseas Cruiseship, Inc. 20-F 2.20 12/31/1997
10.2 Amendment to the Amended and Restated Credit Agreement, dated as of June 15, 2015, by and among the Company, The Bank of Nova Scotia, as administrative agent for the lender parties and the lender parties 8-K 10.1 6/19/2015
10.3 Assignment and Amendment to the Credit Agreement, dated as of August 23, 2013, by and among the Company, Nordea Bank Finland plc, New York Branch, as administrative agent for the lender parties and the lender parties 8-K 10.1 8/26/2013
10.4 Amendment No. 1 to the Amended and Restated Credit Agreement, dated as of July 10, 2015, by and among the Company Nordea Bank Finland Plc, New York Branch, as administrative agent for the lender parties and the lender parties 10-Q 10.2 6/30/2015
10.5 Amendment No. 4 to Hull No. S-697 Credit Agreement, dated as of February 2, 2016, by and between the Company, the Lenders from time to time party thereto, the Mandated Lead Arrangers and KfW-IPEX-Bank GmbH, as Hermes Agent and Facility Agent 10-K 10.7 12/31/2015
10.6 Amendment No. 4 to Hull No. S-698 Credit Agreement, dated as of February 3, 2016, by and between the Company, the Lenders from time to time party thereto, the Mandated Lead Arrangers and KfW-IPEX-Bank GmbH, as Hermes Agent and Facility Agent 10-K 10.8 12/31/2015
10.7 Amendment No. 1 to Hull No. S-699 Credit Agreement, dated as of March 31, 2016, by and between the Company, the Lenders from time to time party thereto, the Mandated Lead Arrangers and KfW-IPEX-Bank GmbH, as Hermes Agent and Facility Agent 10-Q 10.1 3/31/2016
10.8 Amendment and Restatement Agreement, dated as of January 15, 2016, in respect of a Facility Agreement dated, as of July 9, 2013, by and between the Company, the Lenders from time to time party thereto, Société Générale, as Facility Agent and Mandated Lead Arranger, BNP Paribas, as Documentation Bank and Mandated Lead Arranger, and HSBC France, as Mandated Lead Arranger 10-K 10.10 12/31/2015
10.9 Novation Agreement, dated as of January 30, 2015, by and between Frosaitomi Finance Ltd. the Company, Citibank International Limited, Citicorp Trustee Company Limited, Citibank N.A., London Branch and the banks and financial institutions as a lender parties thereto 8-K 10.1 2/5/2015

Incorporated By Reference
Exhibit Number Exhibit Description Form Exhibit Filing Date/ Period End Date
10.10 Form of Hull No. B34 Novated Credit Agreement (as amended and restated on February 8, 2017)*

10.11 Hull No. S-700 Credit Agreement, dated as of November 13, 2015, by and among the Company, the Lenders from time to time party thereto and KfW IPEX-Bank GmbH, as Hermes Agent, Facility Agent and Initial Mandated Lead Arranger. 8-K 10.1 11/19/2015
10.12 Hull No. S-713 Credit Agreement, dated as of November 13, 2015, by and among the Company, the Lenders from time to time party thereto and KfW IPEX-Bank GmbH, as Hermes Agent, Facility Agent and Initial Mandated Lead Arranger. 8-K 10.2 11/19/2015
10.13 Novation Agreement, dated as of June 22, 2016, by and between Saintiami Finance Ltd., Royal Caribbean Cruises Ltd., Citibank Europe Plc, UK Branch, Citicorp Trustee Company Limited, Citibank N.A., London Branch, HSBC France, Sumitomo Mitsui Banking Corporation Europe Limited, Paris Branch and the banks and financial institutions as lender parties thereto
8-K 10.1 6/28/2016
10.14 Novation Agreement, dated as of June 22, 2016, by and between Azairemia Finance Ltd., Royal Caribbean Cruises Ltd., Citibank Europe Plc, UK Branch, Citicorp Trustee Company Limited, Citibank N.A., London Branch, HSBC France, Sumitomo Mitsui Banking Corporation Europe Limited, Paris Branch and the banks and financial institutions as lender parties thereto
8-K 10.2 6/28/2016
10.15 Royal Caribbean Cruises Ltd. 2000 Stock Award Plan 8-K 10.1 12/8/2005
10.16 Amendment No. 1 to 2000 Stock Award Plan 8-K 10.1 9/22/2006
10.17 Royal Caribbean Cruises Ltd. 2008 Equity Incentive Plan (as amended)*
10.18 Form of 2008 Equity Incentive Plan Stock Option Award Agreement—Incentive Options 10-Q 10.3 9/30/2008
10.19 Form of 2008 Equity Incentive Plan Stock Option Award Agreement—Nonqualified Options 10-Q 10.4 9/30/2008
10.20 Form of 2008 Equity Incentive Plan Restricted Stock Unit Agreement - Executive Officer Grants 10-K 10.2 12/31/2013
10.22 Form of 2008 Equity Incentive Plan Restricted Stock Unit Agreement—Director Grants 10-K 10.31 12/31/2010
10.23 Form of 2008 Equity Incentive Plan Performance Shares Agreement 10-K 10.27 12/31/2014
10.24 Form of 2008 Equity Incentive Plan Performance-Based Restricted Shares Agreement 10-K 10.26 12/31/2015
10.25 Employment Agreement, dated as of December 31, 2012, by and between the Company and Richard D. Fain 10-K 10.22 12/31/2012
10.26 Employment Agreement, dated as of December 31, 2012, by and between the Company and Adam M. Goldstein 10-K 10.23 12/31/2012
10.27 Employment Agreement, dated as of December 31, 2012, by and between the Company and Harri U. Kulovaara 10-K 10.26 12/31/2012
10.28 Employment Agreement, dated as of May 20, 2013, by and between the Company and Jason T. Liberty 10-Q 10.20 6/30/2013
10.29 Employment Agreement, dated as of July 16, 2015, by and between the Company and Michael W. Bayley 10-Q 10.3 6/30/2015
10.30 Form of First Amendment to Employment Agreement, dated as of February 6, 2015 (entered into between the Company and each of Messrs. Fain, Goldstein, Kulovaara and Liberty) 10-K 10.3 12/31/2014
10.31 Employment Agreement dated as of August 3, 2015, by and between Celebrity Cruises Inc. and Lisa Lutoff-Perlo*

Incorporated By Reference
Exhibit Number Exhibit Description Form Exhibit Filing Date/ Period End Date
10.32 Royal Caribbean Cruises Ltd. Executive Short-Term Bonus Plan 10-Q 10.4 6/30/2015
10.33 Royal Caribbean Cruises Ltd. et. al. Non Qualified 401(k) Plan 8-K 10.2 12/8/2005
10.34 Amendment to Royal Caribbean Cruises Ltd. et. al. Non Qualified 401(k) Plan 10-K 10.29 12/31/2006
10.35 Amendment to Royal Caribbean Cruises Ltd. et. al. Non Qualified 401(k) Plan 10-K 10.28 12/31/2007
10.36 Amendment to Royal Caribbean Cruises Ltd. et. al. Non Qualified 401(k) Plan 10-K 10.36 12/31/2008
10.37 Royal Caribbean Cruises Ltd. Supplemental Executive Retirement Plan 8-K 10.3 12/8/2005
10.38 Amendment to Royal Caribbean Cruises Ltd. Supplemental Executive Retirement Plan 10-K 10.31 12/31/2006
10.39 Amendment to Royal Caribbean Cruises Ltd. Supplemental Executive Retirement Plan 10-K 10.31 12/31/2007
10.40 Amendment to Royal Caribbean Cruises Ltd. Supplemental Executive Retirement Plan 10-Q 10.1 9/30/2008
10.41 Amendment to Royal Caribbean Cruises Ltd. Supplemental Executive Retirement Plan 10-K 10.38 12/31/2008
10.42 Summary of Royal Caribbean Cruises Ltd. Board of Directors Compensation*
10.43 Cruise Policy for Members of the Board of Directors of the Company 10-K 10.35 12/31/2013
12.1 Statement regarding computation of fixed charge coverage ratio*
18.1
Preferability Letter Regarding Change in Accounting Principle*

21.1 List of Subsidiaries*
23.1 Consent of PricewaterhouseCoopers LLP, an independent registered certified public accounting firm*
23.2 Consent of Drinker Biddle & Reath LLP*
24.1 Power of Attorney*
31.1 Certification of Richard D. Fain required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934*
31.2 Certification of Jason T. Liberty required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934*
32.1 Certification of Richard D. Fain and Jason T. Liberty pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code**


*	~~Filed herewith~~


**	~~Furnished herewith~~

~~Interactive Data File~~



~~101~~*By:			—The following financial statements from Royal Caribbean Cruises Ltd.'s Annual Report on Form 10-K for the year ended December 31, 2016, as filed with the SEC on February 23, 2017, formatted in XBRL, as follows:/s/ JASON T. LIBERTY
			~~(i)~~	~~the Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2016, 2015 and 2014;~~
	~~(ii)~~	~~the Consolidated Balance Sheets at December 31, 2016 and 2015;~~
	~~(iii)~~	~~the Consolidated Statements of Cash Flows for the years ended December 31, 2016, 2015 and 2014;~~
	~~(iv)~~	~~the Consolidated Statements of Shareholders' Equity for the years ended December 31, 2016, 2015 and 2014; and~~
	~~(v)~~	~~the Notes to the Consolidated Financial Statements, tagged in summary and detail.~~ Jason T. Liberty, as Attorney-in-Fact

Table of C ontents

ROYAL CARIBBEAN CRUISES LTD.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



	Page
Report of Independent Registered ~~Certified~~ Public Accounting Firm		~~F-2~~F-2
Consolidated Statements of Comprehensive Income (Loss)		~~F-3~~F-5
Consolidated Balance Sheets		~~F-4~~F-6
Consolidated Statements of Cash Flows		~~F-5~~F-7
Consolidated Statements of Shareholders' Equity		~~F-7~~F-9
Notes to the Consolidated Financial Statements		~~F-8~~F-10

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Table of C ontents

Report of Independent Registered ~~Certified~~ Public Accounting Firm

To the Board of Directors and Shareholders

of Royal Caribbean Cruises Ltd.

Opinions on the Financial Statements and Internal Control over Financial Reporting

~~In our opinion,~~We have audited the accompanying consolidated balance sheets of Royal Caribbean Cruises Ltd. and its subsidiaries (the “Company”) as of December 31, 2019 and 2018, and the related consolidated statements of comprehensive income (loss), of ~~shareholders’~~shareholders' equity and of cash flows present fairly, in all material respects, the financial position of Royal Caribbean Cruises Ltd. and its subsidiaries at December 31, 2016 and 2015, and the results of their operations and their cash flows for each of the three years in the period ended December 31, ~~2016~~2019, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2016,~~2019, based on criteria established in Internal Control - Integrated Framework(2013)issued by the ~~Committee~~COSO.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of ~~Sponsoring Organizations~~accounting for leases as of January 1, 2019 due to the ~~Treadway Commission (COSO).~~ adoption of Accounting Standard Codification (“ASC”) 842, Leases (“ASC 842”), which was adopted using the modified retrospective approach.

Basis for Opinions

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

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

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

~~As discussed in Notes 1~~Definition and ~~2 to the consolidated financial statements, the Company changed the manner in which it accounts for the consolidation~~Limitations of ~~Pullmantur Holdings and the manner in which it classifies debt issuance costs in 2016.~~

Internal Control over Financial Reporting

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

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Table of C ontents

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

Critical Audit Matters

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

Ship Accounting

As described in Notes 2 and 7 to the consolidated financial statements, the Company had vessels with a net book value of approximately $22.7 billion recorded in its financial statements as of December 31, 2019, with capitalized ship improvement costs of approximately $538 million for the year then ended. Ship improvement costs that add value are capitalized, the useful life of the improvement is estimated, and the replaced asset is disposed of on a net cost basis. Any such improvements are depreciated over the shorter of the improvement’s estimated useful lives or that of the associated ship. Accounting estimates related to ship accounting and determinations of ship improvements costs to be capitalized require considerable judgment and are inherently uncertain.Vessels are stated at cost less accumulated depreciation and amortization and depreciation is calculated using the straight-line method over the estimated useful life of the vessels. Management considers the costs and estimates of the useful lives of the ships’ component assets, which are categorized into major component systems, such as the hull, superstructure, main electric, engines and cabins, to determine the estimated weighted-average useful life of a vessel. An assessment of cost allocation methodology is performed at the component level, in order to support the estimated weighted-average useful life and residual values, as well as determine the net cost basis of assets being replaced. Management reviews estimated useful lives and residual values periodically for ongoing reasonableness, and where a trigger for change is identified, a review of the estimate is completed. In the fourth quarter of 2019, the Company invested approximately $170 million of upgrades to its Oasis of the Seas ship under their ship upgrade program. Based on the expected impact of these enhancements, as well as planned future investments and upgrades in the balance of the Oasis class of ships, management now estimates that certain ship components and the overall life of the Oasis class of ships will be extended longer than those previously estimated. In determining the change in estimated useful life and residual value, management utilized quantitative and qualitative analysis, including historical and projected usage patterns, industry benchmarks, planned maintenance programs and projected operational and financial performance of the class.

The principal considerations for our determination that performing procedures relating to ship accounting is a critical audit matter are the significant judgments by management when determining (i) whether ship improvement costs add value to the Company’s ships and are capitalizable; (ii) the related useful life assigned to these ship improvement costs; (iii) the estimated net cost basis of the associated assets being replaced; and (iv) whether changes to estimated weighted-average useful lives and residual values are necessary. This in turn led to significant auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence relating to capitalized ship improvement costs; the estimated useful lives of ship improvement costs; the estimated net cost basis of assets replaced; and management's assessment of the weight-average useful lives and residual values for the Oasis-class ships. In addition, the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of management’s controls relating to ship improvement costs, including the assessment of the capitalization of ship improvement costs, the estimated useful lives and net cost basis of the assets being replaced and management’s reassessment of the estimated useful lives and residual values for the Oasis class ships during 2019. These procedures also included, among others, for a sample of ship improvement costs, (i) evaluating whether the costs capitalized add value to a ship; (ii) evaluating the reasonableness of the assigned estimated useful lives; and (iii) evaluating the reasonableness of the estimated net cost basis of the assets being replaced. Further, for management’s reassessment of estimated useful life and residual value of the Oasis class of ships, our procedures included (i) evaluating the reasonableness of the 35 year useful life and 10% residual value assigned to the Oasis class ships, considering management’s historical experience with similarly built ships, as well as consideration of anticipated technology and market changes (ii) evaluating the reasonableness of the changes in the estimated useful lives and residual values at the component asset level, (iii) evaluating the feasibility of management’s intended use of the Oasis class of ships, considering 1) historical and projected use patterns 2) consistency of planned refurbishments and maintenance with current program 3) consistency of projected forecasts with past performance and 4) consistency with industry external data. Professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of the estimated useful lives of the assets being replaced and the estimated useful life and residual value of the Oasis class of ships.

F-3

Table of C ontents

/s/ PricewaterhouseCoopers LLP

~~PricewaterhouseCoopers LLP~~Miami, FL

~~Miami, Florida~~February 25, 2020

~~February 23, 2017~~We have served as the Company’s auditor since at least 1989, which includes periods before the Company became subject to SEC reporting requirements. We have not been able to determine the specific year we began serving as auditor of the Company.

F-4

Table of C ontents

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)


	Year Ended December 31,
	2019		2018		2017
	(in thousands, except per share data)
Passenger ticket revenues	$	7,857,057	$	6,792,716	$	6,313,170
Onboard and other revenues	3,093,604		2,701,133		2,464,675
Total revenues	10,950,661		9,493,849		8,777,845
Cruise operating expenses:
Commissions, transportation and other	1,656,297		1,433,739		1,363,170
Onboard and other	639,782		537,355		495,552
Payroll and related	1,079,121		924,985		852,990
Food	583,905		520,909		492,857
Fuel	697,962		710,617		681,118
Other operating	1,405,698		1,134,602		1,010,892
Total cruise operating expenses	6,062,765		5,262,207		4,896,579
Marketing, selling and administrative expenses	1,559,253		1,303,144		1,186,016
Depreciation and amortization expenses	1,245,942		1,033,697		951,194



Operating Income	2,082,701		1,894,801		1,744,056
Other income (expense):
Interest income	26,945		32,800		30,101
Interest expense, net of interest capitalized	(408,513)		(333,672)		(299,982)
Equity investment income	230,980		210,756		156,247

Other (expense) income	(24,513)		11,107		(5,289)
	(175,101)		(79,009)		(118,923)
Net Income	1,907,600		1,815,792		1,625,133
Less: Net Income attributable to noncontrolling interest	28,713		4,750		—
Net Income attributable to Royal Caribbean Cruises Ltd.	$	1,878,887	$	1,811,042	$	1,625,133
Earnings per Share:
Basic	$	8.97	$	8.60	$	7.57

Diluted	$	8.95	$	8.56	$	7.53
Comprehensive Income (Loss)
Net Income	$	1,907,600	$	1,815,792	$	1,625,133
Other comprehensive (loss) income:
Foreign currency translation adjustments	869		(14,251)		17,307
Change in defined benefit plans	(19,535)		7,643		(5,583)
(Loss) gain on cash flow derivative hedges	(151,313)		(286,861)		570,495
Total other comprehensive (loss) income	(169,979)		(293,469)		582,219
Comprehensive Income	$	1,737,621	$	1,522,323	$	2,207,352
Less: Comprehensive Income attributable to noncontrolling interest	28,713		4,750		—
Comprehensive Income attributable to Royal Caribbean Cruises Ltd.	$	1,708,908	$	1,517,573	$	2,207,352

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

Year Ended December 31,
2016 2015 2014
(in thousands, except per share data)
Passenger ticket revenues $ 6,149,323
$ 6,058,821
$ 5,893,847
Onboard and other revenues 2,347,078
2,240,253
2,180,008
Total revenues 8,496,401
8,299,074
8,073,855
Cruise operating expenses:
Commissions, transportation and other 1,349,677
1,400,778
1,372,785
Onboard and other 493,558
553,104
582,750
Payroll and related 882,891
861,775
847,641
Food 485,673
480,009
478,130
Fuel 713,676
795,801
947,391
Other operating 1,090,064
1,007,926
1,077,584
Total cruise operating expenses 5,015,539
5,099,393
5,306,281
Marketing, selling and administrative expenses 1,100,290
1,086,504
1,048,952
Depreciation and amortization expenses 894,915
827,008
772,445
Impairment of Pullmantur related assets —
411,267
—
Restructuring charges 8,452
—
4,318
7,019,196
7,424,172
7,131,996
Operating Income 1,477,205
874,902
941,859
Other income (expense):
Interest income 20,856
12,025
10,344
Interest expense, net of interest capitalized (307,370 ) (277,725 ) (258,299 )
Equity investment income 128,350
81,026
51,640
Other (expense) income⁽¹⁾
(35,653 ) (24,445 ) 18,602
(193,817 ) (209,119 ) (177,713 )
Net Income $ 1,283,388
$ 665,783
$ 764,146
Basic Earnings per Share:
Net income $ 5.96
$ 3.03
$ 3.45
Diluted Earnings per Share:
Net income $ 5.93
$ 3.02
$ 3.43
Comprehensive Income (Loss)
Net Income $ 1,283,388
$ 665,783
$ 764,146
Other comprehensive income (loss):
Foreign currency translation adjustments 2,362
(30,152 ) (26,102 )
Change in defined benefit plans (1,636 ) 4,760
(7,213 )
Gain (loss) on cash flow derivative hedges 411,223
(406,047 ) (869,350 )
Total other comprehensive income (loss) 411,949
(431,439 ) (902,665 )
Comprehensive Income (Loss) $ 1,695,337
$ 234,344
$ (138,519 )
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Table of C ontents


~~(1)~~	Including a $21.7 million loss related to the 2016 elimination of the Pullmantur reporting lag, a net deferred tax benefit of $12.0 million related to the 2015 Pullmantur impairment and a deferred tax benefit of $33.5 million related to the 2014 reversal of a valuation allowance.

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED BALANCE SHEETS


	As of December 31,
	2019		2018
	(in thousands, except share data)
Assets
Current assets
Cash and cash equivalents	$	243,738	$	287,852
Trade and other receivables, net	305,821		324,507
Inventories	162,107		153,573
Prepaid expenses and other assets	429,211		456,547
Derivative financial instruments	21,751		19,565
Total current assets	1,162,628		1,242,044
Property and equipment, net	25,466,808		23,466,163
Operating lease right-of-use assets	687,555		—
Goodwill	1,385,644		1,378,353
Other assets	1,617,649		1,611,710
Total assets	$	30,320,284	$	27,698,270
Liabilities, redeemable noncontrolling interest and shareholders' equity
Current liabilities
Current portion of long-term debt	$	1,186,586	$	1,646,841
Commercial paper	1,434,180		775,488
Current portion of operating lease liabilities	96,976		—
Accounts payable	563,706		488,212
Accrued interest	70,090		74,550
Accrued expenses and other liabilities	1,078,345		899,761
Derivative financial instruments	94,875		78,476
Customer deposits	3,428,138		3,148,837
Total current liabilities	7,952,896		7,112,165
Long-term debt	8,414,110		8,355,370
Long-term operating lease liabilities	601,641		—
Other long-term liabilities	617,810		583,254
Total liabilities	17,586,457		16,050,789
Commitments and contingencies (Note 19)
Redeemable noncontrolling interest	569,981		542,020
Shareholders' equity
Preferred stock ($0.01 par value; 20,000,000 shares authorized; 0ne outstanding)	—		—
Common stock ($0.01 par value; 500,000,000 shares authorized; 236,547,842 and 235,847,683 shares issued, December 31, 2019 and December 31, 2018, respectively)	2,365		2,358
Paid-in capital	3,493,959		3,420,900
Retained earnings	11,523,326		10,263,282
Accumulated other comprehensive loss	(797,713)		(627,734)
Treasury stock (27,746,848 and 26,830,765 common shares at cost, December 31, 2019 and December 31, 2018, respectively)	(2,058,091)		(1,953,345)
Total shareholders' equity	12,163,846		11,105,461
Total liabilities, redeemable noncontrolling interest and shareholders’ equity	$	30,320,284	$	27,698,270

As of December 31,
2016 2015
(in thousands, except share data)
Assets
Current assets
Cash and cash equivalents $ 132,603
$ 121,565
Trade and other receivables, net 291,899
238,972
Inventories 114,087
121,332
Prepaid expenses and other assets 209,716
220,579
Derivative financial instruments —
134,574
Total current assets 748,305
837,022
Property and equipment, net 20,161,427
18,777,778
Goodwill 288,386
286,764
Other assets 1,112,206
880,479
$ 22,310,324
$ 20,782,043
Liabilities and Shareholders' Equity
Current liabilities
Current portion of long-term debt $ 1,285,735
$ 899,542
Accounts payable 305,313
302,072
Accrued interest 46,166
38,325
Accrued expenses and other liabilities 692,322
658,601
Derivative financial instruments 146,592
651,866
Customer deposits 1,965,473
1,742,286
Total current liabilities 4,441,601
4,292,692
Long-term debt 8,101,701
7,627,701
Other long-term liabilities 645,610
798,611
Commitments and contingencies (Note 15)

Shareholders' equity
Preferred stock ($0.01 par value; 20,000,000 shares authorized; none outstanding) —
—
Common stock ($0.01 par value; 500,000,000 shares authorized; 234,613,486 and 233,905,166 shares issued, December 31, 2016 and December 31, 2015, respectively) 2,346
2,339
Paid-in capital 3,328,517
3,297,619
Retained earnings 7,860,341
6,944,862
Accumulated other comprehensive loss (916,484 ) (1,328,433 )
Treasury stock (20,019,237 and 15,911,971 common shares at cost, December 31, 2016 and December 31, 2015, respectively) (1,153,308 ) (853,348 )
Total shareholders' equity 9,121,412
8,063,039
$ 22,310,324
$ 20,782,043

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

F-6

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Year Ended December 31,
	2019		2018		2017
	(in thousands)
Operating Activities
Net Income	$	1,907,600	$	1,815,792	$	1,625,133
Adjustments:
Depreciation and amortization	1,245,942		1,033,697		951,194
Impairment losses	—		33,651		—

Net deferred income tax expense (benefit)	7,745		(2,679)		1,730
(Gain) loss on derivative instruments not designated as hedges	(1,431)		61,148		(61,704)
Share-based compensation expense	75,930		46,061		69,459
Equity investment income	(230,980)		(210,756)		(156,247)
Amortization of debt issuance costs	31,991		41,978		45,943
Amortization of commercial paper notes discount	31,263		10,652		—
Loss on extinguishment of debt	6,326		—		—
Change in fair value of contingent consideration	18,400		—		—
Gain on sale of property and equipment	—		—		(30,902)
Gain on sale of unconsolidated affiliate	—		(13,680)		—
Recognition of deferred gain	—		(21,794)		—
Changes in operating assets and liabilities:
Increase in trade and other receivables, net	(9,898)		(9,573)		(32,043)
(Increase) decrease in inventories	(8,533)		(23,849)		2,424
Decrease (increase) in prepaid expenses and other assets	15,669		(71,770)		20,859
Increase in accounts payable	75,281		91,737		36,780
(Decrease) increase in accrued interest	(4,460)		18,773		1,303
Increase in accrued expenses and other liabilities	96,490		42,937		34,215
Increase in customer deposits	280,139		385,990		274,705

Dividends received from unconsolidated affiliates	150,177		243,101		109,677
Other, net	28,715		7,723		(17,960)
Net cash provided by operating activities	3,716,366		3,479,139		2,874,566
Investing Activities
Purchases of property and equipment	(3,024,663)		(3,660,028)		(564,138)

Cash received on settlement of derivative financial instruments	7,621		76,529		63,224
Cash paid on settlement of derivative financial instruments	(68,836)		(98,074)		—
Investments in and loans to unconsolidated affiliates	(25,569)		(27,172)		(10,396)
Cash received on loans to unconsolidated affiliates	32,870		124,238		62,303
Proceeds from the sale of property and equipment	—		—		230,000
Proceeds from the sale of unconsolidated affiliate	—		13,215		—

Acquisition of Silversea Cruises, net of cash acquired	—		(916,135)		—
Other, net	(12,829)		(1,731)		5,415
Net cash used in investing activities	(3,091,406)		(4,489,158)		(213,592)
Financing Activities
Debt proceeds	3,525,564		8,590,740		5,866,966

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

F-7

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

Year Ended December 31,
2016 2015 2014
(in thousands)
Operating Activities
Net income $ 1,283,388
$ 665,783
$ 764,146
Adjustments:
Depreciation and amortization 894,915
827,008
772,445
Impairment of Pullmantur related assets —
411,267
—
Net deferred income tax expense (benefit) 2,608
(10,001 ) (41,003 )
Share-based compensation expense 32,659
36,073
26,116
Equity investment income (128,350 ) (81,026 ) (51,640 )
Amortization of debt issuance costs 52,795
52,153
54,993
Loss on sale of property and equipment —
—
17,401
Loss on derivative instruments not designated as hedges 45,670
59,162
48,637
Changes in operating assets and liabilities:
Decrease in trade and other receivables, net 4,759
63,102
100,095
(Increase) decrease in inventories (1,679 ) 1,197
26,254
Decrease (increase) in prepaid expenses and other assets 11,519
(2,262 ) 21,234
Increase (decrease) in accounts payable 29,564
(25,278 ) (40,651 )
Increase (decrease) in accrued interest 7,841
(10,749 ) (53,951 )
Increase in accrued expenses and other liabilities 20,718
33,859
62,019
Increase (decrease) in customer deposits 188,632
(92,849 ) 14,885
Dividends received from unconsolidated affiliates 75,942
33,338
5,814
Other, net (4,291 ) (14,411 ) 16,965
Net cash provided by operating activities 2,516,690
1,946,366
1,743,759
Investing Activities
Purchases of property and equipment (2,494,363 ) (1,613,340 ) (1,811,398 )
Cash paid on settlement of derivative financial instruments (213,202 ) (178,597 ) (68,098 )
Investments in and loans to unconsolidated affiliates (9,155 ) (56,163 ) (188,595 )
Cash received on loans to unconsolidated affiliates 38,213
124,253
76,167
Proceeds from sale of property and equipment —
—
220,000
Other, net ⁽¹⁾
(46,385 ) (19,128 ) 1,546
Net cash used in investing activities (2,724,892 ) (1,742,975 ) (1,770,378 )
Financing Activities
Debt proceeds 7,338,560
4,399,501
4,153,958
Debt issuance costs (88,241 ) (68,020 ) (72,974 )
Repayments of debt (6,365,570 ) (4,118,553 ) (3,724,218 )
Purchase of treasury stock (299,960 ) (200,000 ) (236,074 )
Dividends paid (346,487 ) (280,212 ) (198,952 )
Proceeds from exercise of common stock options 2,258
11,252
70,879
Cash received on settlement of derivative financial instruments —
—
22,835
Other, net 3,249
2,520
2,026
Net cash provided by (used in) financing activities 243,809
(253,512 ) 17,480
Effect of exchange rate changes on cash (24,569 ) (17,555 ) (6,307 )


	Year Ended December 31,
	2019		2018		2017
Debt issuance costs	(50,348)		(81,959)		(51,590)
Repayments of debt	(4,060,244)		(6,963,511)		(7,835,087)
Proceeds from issuance of commercial paper notes	26,240,540		4,730,286		—
Repayments of commercial paper notes	(25,613,111)		(3,965,450)		—
Purchase of treasury stock	(99,582)		(575,039)		(224,998)
Dividends paid	(602,674)		(527,494)		(437,455)
Proceeds from exercise of common stock options	1,742		4,264		2,525

Other, net	(12,258)		(13,764)		3,843
Net cash (used in) provided by financing activities	(670,371)		1,198,073		(2,675,796)
Effect of exchange rate changes on cash	1,297		(20,314)		2,331
Net (decrease) increase in cash and cash equivalents	(44,114)		167,740		(12,491)
Cash and cash equivalents at beginning of year	287,852		120,112		132,603
Cash and cash equivalents at end of year	$	243,738	$	287,852	$	120,112
Supplemental Disclosures
Cash paid during the year for:
Interest, net of amount capitalized	$	246,312	$	252,466	$	249,615

Non-Cash Investing Activities
Contingent consideration for the acquisition of Silversea Cruises	—		44,000		—
Purchases of property and equipment included in accounts payable and accrued expenses and other liabilities	86,155		—		139,644
Notes receivable issued upon sale of property and equipment	—		—		20,409

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

F-8

Net increase (decrease) in cash and cash equivalents 11,038
(67,676 ) (15,446 )
Cash and cash equivalents at beginning of year 121,565
189,241
204,687
Cash and cash equivalents at end of year $ 132,603
$ 121,565
$ 189,241
Supplemental Disclosures
Cash paid during the year for:
Interest, net of amount capitalized $ 256,775
$ 248,611
$ 276,933

Non-Cash Investing Activities
Notes receivable issued upon sale of property and equipment $ 213,042
$ —
$ —

⁽¹⁾~~Amount includes $26.0 million in 2016 related to cash included in the divestiture~~Table of ~~Pullmantur Holdings (formerly known as Royal Caribbean Holdings de España S.L. or RCHE).~~Contents

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY


	Common Stock		Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total Shareholders' Equity
	(in thousands, except per share data)
Balances at January 1, 2017	$	2,346	$	3,328,517	$	7,860,341	$	(916,484)	$	(1,153,308)	$	9,121,412
Activity related to employee stock plans	6		61,600		—		—		—		61,606
Common stock dividends, $2.16 per share	—		—		(463,069)		—		—		(463,069)

Changes related to cash flow derivative hedges	—		—		—		570,495		—		570,495
Change in defined benefit plans	—		—		—		(5,583)		—		(5,583)
Foreign currency translation adjustments	—		—		—		17,307		—		17,307
Purchase of treasury stock	—		—		—		—		(224,998)		(224,998)
Net Income attributable to Royal Caribbean Cruises Ltd.	—		—		1,625,133		—		—		1,625,133
Balances at December 31, 2017	2,352		3,390,117		9,022,405		(334,265)		(1,378,306)		10,702,303
Cumulative effect of accounting changes	—		—		(23,476)		—		—		(23,476)
Activity related to employee stock plans	6		30,783		—		—		—		30,789
Common stock dividends, $2.60 per share	—		—		(546,689)		—		—		(546,689)

Changes related to cash flow derivative hedges	—		—		—		(286,861)		—		(286,861)
Change in defined benefit plans	—		—		—		7,643		—		7,643
Foreign currency translation adjustments	—		—		—		(14,251)		—		(14,251)
Purchases of treasury stock	—		—		—		—		(575,039)		(575,039)
Net Income attributable to Royal Caribbean Cruises Ltd.	—		—		1,811,042		—		—		1,811,042
Balances at December 31, 2018	2,358		3,420,900		10,263,282		(627,734)		(1,953,345)		11,105,461

Activity related to employee stock plans	7		73,059		—		—		(5,164)		67,902
Common stock dividends, $2.96 per share	—		—		(618,843)		—		—		(618,843)

Changes related to cash flow derivative hedges	—		—		—		(151,313)		—		(151,313)
Change in defined benefit plans	—		—		—		(19,535)		—		(19,535)
Foreign currency translation adjustments	—		—		—		869		—		869
Purchases of treasury stock	—		—		—		—		(99,582)		(99,582)

Net Income attributable to Royal Caribbean Cruises Ltd.	—		—		1,878,887		—		—		1,878,887
Balances at December 31, 2019	$	2,365	$	3,493,959	$	11,523,326	$	(797,713)	$	(2,058,091)	$	12,163,846

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

F-9

Table of Contents

Common Stock Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock Total Shareholders' Equity
(in thousands)
Balances at January 1, 2014 $ 2,308
$ 3,159,038
$ 6,054,952
$ 5,671
$ (413,704 ) $ 8,808,265
Issuance under employee related plans 23
94,514
—
—
—
94,537
Common Stock dividends —
—
(243,550 ) —
—
(243,550 )
Dividends declared by non-controlling interest⁽¹⁾
—
—
(300 ) —
—
(300 )
Changes related to cash flow derivative hedges —
—
—
(869,350 ) —
(869,350 )
Change in defined benefit plans —
—
—
(7,213 ) —
(7,213 )
Foreign currency translation adjustments —
—
—
(26,102 ) —
(26,102 )
Purchase of Treasury Stock (236,074 ) (236,074 )
Net income —
—
764,146
—
—
764,146
Balances at December 31, 2014 2,331
3,253,552
6,575,248
(896,994 ) (649,778 ) 8,284,359
Issuance under employee related plans 8
40,497
—
—
—
40,505
Common Stock dividends —
—
(296,169 ) —
—
(296,169 )
Changes related to cash flow derivative hedges —
—
—
(406,047 ) —
(406,047 )
Change in defined benefit plans —
—
—
4,760
—
4,760
Foreign currency translation adjustments —
—
—
(30,152 ) —
(30,152 )
Purchases of Treasury Stock —
3,570
—
—
(203,570 ) (200,000 )
Net income —
—
665,783
—
—
665,783
Balances at December 31, 2015 2,339
3,297,619
6,944,862
(1,328,433 ) (853,348 ) 8,063,039
Issuance under employee related plans 7
30,898
—
—
—
30,905
Common Stock dividends —
—
(367,909 ) —
—
(367,909 )
Changes related to cash flow derivative hedges —
—
—
411,223
—
411,223
Change in defined benefit plans —
—
—
(1,636 ) —
(1,636 )
Foreign currency translation adjustments —
—
—
2,362
—
2,362
Purchases of Treasury Stock —
—
—
—
(299,960 ) (299,960 )
Net income —
—
1,283,388
—
—
1,283,388
Balances at December 31, 2016 $ 2,346
$ 3,328,517
$ 7,860,341
$ (916,484 ) $ (1,153,308 ) $ 9,121,412


~~(1)~~	~~Dividends declared by Falmouth Land Company Limited to its non-controlling shareholder.~~

ROYAL CARIBBEAN CRUISES LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 1.General

Description of Business

We are a global cruise company. We own and operate ~~three~~4 global cruise brands: Royal Caribbean International, Celebrity Cruises, Azamara and ~~Azamara Club Cruises.~~Silversea Cruises (collectively, our "Global Brands"). We also own a 50% joint venture interest in the German brand TUI Cruises and a 49% interest in the Spanish brand Pullmantur ~~and have a minority interest~~(collectively, our "Partner Brands"). We account for our investments in our Partner Brands under the ~~Chinese brand SkySea Cruises.~~equity method of accounting. Together, our Global Brands and our Partner Brands operate a combined 4961 ships as of December 31, ~~2016.~~2019. Our ships operate on a selection of worldwide itineraries that call on ~~approximately 535~~more than 1,000 destinations on all ~~seven~~7 continents.

~~Effective~~On July 31, ~~2016,~~2018, we ~~sold 51% of our interest~~acquired a 66.7% equity stake in ~~Pullmantur Holdings (formerly known as Royal Caribbean Holdings de España S.L. or "RCHE"~~Silversea Cruise Holding Ltd. ("Silversea Cruises"), ~~the parent company of the Pullmantur brand. We retain a 49% interest~~an ultra-luxury and expedition cruise line with 9 ships, from Silversea Cruises Group Ltd. ("SCG") for $1.02 billion in Pullmantur Holdings as well as full ownership of the four vessels currently operated by the Pullmantur brand under bareboat charter arrangements. We account for the bareboat charters of the vessels to Pullmantur Holdings as operating leases. We also provide certain ship management services to Pullmantur Holdings. We recognized an immaterial gain on the sale of our majority interest in Pullmantur Holdings. In addition, we also continue to retain full ownership of the aircraft, which were not impacted by this sale transaction. Effective August 2016, we no longer consolidate Pullmantur Holdings in our consolidated financial statementscash and ~~our investment in the company is accounted for under the equity method of accounting.~~contingent consideration. Refer to Note 6. ~~Other Assets~~3. Business Combination for further information on our retained interest in Pullmantur Holdings. The sale did not represent a strategic shift that will have a major effect on our operations and financial results, as we continue to provide similar itineraries to and source passengers from the ~~markets served by the Pullmantur business. Therefore, the sale of Pullmantur Holdings did not meet the criteria for discontinued operations reporting.~~Silversea Cruises acquisition.

Basis for Preparation of Consolidated Financial Statements

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

All significant intercompany accounts and transactions are eliminated in consolidation. We consolidate entities over which we have control, usually evidenced by a direct ownership interest of greater than 50%, and variable interest entities where we are determined to be the primary beneficiary. Refer to Note 6. 8. Other Assets for further information regarding our variable interest entities. We consolidate the operating results of Silversea Cruises on a three-month reporting lag to allow for more timely preparation of our consolidated financial statements. No material events or other transactions involving Silversea Cruises have occurred from September 30, 2019 through December 31, 2019 that would require further disclosure or adjustment to our consolidated financial statements as of and for the year ended December 31, 2019. For affiliates we do not control but over which we have significant influence on financial and operating policies, usually evidenced by a direct ownership interest from 20% to 50%, the investment is accounted for using the equity method.

~~Prior to January 1, 2016, we consolidated the operating results of Pullmantur Holdings on a~~ ~~two~~-month reporting lag to allow for more timely preparation of our consolidated financial statements. Effective January 1, 2016, we eliminated the two-month reporting lag to reflect Pullmantur Holdings' financial position, results of operations and cash flows concurrently and consistently with the fiscal calendar of the Company ("elimination of the Pullmantur reporting lag"). The elimination of the Pullmantur reporting lag represented a change in accounting principle which we believed to be preferable because it provided more current information to the users of our financial statements. A change in accounting principle requires retrospective application, if material. The impact of the elimination of the reporting lag was immaterial to prior periods and is immaterial for our fiscal year ended December 31, 2016. As a result, we have accounted for this change in accounting principle in our consolidated results for the year ended December 31, 2016. Accordingly, the results of Pullmantur Holdings for November and December 2015 are included in our statement of comprehensive income (loss) for the year ended December 31, 2016. The effect of this change was a decrease to net income of $21.7 million, which has been reported within ~~Other income~~ ~~in our consolidated statements of comprehensive income (loss) for the year ended December 31, 2016.~~

~~F-8~~

~~Table of Contents~~

~~ROYAL CARIBBEAN CRUISES LTD.~~

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

Note 2.Summary of Significant Accounting Policies

Revenues and Expenses

Deposits received on sales of passenger cruises are initially recorded as customer deposit liabilities on our balance sheet. Customer deposits are subsequently recognized as passenger ticket revenues, together with revenues from onboard and other goods and services and all associated cruise operating expenses of a voyage.

Historically, we recognized revenues and cruise operating expenses for our shorter voyages (voyages of ten days or less) upon voyage completion while we recognized revenues and cruise operating expenses for voyages in excess of ten days For further information on ~~a pro-rata basis. We followed this completed voyage~~revenue recognition, ~~approach on our shorter voyages because the difference between prorating revenue from such voyages and recognizing such revenue at the completion of the voyage was immaterial~~refer to our consolidated financial statements. As of September 30, 2014, we changed our methodology and recognized passenger ticket revenues, revenues from onboard and other goods and services and all associated cruise operating expenses for all of our uncompleted voyages on a pro-rata basis. We believe that recognizing revenues and cruise operating expenses on a pro-rata basis for all voyages is preferable as revenues and expenses are recorded in the period in which the revenue generating activities are performed.

~~The effect of this change was an increase to~~ ~~Passenger ticket revenues~~ ~~and~~ ~~Onboard and other revenues, as well as an increase to our~~ ~~Cruise operating expenses~~Note. 4 Revenues. The change was not individually material to our revenues or any of our cruise operating expenses, and resulted in an aggregate increase to operating income and net income of $53.2 million for the year ended December 31, 2014. In addition, the change has not been retrospectively applied to prior periods, as the impact of prorating all voyages was immaterial to the respective periods presented.

~~Revenues and expenses include port costs that vary with guest head counts. The amounts of such port costs charged to our guests and included within~~ ~~Passenger ticket revenues~~ ~~on a gross basis were $570.3 million, $561.1 million and $546.6 million for the years 2016, 2015 and 2014, respectively.~~

Cash and Cash Equivalents

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

Inventories

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

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

F-10

Table of Contents

ROYAL CARIBBEAN CRUISES LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Property and Equipment

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

Depreciation of property and equipment is computed using the straight-line method over the estimated useful life of the asset. The useful lives of our ships are generally 3030-35 years, net of a ~~15%~~10%-15% projected residual value. The ~~30-year~~30-35-year useful life ~~of our newly constructed ships~~ and ~~15% associated~~10%-15% residual value are ~~both~~ based on the weighted-average of all major components of a ship. Our useful life and residual value estimates take into consideration the impact of anticipated technological changes, long-term cruise and vacation market conditions and historical useful lives of similarly-built ships. In addition, we take into consideration our estimates of the weighted-average useful lives of the ships' major component systems, such as hull, superstructure, main electric, engines and cabins. We employ a cost allocation methodology at the component level, in order to support the estimated weighted-average useful lives and residual values, as well as to determine the net cost basis of assets being replaced. Given the very large and complex nature of our ships, our accounting estimates related to ships and determinations of ship improvement costs to be capitalized require considerable judgment and are inherently uncertain. Depreciation for assets under capital leases is computed using the shorter of the lease term or related asset life.

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


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

We periodically review estimated useful lives and residual values for ongoing reasonableness, considering long term views on our intended use of each class of ships and the planned level of improvements to maintain and enhance vessels within those classes. In the event a factor is identified that may trigger a change in the estimated useful lives and residual values of our ships, a review of the estimate is completed. In the fourth quarter of 2019, we completed a modernization of the Oasis of the Seas under our ship upgrade program. We spent $538.0 million under this ship upgrade program for the year ended December 31, 2019, with the Oasis of the Seas representing approximately $170.0 million. As a result of this capital investment and future planned investments in our Oasis-class ships, we performed a review of the estimated useful lives and residual values of Oasis-class ships, concluding in a change to the estimate. Effective fourth quarter of 2019, we revised the estimated useful lives of our Oasis-class ships from 30 years with a 15% residual value to 35 years with a 10% residual value. The change in the estimated useful lives and residual values was accounted for prospectively as a change in accounting estimate. The 35-year useful life with a 10% residual value is based on revised estimates of the weighted-average useful life of all major ship components for the Oasis-class ships. The change in estimate is consistent with our recent investments in and future plans to continue to invest in the upgrade of these ships, resulting in the use of certain ship components longer than originally estimated. In determining the change in estimated useful life and residual value, we utilized quantitative and qualitative analysis, including historical and projected usage patterns, industrybenchmarks, planned maintenance programs and projected operational and financial performance of the class. The change allows us to better match depreciation expense with the periods these assets are expected to be in use. For the year ended

~~F-9~~

F-11

Table of Contents

ROYAL CARIBBEAN CRUISES LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)



	~~Years~~
~~Ships~~	~~generally 30~~
~~Ship improvements~~	~~3-20~~
~~Buildings and improvements~~	~~10-40~~
~~Computer hardware and software~~	~~3-10~~
~~Transportation equipment and other~~	~~3-30~~
~~Leasehold improvements~~	~~Shorter of remaining lease term or useful life 3-30~~

December 31, 2019, this change increased operating income and net income by approximately $4.6 million and increased earnings per share by $0.02 per share on a basic and diluted basis.

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

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

Goodwill

Goodwill represents the excess of cost over the fair value of net tangible and identifiable intangible assets acquired. We review goodwill for impairment at the reporting unit level annually or, when events or circumstances dictate, more frequently. The impairment review for goodwill consists of a qualitative assessment of whether it is more-likely-than-not that a reporting unit's fair value is less than its carrying amount, and if necessary, a two-step goodwill impairment test. Factors to consider when performing the qualitative assessment include general economic conditions, limitations on accessing capital, changes in forecasted operating results, changes in fuel prices and fluctuations in foreign exchange rates. If the qualitative assessment demonstrates that it is more-likely-than-not that the estimated fair value of the reporting unit exceeds its carrying value, it is not necessary to perform the two-step goodwill impairment test. We may elect to bypass the qualitative assessment and proceed directly to step one, for any reporting unit, in any period. On a periodic basis, we elect to bypass the qualitative assessment and proceed to step one to corroborate the results of recent years' qualitative assessments. We can resume the qualitative assessment for any reporting unit in any subsequent period. When performing the two-step goodwill impairment test, the fair value of the reporting unit is determined and compared to the carrying value of the net assets allocated to the reporting unit. If the fair value of the reporting unit exceeds its carrying value, no further analysis or write-down of goodwill is required. If the fair value of the reporting unit is less than the carrying value of its net assets, the implied fair value of the reporting unit is allocated to all its underlying assets and liabilities, including both recognized and unrecognized tangible and intangible assets, based on their fair value. If necessary, goodwill is then written down to its implied fair value.

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~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

Intangible Assets

In connection with our acquisitions, we have acquired certain intangible assets to which value has been assigned based on our estimates. Intangible assets that are deemed to have an indefinite life are not amortized, but are subject to an annual impairment test, or when events or circumstances dictate, more frequently. The impairment review for indefinite-life intangible ~~asset~~assets can be performed using a qualitative or quantitative impairment ~~test~~assessment. The quantitative assessment consists of a comparison of the fair value of the indefinite-life intangible

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asset with its carrying amount. If the carrying amount exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. If the fair value exceeds its carrying amount, the indefinite-life intangible asset is not considered impaired.

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

Contingencies — Litigation

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

Advertising Costs

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

Media advertising was ~~$240.3~~$309.4 million, ~~$242.8~~$255.7 million and ~~$205.2~~$233.5 million, and brochure, production and direct mail costs were ~~$120.8~~$156.0 million, ~~$127.1~~$133.4 million and ~~$136.7~~$126.7 million for the years ~~2016, 2015~~ended December 31, 2019, 2018 and ~~2014,~~2017, respectively.

Derivative Instruments

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

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

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

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On an ongoing basis, we assess whether derivatives used in hedging transactions are "highly effective" in offsetting changes in the fair value or cash flow of hedged items. WeFor our net investment hedges, we use the dollar offset method to measure effectiveness. For all other hedging programs, we use the long-haul method to assess hedge effectiveness using regression analysis for each hedge ~~relationship under our interest rate, foreign currency and fuel hedging programs. We apply the same~~relationship. The methodology for assessing hedge

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effectiveness is applied on a consistent basis for ~~assessing hedge effectiveness to all hedges within~~ each one of our hedging ~~program~~programs (i.e., interest rate, foreign currency ship construction, foreign currency net investment and fuel). ~~We perform~~For our regression analyses, ~~over~~we use an observation period of up to three years, utilizing market data relevant to the hedge horizon of each hedge relationship. High effectiveness is achieved when a statistically valid relationship reflects a high degree of offset and correlation between the changes in the fair values of the derivative instrument and the hedged item. The determination of ineffectiveness is based on the amount of dollar offset between the change in fair value of the derivative instrument and the change in fair value of the hedged item at the end of the reporting period. If it is determined that a derivative is not highly effective as a hedge or hedge accounting is discontinued, any change in fair value of the derivative since the last date at which it was determined to be effective is recognized in earnings. ~~In addition, the ineffective portion of our highly effective hedges is immediately recognized in earnings and reported in~~ ~~Other income (expense)~~ ~~in our consolidated statements of comprehensive income (loss).~~

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

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

Foreign Currency Translations and Transactions

We translate assets and liabilities of our foreign subsidiaries whose functional currency is the local currency, at exchange rates in effect at the balance sheet date. We translate revenues and expenses at weighted-average exchange rates for the period. Equity is translated at historical rates and the resulting foreign currency translation adjustments are included as a component of Accumulated other comprehensive loss, which is reflected as a separate component of Shareholders' equity. Exchange gains or losses arising from the remeasurement of monetary assets and liabilities denominated in a currency other than the functional currency of the entity involved are immediately included in our earnings, except for certain liabilities that have been designated to act as a hedge of a net investment in a foreign operation or investment. Exchange gains (losses) were ~~$39.8~~$0.4 million, ~~$34.6~~$57.6 million and ~~$49.5~~$(75.6) million for the years ~~2016, 2015~~ended December 31, 2019, 2018 and ~~2014,~~2017, respectively, and were recorded within Other income (expense). The majority of our transactions are settled in United States dollars. Gains or losses resulting from transactions denominated in other currencies are recognized in income at each balance sheet date.

Concentrations of Credit Risk

We monitor our credit risk associated with financial and other institutions with which we conduct significant business and, to minimize these risks, we select counterparties with credit risks acceptable to us and we seek to limit our exposure to an individual counterparty. Credit risk, including but not limited to counterparty nonperformance under derivative instruments, our credit facilities and new ship progress payment guarantees, is not considered significant, as we primarily conduct business with large, well-established financial institutions, insurance companies and export credit agencies many of which we have long-term relationships with and which have credit risks acceptable to us or where the credit risk is spread out among a large number of counterparties. As of December 31, ~~2016,~~2019, we ~~did not have any exposure under our derivative instruments. As of December 31, 2015, we~~ had 0 counterparty credit risk exposure under our derivative instruments compared to credit risk exposures of ~~approximately $4.8~~$5.6 million on December 31, 2018, which ~~was~~were limited to the cost of replacing the contracts in the event of non-performance by the counterparties to the contracts, ~~all~~the majority of which are currently our lending banks.

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We do not anticipate nonperformance by any of our significant counterparties. In addition, we have established guidelines we follow regarding credit ratings and instrument maturities to maintain safety and liquidity. We do not normally require collateral or other security to support credit relationships; however, in certain circumstances this option is available to us.

Earnings Per Share

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

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Stock-Based Employee Compensation

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

Segment Reporting

We ~~own~~control and operate ~~three~~4 global cruise ~~brands,~~brands: Royal Caribbean International, Celebrity Cruises, Azamara and ~~Azamara Club~~Silversea Cruises. We also own a 50% joint venture interest ~~with TUI AG which operates~~in the German brand TUI Cruises, a 49% interest in the Spanish brand ~~Pullmantur and have a minority interest in the Chinese brand SkySea Cruises.~~Pullmantur. We believe our brands possess the versatility to enter multiple cruise market segments within the cruise vacation industry. Although each of these brands ~~have~~has its own marketing style as well as ships and crews of various sizes, the nature of the products sold and services delivered by these brands share a common base (i.e., the sale and provision of cruise vacations). Our brands also have similar itineraries as well as similar cost and revenue components. In addition, our brands source passengers from similar markets around the world and operate in similar economic environments with a significant degree of commercial overlap. As a result, our brands have been aggregated as a single reportable segment based on the similarity of their economic characteristics, types of consumers, regulatory environment, maintenance requirements, supporting systems and processes as well as products and services provided. Our Chairman and Chief Executive Officer has been identified as the chief operating decision-maker and all significant operating decisions including the allocation of resources are based upon the analyses of the Company as ~~one~~1 segment.

~~Information~~ Refer to Note 4. Revenues for passenger ticket revenue information by geographic ~~area is shown in the table below. Passenger ticket revenues are attributed to geographic areas based on where the reservation originates.~~area.

2016
2015
2014
Passenger ticket revenues:

United States 55%
55% 53%
All other countries 45%
45% 47%

~~Recent~~Adoption of Accounting Pronouncements

~~Revenue from Contracts with Customers~~Leases

~~In May 2014, amended GAAP~~On January 1, 2019, we adopted the guidance was issued to clarify the principles used to recognize revenue for all entities. The guidance also requires more detailed disclosures and provides additional guidance for transactions that were not comprehensively addressedcodified in ~~the prior accounting guidance. This guidance must be applied~~Accounting Standard Codification ("ASC") 842, Leases ("ASC 842") using one of two retrospective application methods and will be effective for our annual reporting period beginning after December 15, 2017, including interim periods therein. Early adoption is permitted for our annual reporting period beginning after December 15, 2016, including interim periods therein. We are currently evaluating the impact, if any, of the adoption of the revenue recognition guidance to our consolidated financial statements and intend to elect the modified retrospective approach and elected the optional transition method, which allows entities to ~~all contracts on~~initially apply the standard at the adoption date ~~of initial application, January 1, 2018. This will involve applying the guidance retrospectively only to the most current period presented in the financial statements~~ and ~~recognizing the~~

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~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~cumulative effect of initially applying the guidance as an~~recognize a cumulative-effect adjustment to the ~~January 1, 2018~~ opening balance of retained earnings atin the ~~date~~period of ~~initial application.~~ adoption. Upon adoption, we applied the guidance to all existing leases.

~~Leases~~

~~In February 2016, amended GAAP guidance was issued to increase the transparency and comparability of lease accounting among organizations.~~ For leases with a term greater than 12 months, the ~~amendments require~~new guidance requires the lease rights and obligations arising from the leasing arrangements, including operating leases, to be recognized as assets and liabilities on the balance sheet. Upon adoption of the new guidance, the most significant impact was the recognition of right-of-use assets and lease liabilities relating to operating leases in the amounts of $801.8 million and $820.5 million, respectively, reported within Operating lease right-of-use assets and Long-term operating lease liabilities, respectively, with the current portion of the liability reported within Current portion of operating lease liabilities, in our consolidated balance sheet as of January 1, 2019. Accounting for finance leases remained substantially unchanged and continues to be reported within Property and equipment, net and Long-term debt, with the current portion of the debt reported within Current portion of debt, in our consolidated balance sheets. There was no cumulative effect of applying the new standard and accordingly there was no adjustment to our retained earnings upon adoption. The ~~amendments also expand~~comparative information presented has not been recast and continues to be reported under the ~~required disclosures surrounding leasing arrangements.~~accounting standards in effect for those periods. For further information on leases, refer to Note 10. Leases.

This guidance did not have a material impact to our consolidated statements of comprehensive income (loss), consolidated statements of cash flows and our debt-covenants calculations under our current agreements.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326); Measurement of Credit Losses on Financial Instruments. This ASU, along with subsequent ASUs issued to clarify certain of its provisions, introduces new guidance which makes substantive changes to the accounting model for financial assets subject to credit losses that are measured at amortized cost, as well as certain off-balance sheet credit exposures. The ~~guidance must be applied using~~primary updates include the introduction of a ~~retrospective application method~~new current expected credit loss (“CECL”) model that is based on expected rather than

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incurred losses. This ASU and the related amendments will be effective for ~~financial statements issued for fiscal years~~our annual reporting period beginning ~~after December 15, 2018 and interim periods within those years. Early adoption is permitted.~~January 1, 2020. We are currently evaluating the impact ofthat the adoption of this ~~newly issued~~ guidance will have to our consolidated financial statements.

~~Effect~~In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment, which simplifies the subsequent measurement of ~~Derivative Contract Novations~~goodwill by eliminating the second step of the goodwill impairment test. Under the new standard, goodwill impairment should be recognized based on ~~Existing Hedge Accounting Relationships~~

~~In March 2016, amended GAAP guidance was issued addressing~~ the ~~effect~~amount by which the carrying amount of ~~derivative contract novations on existing hedge accounting relationships. The amendments clarify that~~ a ~~change in~~reporting unit exceeds its fair value, but should not exceed the ~~counterparty~~total amount of goodwill allocated to a derivative instrument that has been designated as a hedging instrument does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria continue to be met. The guidance must be applied using a prospective or modified retrospective application method andthe reporting unit. This ASU will be effective for ~~financial statements issued for fiscal years~~our annual reporting period beginning ~~after December 15, 2016 and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The adoption of this newly issued~~January 1, 2020. This guidance is not expected to have a material impact to our consolidated financial ~~statements.~~

~~Classification of Certain Cash Receipts and Cash Payments~~

statements, but may require us to modify our annual or interim goodwill impairment tests.

In August ~~2016, amended GAAP~~2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Topic 350-40), which requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance ~~was issued~~ to clarify how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments are aimed at reducing the existing diversity in practice. The guidance should be applied using a retrospective transition methoddetermine which implementation costs to ~~each period presented and~~capitalize as assets or expense as incurred. This ASU will be effective for our annual ~~periods~~reporting period beginning ~~after December 15, 2017~~January 1, 2020 and ~~interim periods within those annual periods. Early~~we expect to elect the prospective adoption ~~is permitted, including adoption in an interim period.~~method. The ~~adoption~~guidance may impact the accounting treatment of ~~this newly issued guidance is not expected~~our future implementation costs related to ~~have a material impact to our consolidated financial statements.~~

~~Intra-Entity Transfers of Assets Other Than Inventory~~

cloud computing arrangements.

In ~~October 2016, amended GAAP~~January 2020, the FASB issued ASU No. 2020-01, Investments – Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivative and Hedging (Topic 815), which clarifies the interaction of rules for equity securities, the equity method of accounting, and forward contracts and purchase options on certain types of securities. The guidance ~~was issued that requires~~clarifies how to account for the ~~income tax consequences~~transition into and out of ~~an intra-entity transfer~~the equity method of ~~an asset, other than inventory, to be recognized at~~accounting when considering observable transactions under the ~~time that the transfer occurs, rather than when the asset is sold to an outside party.~~measurement alternative. The ~~new guidance~~ASU is effective for annual ~~and interim~~ reporting periods beginning after December 15, ~~2018. Early~~2020, including interim reporting periods within those annual periods, with early adoption is permitted as of the beginning of an annual period for which financial statements have not been issued. The guidance is required to be adopted retrospectively by recording a cumulative-effect adjustment to retained earnings as of the beginning of the adoption period.permitted. We are currently evaluating the impact of the ~~adoption of this newly issued~~new guidance toon our consolidated financial statements.

Reclassifications

~~Interests held~~For the year ended December 31, 2019, we separately presented Amortization of commercial paper notes discount in our consolidated statements of cash flows. As a result, the prior year amortization amount was reclassified within Operating Activities to conform to the current year presentation.

Note 3. Business Combination

On July 31, 2018, we acquired a 66.7% equity stake in Silversea Cruise Holding Ltd. ("Silversea Cruises"), an ultra-luxury and expedition cruise line, from Heritage Cruise Holding Ltd. ("HCH"), previously known as Silversea Cruises Group Ltd. Silversea Cruises enhances our presence in the ultra-luxury and expedition markets and provides us with an opportunity to drive long-term capacity growth in these markets.

The purchase price consisted of $1.02 billion in cash, net of assumed liabilities, and contingent consideration that can range from 0 up to a maximum of approximately 472,000 shares of our common stock, and is payable upon achievement of certain 2019-2020 performance metrics by Silversea Cruises. The fair value of the contingent consideration at the acquisition date was $44.0 million. Changes to the fair value of the contingent consideration are recorded in our results of operations, if any, in the period of the change. Refer to Note 18. Fair Value Measurements and Derivative Instruments for further information on the valuation of the contingent consideration.

To finance a portion of the purchase price, we drew in full on a $700 million unsecured credit agreement and the remainder of the transaction consideration was financed through ~~Related Parties that are~~the use of our revolving credit facilities. Refer to Note 9. Debt for further information on the credit agreement.

We have accounted for this transaction under ~~Common Control~~

~~In October 2016, amended GAAP guidance~~the provisions of ASC 805, Business Combinations. The purchase price for the Silversea Cruises acquisition was ~~issued related~~allocated based on estimates of the fair value of assets acquired and liabilities assumed at the acquisition date, with the excess allocated to ~~Interests held through Related Parties that are under Common Control, which alters how a decision maker needs~~goodwill. Goodwill is not deductible for tax purposes and consisted primarily of the opportunity to ~~consider indirect interests~~expand our cruise operations in a Variable Interest Entity ("VIE") held through an entity under common control. The amended guidance addresses how a single decision maker of a VIE should treat indirect interests that are held through related parties under common control, when determining whether it is the primary beneficiary of that VIE. The amendments in this update are effective for fiscal

strategic growth areas.

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For reporting purposes, we included Silversea Cruises’ results of operations on a three-month reporting lag from October 1, 2018 through September 30, 2019 in our consolidated results of operations for the year ended December 31, 2019 and from the July 31, 2018 date of acquisition through September 30, 2018 in our consolidated results of operations for the year ended December 31, 2018. We have included Silversea Cruises' balance sheets as of September 30, 2019 and 2018 in our consolidated balance sheets as of December 31, 2019 and 2018, respectively. Refer to Note 1. General for further information on this three-month reporting lag.

~~years beginning after~~There were no material measurement period adjustments recorded for the year ended December ~~15, 2016, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. We are currently evaluating~~31, 2019.

The following table summarizes the ~~impact~~purchase price allocation based on estimated fair values of the ~~adoption~~assets acquired and liabilities assumed related to the Silversea Cruises acquisition as of ~~this newly issued guidance~~July 31, 2018. Our purchase price allocation was final during 2019.


(in thousands)	Estimated Fair Value as of Acquisition Date (as Previously Reported)		Measurement Period Adjustments (1)		Estimated Fair Value as of Acquisition Date (as Adjusted)
Assets
Cash and cash equivalents	$	103,865	$	—	$	103,865
Trade and other receivables, net	7,163		—		7,163
Inventories	18,331		—		18,331
Prepaid expenses and other assets(2)	120,496		—		120,496
Derivative financial instruments	2,886		—		2,886
Property and equipment, net(3)	1,114,270		—		1,114,270
Goodwill	1,090,010		(5,224)		1,084,786
Other assets(4)	498,457		—		498,457
Total assets acquired	2,955,478		(5,224)		2,950,254
Liabilities
Current portion of long-term debt(5)	26,851		—		26,851
Accounts payable	36,960		—		36,960
Accrued interest	1,773		—		1,773
Accrued expenses and other liabilities	82,531		(5,224)		77,307
Customer deposits	453,798		—		453,798
Long-term debt(5)	727,935		—		727,935
Other long-term liabilities	23,860		—		23,860
Total liabilities assumed	1,353,708		(5,224)		1,348,484
Redeemable noncontrolling interest(6)	537,770		—		537,770
Total purchase price	$	1,064,000	$	—	$	1,064,000

(1) As a result of additional information obtained about facts and circumstances that existed as of the acquisition date, we recorded measurement period adjustments during 2019, which resulted in a net decrease to Goodwill of $5.2 million.

(2) Amount includes $32.0 million of cash held as collateral with credit card processors as of July 31, 2018.

(3) Property and equipment, net includes 2 ships under capital lease agreements amounting to $156.0 million as of July 31, 2018. The respective capital lease liabilities are reported within Long-term debt. Refer to Note 9. Debt for further information on the capital lease financing arrangements.

(4) Amount includes $494.6 million of intangible assets. Refer to Note 6. Intangible Assets for further information on the intangible assets acquired.

(5) Refer to Note 9. Debt for further information on long-term debt assumed.

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(6) Refer to Note 11. Redeemable Noncontrolling Interest for further information on the redeemable noncontrolling interest recorded.

As of December 31, 2018, intangible assets, net include intangible assets acquired in the Silversea Cruises acquisition, which were recorded at fair value at acquisition date as follows:


	Fair Value at Acquisition Date (in thousands)		Weighted Average Amortization Period (Years)
Silversea Cruises trade name	$	349,500	Indefinite-life
Customer relationships	97,400		15
Galapagos operating license	36,100		16
Other finite-life intangible assets	11,560		2
Total intangible assets	$	494,560

Similar to our other ship-operating and vessel-owning subsidiaries, Silversea Cruises is currently exempt from U.S. corporate tax on U.S. source income from the international operation of ships pursuant to Section 883 of the Internal Revenue Code. Additionally, the deferred tax liability recognized in connection with the acquisition of Silversea Cruises was not material to our consolidated financial ~~statements.~~

~~Reclassifications~~

On January 1, 2016, we adopted Accounting Standards Codification ("ASC") 835, Presentation of Debt Issuance Costs, using the retrospective approach. Due to the adoption of ASC 835, $139.8 million of debt issuance costs have been reclassified in the consolidated balance sheet,statements and there were no net operating losses recognized as of December 31, ~~2015,~~2018.

For the year ended December 31, 2018, Total revenues and Net Income in our consolidated statements of comprehensive income (loss) include $130.1 million and $3.3 million, respectively, of revenues and net income from ~~Other assets~~ ~~to either~~ ~~Current portion~~Silversea Cruises since the date of ~~long-term debt~~ or ~~Long-term debt~~ acquisition through September 30, 2018. For the year ended December 31, 2018, our results of operations also include transaction-related costs of $31.8 million, which were included primarily within Marketing, selling and administrative expenses in ~~order to conform~~our consolidated statements of comprehensive income (loss).

Pro-forma financial results relating to the ~~current year presentation.~~Silversea Cruises acquisition are not presented, as this acquisition was not material to our consolidated results of operations.

Note 4. Revenues

Revenue Recognition

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

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

Passenger ticket revenues include charges to our guests for port costs that vary with passenger head counts. These type of port costs, along with port costs that do not vary by passenger head counts, are included in our operating expenses. The amounts of port costs charged to our guests and included within Passenger ticket revenues on a gross basis were $666.8 million, $611.4 million and $569.5 million for the years ended December 31, 2019, 2018 and 2017, respectively.

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

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

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Disaggregated Revenues

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


	Year Ended December 31,
	2019		2018		2017
Revenues by itinerary
North America(1)	$	6,392,354	$	5,399,951	$	5,062,305
Asia/Pacific(2)	1,529,898		1,463,083		1,588,802
Europe(3)	1,942,057		1,914,549		1,509,586
Other regions	567,904		348,145		285,954
Total revenues by itinerary	10,432,213		9,125,728		8,446,647
Other revenues(4)	518,448		368,121		331,198
Total revenues	$	10,950,661	$	9,493,849	$	8,777,845

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

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

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

(4)Includes revenues primarily related to cancellation fees, vacation protection insurance and pre- and post-cruise tours and fees for operating certain port facilities. Amounts also include revenues related to our bareboat charter, procurement and management related services we perform on behalf of our unconsolidated affiliates. Refer to Note 8. Other Assets for more information on our unconsolidated affiliates.

Passenger ticket revenues are attributed to geographic areas based on where the reservation originates. For the years ended December 31, ~~2015~~2019, 2018 and December 31, 2014, share-based compensation expense of $36.1 million and $26.1 million, equity investment income of $81.0 million and $51.6 million and amortization of debt issuance costs of $27.1 million and $26.6 million, respectively, have been reclassified in2017, our guests were sourced from the ~~consolidated statements of cash flows from~~ ~~Other, net~~ to ~~Share-based compensation expense, Equity investment income~~ ~~and~~ ~~Amortization of debt issuance costs,~~ ~~respectively, within~~ ~~Net cash provided by operating activities~~ ~~in order to conform to the current year presentation.~~following areas:


	Year Ended December 31,
	2019		2018		2017
Passenger ticket revenues:
United States	65	%	61	%	59	%
United Kingdom	9	%	10	%	9	%

All other countries (1)	26	%	29	%	32	%

~~Additionally,~~(1)No other individual country's revenue exceeded 10% for the years ended December 31, ~~2015~~2019, 2018 and 2017.

Customer Deposits and Contract Liabilities

Our payment terms generally require an upfront deposit to confirm a reservation, with the balance due prior to the cruise. Deposits received on sales of passenger cruises are initially recorded as Customer deposits in our consolidated balance sheets and subsequently recognized as passenger ticket revenues during the duration of the cruise. ASC 606, Revenues from Contracts with Customers, defines a “contract liability” as an entity’s obligation to transfer goods or services to a customer for which the entity has received consideration from the customer. We consider customer deposits to be a contract liability once the customer no longer retains the unilateral right, resulting from the passage of time, to cancel such customer's reservation and receive a full refund. Customer deposits as of December 31, 2019, 2018 and 2017 included contract liabilities of $1.7 billion, $1.9 billion and $1.4 billion, respectively. Substantially all of our contract liabilities as of the years ended December 31, 2018 and 2017 were recognized and reported within Total revenues in our consolidated statements of comprehensive income (loss) for the years ended December 31, 2019 and 2018, respectively.

Contract Receivables and Contract Assets

Although we generally require full payment from our customers prior to their cruise, we grant credit terms to a relatively small portion of our revenue sourced in select markets outside of the United States. As a result, we have

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outstanding receivables from passenger cruise contracts in those markets. We also have receivables from credit card merchants for cruise ticket purchases and goods and services sold to guests during cruises that are collected before, during or shortly after the cruise voyage. In addition, we have receivables due from concessionaires onboard our vessels. These receivables are included within Trade and other receivables, net in our consolidated balance sheets.

We have contract assets that are conditional rights to consideration for satisfying the construction services performance obligations under a service concession arrangement. As of December 31, 2019, 2018, and 2017, our contract assets were $55.5 million, $57.8 million and $60.1 million, respectively, and were included within Other assets in our consolidated balance sheets. Given the short duration of our cruises and our collection terms, we do not have any other significant contract assets.

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

Prepaid travel agent commissions are an incremental cost of obtaining contracts with customers that we recognize as an asset and include within Prepaid expenses and other assets in our consolidated balance sheets. Prepaid travel agent commissions were $163.2 million and $153.5 million as of December 31, 2019 and 2018, respectively. Substantially all of our prepaid travel agent commissions at December 31, 2018 and December 31, ~~2014, amortization of debt issuance costs of $17.2 million~~2017 were expensed and ~~$19.8 million, respectively, have been reclassified from~~ ~~Decrease (increase)~~reported within Commissions, transportation and other in ~~prepaid expenses and other assets~~ ~~and $7.9 million and $8.5 million, respectively, have been reclassified from~~ ~~Increase in accrued expenses and other liabilities~~ ~~in the~~our consolidated statements of ~~cash flows~~to ~~Amortization of debt issuance costs~~,~~within~~ ~~Net cash provided by operating activities~~ ~~in order to conform to~~comprehensive income (loss) for the ~~current year presentation.~~years ended December 31, 2019 and 2018, respectively.

Note 3.5.Goodwill

The carrying amount of goodwill attributable to our Royal Caribbean International, Celebrity Cruises and ~~Celebrity~~Silversea Cruises reporting units and the changes in such balances during the years ended December 31, ~~2016~~2019 and ~~December 31, 2015~~2018 were as follows (in thousands):


	Royal Caribbean International		Celebrity Cruises		Silversea Cruises		Total
Balance at December 31, 2017	$	286,880	$	1,632	$	—	$	288,512
Goodwill attributable to the acquisition of Silversea Cruises (1)					1,090,010		1,090,010
Foreign currency translation adjustment	(169)		—		—		(169)
Balance at December 31, 2018	286,711		1,632		1,090,010		1,378,353
Silversea Goodwill adjustment	—		—		(5,224)		(5,224)
Goodwill attributable to the purchase of photo operations onboard our ships (2)	12,518		—		—		12,518
Foreign currency translation adjustment	(3)		—		—		(3)
Balance at December 31, 2019	$	299,226	$	1,632	$	1,084,786	$	1,385,644

(1)In 2018, we purchased Silversea Cruises. Refer to Note 3. Business Combination for further information.

Royal
Caribbean
International Celebrity Cruises Total
Balance at December 31, 2014 $ 286,958
$ —
$ 286,958
Foreign currency translation adjustment (194 ) —
(194 )
Balance at December 31, 2015 286,764
—
286,764
Goodwill attributable to purchase of Ocean Adventures⁽¹⁾
—
1,600
1,600
Foreign currency translation adjustment (10 ) 32
22
Balance at December 31, 2016 $ 286,754
$ 1,632
$ 288,386

~~(1)~~

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

~~The carrying amount of goodwill attributable~~ to our ~~Pullmantur reporting unit and the changes in such balances during the year ended December 31, 2015 were as follows (in thousands):~~

Pullmantur
Balance at December 31, 2014 $ 133,584
Impairment charge (123,814 )
Foreign currency translation adjustment (9,770 )
Balance at December 31, 2015 $ —

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~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

consolidated financial statements.

During the fourth quarter of ~~2016,~~2019, we performed a qualitative assessment of whether it was more-likely-than-not that our Royal Caribbean International reporting unit's fair value was less than its carrying amount before applying the two-step goodwill impairment test. The qualitative analysis included assessing the impact of certain factors such as general economic conditions, limitations on accessing capital, changes in forecasted operating results, changes in fuel prices and fluctuations in foreign exchange rates. Based on our qualitative assessment, we concluded that it was more-likely-than-not that the estimated fair value of the Royal Caribbean International reporting unit exceeded its carrying value and thus, we did not proceed to the two-step goodwill impairment test. No indicators of impairment exist primarily because the reporting unit's fair value has consistently exceeded its carrying value by a significant margin ~~its financial performance has been solid in the face of mixed economic environments~~ and forecasts of operating results generated by the reporting unit appear sufficient to

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support its carrying value. As a result of our assessment, we did 0t record an impairment of goodwill for the year ended December 31, 2019.

During the fourth quarter of 2019, we also performed a qualitative assessment of whether it was more-likely-than-not that our Silversea Cruises reporting unit's fair value was less than its carrying amount before applying the two-step goodwill impairment test. The qualitative analysis included assessing the impact of certain factors such as general economic conditions, limitations on accessing capital, changes in forecasted operating results, changes in fuel prices and fluctuations in foreign exchange rates. Based on our qualitative assessment, we concluded that it was more-likely-than-not that the estimated fair value of the Silversea Cruises reporting unit exceeded its carrying value and thus, we did not proceed to the two-step goodwill impairment test. No indicators of impairment exist primarily because forecasted operating results of the reporting unit appear sufficient to support its carrying value. As a result of our assessment, we did ~~not~~0t record an impairment of goodwill for the year ended December 31, ~~2016.~~2019.

~~During~~For the fourth quarter of 2015, we performed our annual impairment review of goodwill for the Royal Caribbean International reporting unit. We elected to bypass the qualitative assessment and proceeded directly to step one of the two-step goodwill impairment test to corroborate the results of prior years' qualitative assessments. As a result of the test, we determined the fair value of the Royal Caribbean International reporting unit exceeded its carrying value by approximately 90% resulting in no impairment to the Royal Caribbean International goodwill for the yearyears ended December 31, ~~2015.~~

In 2015, for our Pullmantur reporting unit, we reviewed the two-step goodwill impairment test based on our cash flow projections. As a result of this analysis, we determined that the carrying value of the Pullmantur reporting unit exceeded its fair value. Accordingly, upon the completion of the two-step impairment test, we recognized a goodwill impairment charge of $123.8 million. The charge reflected the full carrying amount of the goodwill leaving Pullmantur with no goodwill on its books. This impairment charge was recognized in earnings during the third quarter of 20152018 and ~~is reported within~~ ~~Impairment of Pullmantur related assets~~ ~~within our consolidated statements of comprehensive income (loss). Refer to Note 14.~~ ~~Fair Value Measurements and Derivative Instruments~~ ~~for further information regarding the Pullmantur reporting unit estimated fair value calculation.~~

~~For the year ended December 31, 2014,~~2017, we did ~~not~~0t record an impairment of goodwill for our reporting units. ~~Accumulated goodwill impairment losses as of December 31, 2016 were $443.0 million attributable to our Pullmantur reporting unit.~~

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~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

Note 4.6.Intangible Assets

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

The ~~carrying amount~~following is a summary of ~~indefinite-life~~our intangible assets ~~was not material~~ as of December 31, ~~2016. Indefinite-life~~2019 (in thousands, except weighted average amortization period):


	As of December 31, 2019
	Remaining Weighted Average Amortization Period (Years)	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Finite-life intangible assets:
Customer relationships	13.8	$	97,400	$	7,576	$	89,824
Galapagos operating license	24.7	47,669		6,010		41,659
Other finite-life intangible assets	0.8	11,560		6,743		4,817
Total finite-life intangible assets		156,629		20,329		136,300
Indefinite-life intangible assets		352,275		—		352,275
Total intangible assets, net		$	508,904	$	20,329	$	488,575

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The following is a summary of our intangible assets ~~consisted of the following~~ as of December 31, ~~2015~~2018 (in ~~thousands):~~

2015
Indefinite-life intangible asset—Pullmantur trademarks and trade names $ 188,038
Impairment charge (174,285 )
Foreign currency translation adjustment (13,753 )
Total $ —

During the third quarter of 2015, we performed an interim impairment evaluation of Pullmantur's trademarks and trade names using a discounted cash flow model and the relief-from-royalty method to compare the fair value of these indefinite-lived intangible assets to its carrying value. We used a discount rate comparable to the rate used in valuing the Pullmantur reporting unit in our goodwill impairment test. Based on our cash flow projections, we determined that the fair value of Pullmantur’s trademarks and trade names no longer exceeded their carrying value. Accordingly, we recognized an impairment charge of approximately $174.3 million to write down trademarks and trade names to their fair value. The charge reflected the full carrying amount of the trademark and trade names leaving Pullmantur with no intangible assets on its books. This impairment charge was recognized in earnings during the third quarter of 2015 and is reported within ~~Impairment of Pullmantur related assets~~ ~~within our consolidated statements of comprehensive income (loss). Refer to Note 14.~~ ~~Fair Value Measurements and Derivative Instruments~~ ~~for further information regarding the estimated fair value calculation of these assets.~~

~~For the year ended December 31, 2014, we did not record an impairment of Pullmantur's trademark and trade names.~~

Finite-life intangible assets had a gross carrying amount and accumulated amortization amount of $8.4 million and $0.2 million, respectively, as of December 31, 2016, consisting of operating licenses to operate in the Galapagos Islands. As of December 31, 2016, the remainingthousands, except weighted average ~~remaining life of these licenses were approximately 27.6 years. Amortization expense~~amortization period):


	As of December 31, 2018
	Remaining Weighted Average Amortization Period (Years)	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Finite-life intangible assets:
Customer relationships	14.8	$	97,400	$	1,082	$	96,318
Galapagos operating license	25.8	47,669		4,206		43,463
Other finite-life intangible assets	1.8	11,560		963		10,597
Total finite-life intangible assets		156,629		6,251		150,378
Indefinite-life intangible assets		351,725		—		351,725
Total intangible assets, net		$	508,354	$	6,251	$	502,103

The estimated future amortization for finite-life intangible assets ~~was immaterial to our consolidated financial statements.~~for each of the next five years is as follows (in thousands):


Year

2020	$	12,995
2021	$	8,179
2022	$	8,179
2023	$	8,179
2024	$	8,179

Note 5.7.Property and Equipment

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


	As of December 31,
	2019		2018
Ships	$	28,348,088	$	27,209,553
Ship improvements	3,920,800		2,965,634
Ships under construction	1,110,962		817,800
Land, buildings and improvements, including leasehold improvements and port facilities	472,067		321,136
Computer hardware and software, transportation equipment and other	1,698,007		1,120,988
Total property and equipment	35,549,924		32,435,111
Less—accumulated depreciation and amortization⁽¹⁾	(10,083,116)		(8,968,948)
	$	25,466,808	$	23,466,163

2016 2015
Ships $ 23,978,822
$ 22,102,025
Ship improvements 2,359,639
2,019,294
Ships under construction 354,425
734,998
Land, buildings and improvements, including leasehold improvements and port facilities 341,605
337,109
Computer hardware and software, transportation equipment and other 1,108,301
1,025,264
Total property and equipment 28,142,792
26,218,690
Less—accumulated depreciation and amortization (7,981,365 ) (7,440,912 )
$ 20,161,427
$ 18,777,778
(1)Amount includes accumulated depreciation and amortization for assets in service.

Ships under construction include progress payments for the construction of new ships as well as planning, design, capitalized interest and other associated costs. We capitalized interest costs of ~~$25.3~~$56.5 million, ~~$26.5~~$49.6 million and ~~$28.8~~$24.2 million for the years ~~2016, 2015~~ended December 31, 2019, 2018 and ~~2014,~~2017, respectively.

During 2019, we took delivery of Spectrum of the Seas and Celebrity Flora. During 2018, we completed our purchase of Azamara Pursuit and took delivery of Symphony of the Seas and Celebrity Edge. Refer to Note 9. Debt for further information.

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~~We review~~Upon our ~~long-lived assets~~acquisition of Silversea Cruises, we added 9 ships to our fleet, 2 of which are under capital lease agreements and 1 under an operating lease. As of December 31, 2019, Silversea Cruises operates 8 ships as the operating lease for ~~impairment whenever events or changes in circumstances indicate potential impairment. During 2016, we sold our 51% interest in Pullmantur Holdings. For~~Silver Discover was terminated during 2019. Refer to Note 3. Business Combination for further information on the Silversea Cruises acquisition and Note 9. Debt for further information on the capital leases.

During 2017, we sold our 3 aircraft and 6% of our ownership stake in Wamos Air, S.A. (formerly known as Pullmantur Air, S.A.) to Wamos Air, S.A. In connection with the sale transaction, ~~refer~~we extended 2 loans to ~~Note 1.~~ ~~General. Due to this sale~~Wamos Air, S.A. totaling €17.3 million. During the year ended December 31, 2019, we received principal and ~~the~~interest payments of €5.4 million resulting ~~change~~ in ~~the nature~~full repayment of one of the ~~cash flows generated by~~loans. As of December 31, 2019, a receivable of €9.9 million, or approximately $11.1 million, based on the ~~vessels that are owned by us and operated by Pullmantur Holdings, we reviewed these vessels for impairment. We determined that~~exchange rate at December 31, 2019, was outstanding related to the ~~undiscounted future cash flows~~principal amount of the ~~vessels exceeded their carrying value; therefore, no impairment~~remaining loan. The remaining loan accrues interest at 5.25% per annum, amortizes through maturity of July 2021, and is secured by first priority security interests over the aircraft engines and shares sold in connection with the transaction. The sale resulted in an immaterial gain that was ~~required.~~recognized in earnings during the year ended December 31, 2017. Post-sale, we retained a 13% interest in Wamos Air, S.A.

During ~~2016,~~2017, we ~~entered into agreements with STX France to build a fifth Oasis-class ship and a third and fourth "Project Edge" ship. Refer to Note 15.~~ ~~Commitments and Contingencies~~ ~~for further information.~~

~~In April 2016, we completed the previously announced sale of~~ ~~Splendour~~sold Legend of the Seasto ~~TUI Cruises. Concurrent with the acquisition, TUI Cruises leased the ship to Thomson Cruises,~~ an affiliate of TUI AG, our joint venture partner ~~who will operate the ship. The gain recognized did not have a material effect to our consolidated financial statements.~~

~~In June 2016, we entered into an agreement to sell~~ ~~Legend of the Seas~~ ~~to Thomson~~in TUI Cruises. The sale ~~is scheduled to be completed~~resulted in ~~March 2017 in order to retain the future revenues to be generated for sailings through that date. We expect to recognize~~ a gain ~~on the sale, which we do not expect will have a material effect to our annual consolidated financial statements.~~

~~During 2015, in conjunction with performing the two-step goodwill impairment test for the Pullmantur reporting unit, we identified that the estimated fair value~~ of ~~certain long-lived assets, consisting of two ships~~$30.9 million and three aircraft were less than their carrying values. As a result of this determination, we evaluated these assets pursuant to our long-lived asset impairment test, resulting in an impairment charge of $113.2 million to write down these assets to their estimated fair values. This impairment charge was ~~recognized in earnings during the third quarter of 2015 and is~~ reported within ~~Impairment of Pullmantur related assets~~ Other operatingwithinCruise operating expenses in our consolidated statements of comprehensive income (loss)~~. Refer~~ for the year ended December 31, 2017.

In January of 2020, Zenith was sold to ~~Note 14.~~ ~~Fair Value Measurements and Derivative Instruments~~ ~~for further information regarding the estimated fair value calculation of these assets.~~

~~During 2015, Pullmantur sold~~ ~~Ocean Dream~~ ~~to an unrelated~~a third party for ~~$34.6 million. The purchase price~~approximately its net book value. Zenith was paid via a secured promissory note, payable over a nine-year period. The buyer's obligations under this loan accrue interest at the rate of 6.0% per annum and are secured by a first priority mortgage on the ship. The sale resulted in an immaterial gain that was deferred and is expectedpreviously bareboat chartered to ~~be recognized at the end of the nine-year term.~~Pullmantur Holdings S.L.

Note 6.8.Other Assets

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

We have determined that TUI Cruises GmbH, our 50%-owned joint venture, which operates the brand TUI Cruises, is a VIE. As of December 31, ~~2016,~~2019, the net book value of our investment in TUI Cruises was ~~approximately $515.9~~$598.1 million, primarily consisting of ~~$323.5~~$443.1 million in equity and a loan of ~~$192.4 million.~~€133.2 million, or approximately $149.5 million, based on the exchange rate at December 31, 2019. As of December 31, 2018, the net book value of our investment in TUI Cruises was $578.1 million, primarily consisting of $403.0 million in equity and a loan of €150.6 million, or approximately $172.2 million, based on the exchange rate at December 31, 2018. The loan, which was made in connection with the sale of Splendour of the Seasin April 2016, accrues interest at a rate of 6.25% per annum and is payable over ~~a 10-year term.~~10 years. This loan is 50% guaranteed by TUI AG, our joint venture partner in TUI Cruises, and is secured by a first priority mortgage on the ship. Refer to Note 5. 7. Property and Equipmentfor further information. ~~As of December 31, 2015, the net book value of our investment in TUI Cruises was approximately $293.8 million, consisting of equity.~~ The majority of these amounts were included within Other assets in our consolidated balance sheets.

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~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

In addition, we and TUI AG have each guaranteed the repayment by TUI Cruises of 50% of a bank ~~loan borrowed by TUI Cruises.~~loan. As of December 31, ~~2016,~~2019, the outstanding principal amount of the loan was ~~€116.3~~€26.4 million, or approximately ~~$122.7~~$29.7 million, based on the exchange rate at December 31, ~~2016. While this loan matures in May 2022, the lenders have agreed to release each shareholder's guarantee in 2018.~~2019. The loan amortizes quarterly and is currently secured by a first ~~mortgages~~mortgage on ~~the~~ Mein Schiff 1 ~~and~~ ~~Mein Schiff 2~~ ~~vessels.~~Herz. Based on current facts and circumstances, we do not believe potential obligations under our guarantee of this bank loan are probable. In addition to our guarantee of the bank loan, TUI Cruises has various ship construction and financing agreements which include certain restrictions on each of our and TUI AG’s ability to reduce our current ownership interest in TUI Cruises below 37.55% through May 2031.

Our investment amount, outstanding term loan and the potential obligations under the bank loan guarantee are substantially our maximum exposure to loss in connection with our investment in TUI Cruises. We have determined that we are not the primary beneficiary of TUI Cruises. We believe that the power to direct the activities that most

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significantly impact TUI Cruises’ economic performance are shared between ourselves and TUI AG. All the significant operating and financial decisions of TUI Cruises require the consent of both parties, which we believe creates shared power over TUI Cruises. Accordingly, we do not consolidate this entity and account for this investment under the equity method of accounting.

In March 2009, we sold Celebrity Galaxy to TUI Cruises ~~has three newbuild ships~~for €224.4 million, or $290.9 million, to serve as the original Mein Schiff 1. Due to the related party nature of this transaction, the gain on ~~order with Meyer Turku scheduled~~the sale of the ship of $35.9 million was deferred and being recognized over the remaining life of the ship which was estimated to be ~~delivered in each of 2017,~~23 years. In April 2018, ~~and 2019.~~ TUI Cruises ~~has~~sold the original Mein Schiff 1 and as a result we accelerated the recognition of the remaining balance of the deferred gain, which was $21.8 million. This amount is included within Other income (expense) in ~~place agreements~~our consolidated statements of comprehensive income (loss) for the secured financing of each of the ships on order for up to 80% of the contract price. The remaining portion of the contract price of the ships is expected to be funded through an existing €150.0 million bank facility and TUI Cruises’ cash flows from operations. The various ship construction and financing agreements include certain restrictions on each of our and TUI AG’s ability to reduce our current ownership interest inyear ended December 31, 2018.

On February 7, 2020, TUI Cruises ~~below 37.55% through 2021.~~entered into an agreement to acquire Hapag-Lloyd Cruises, a luxury and expedition brand for German-speaking guests, from TUI AG. Hapag-Lloyd Cruises operates 2 luxury liners and 3 smaller expedition ships. The transaction is subject to regulatory approval and customary closing conditions.

We have determined that Pullmantur Holdings S.L. ("Pullmantur Holdings"), which operates the Pullmantur brand and in which we have a 49% noncontrolling interest and SpringwaterCapital LLC has a 51% interest, is a VIE for which we are not the primary beneficiary, as we do not have the power to direct the activities that most significantly impact the entity's economic performance. Accordingly, ~~subsequent to the sale of our 51% interest in Pullmantur Holdings to Springwater Capital LLC ("Springwater"),~~ we do not consolidate this entity and we account for this investment under the equity method of accounting. As of December 31, ~~2016, the net book value of~~2019 and December 31, 2018, our ~~investment~~maximum exposure to loss in Pullmantur Holdings was ~~was immaterial to~~$49.7 million and $58.5 million, respectively, consisting of loans and other receivables. These amounts were included within Trade and other receivables, net and Other assets in our consolidated ~~financial statements.~~balance sheets.

~~In conjunction with the sale, we~~We have provided a non-revolving working capital facility to a Pullmantur Holdings subsidiary in the amount of up to €15.0 million or approximately ~~$15.8~~$16.8 million based on the exchange rate at December 31, ~~2016.~~2019. Proceeds of the facility, which ~~may~~were available to be drawn through ~~July~~December 31, 2018 ~~will bear~~accrue interest at ~~the~~an interest rate of 6.5% per annum, ~~and~~ are payable through 2022. An affiliate of Springwater Capital LLC, has guaranteed repayment of 51% of the outstanding amounts under the facility. As of December 31, ~~2016, no amounts had been drawn~~2019, €11.0 million, or approximately $12.3 million, based on the exchange rate at December 31, 2019, was outstanding under this facility. ~~See Note 1.~~ ~~General~~ ~~for further discussion~~As of December 31, 2018, €14.0 million, or approximately $16.0 million, based on the ~~sales transaction.~~exchange rate at December 31, 2018, was outstanding under this facility.

We have determined that Grand Bahama Shipyard Ltd. ("Grand Bahama"), a ship repair and maintenance facility in which we have a 40% noncontrolling interest, is a VIE. This facility serves cruise and cargo ships, oil and gas tankers and offshore units. We utilize this facility, among other ship repair facilities, for our regularly scheduled drydocks, ship upgrades and certain emergency repairs as may be required. During the ~~year~~years ended December 31, ~~2016~~2019 and ~~December 31, 2015,~~2018, we made payments of ~~$39.8~~$45.7 million and ~~$21.7~~$44.7 million, respectively, to Grand Bahama for ship repair and maintenance services. We have determined that we are not the primary beneficiary of this facility, as we do not have the power to direct the activities that most significantly impact the facility's economic performance. Accordingly, we do not consolidate this entity and we account for this investment under the equity method of accounting. As of December 31, ~~2016~~,2019, the net book value of our investment in Grand Bahama was $47.9 million, consisting of $27.0 million in equity and loans of $20.9 million. As of December 31, 2018, the net book value of our investment in Grand Bahama was approximately ~~$47.0~~$56.1 million, consisting of ~~$23.2~~$41.4 million in equity and ~~a loan~~loans of ~~$23.8 million. As of~~ ~~December 31, 2015, the net book value of our investment in Grand Bahama was approximately $51.2 million, consisting of $12.6 million in equity and a loan of $38.6~~$14.6 million. These amounts represent our maximum exposure to loss related to our investment in Grand Bahama. ~~During 2016, our debt agreement with~~Our loans to Grand Bahama ~~was amended to extend the maturity by 10 years~~mature between December 2020 and ~~increase the applicable~~March 2026 and bear interest ~~rate to the lower of (i)~~at LIBOR plus ~~3.50% and (ii) 5.50%.~~2.0% to 3.75%, capped at 5.75% for the majority of the outstanding loan balance. Interest payable on the ~~loan~~loans is due on a semi-annual basis. ~~We continue to classify~~During the ~~loan, as modified, as non-accrual status.~~years ended December 31, 2019 and 2018, we received principal and interest payments of $8.6 million and $16.4 million, respectively. The loan ~~balance is~~balances are included within Trade and other receivables, net and Other assets in our consolidated balance sheets. ~~During~~The loans are currently accruing interest under the ~~year ended December 31, 2016 and 2015, we received payments of~~

effective yield method.

~~F-19~~

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

~~approximately $14.8 million and $4.4 million, respectively~~. We monitor credit risk associated with the loan through our participation on Grand Bahama's board of directors along with our review of Grand Bahama's financial statements and projected cash flows. Based on this review, we believe the risk of loss associated with the outstanding loan is not probable as of December 31, ~~2016.~~2019.

~~We have determined that~~In April 2019, Grand Bahama experienced an incident involving one of its drydocks where Oasis of the Seas was undergoing maintenance. The damage from the incident resulted in a write-off of the related drydock by Grand Bahama. Our equity investment income for the year ended December 31, 2019 reflects our equity share of the write-off and other incidental expenses. Grand Bahama's management is working with its insurance underwriter to determine coverage under their existing policies.

In March 2018, we and Ctrip.com International Ltd. ("Ctrip") announced the decision to end the Skysea Holding International Ltd. ("Skysea Holding"), venture in which we have a ~~35% noncontrolling interest, is~~36% ownership interest. As a ~~VIE for which~~result, we ~~are not~~reviewed the primary beneficiary, as we do not have the power to direct the activities that most significantly impact the entity's economic performance. Accordingly, we do not consolidate this entity and we account for this investment under the equity method of accounting. In December 2014, we and Ctrip.com International Ltd, which also owns 35% of Skysea Holding, each provided a debt facility to a wholly owned subsidiary of Skysea Holding in the amount of $80.0 million. Interest under these facilities, which mature in January 2030, initially accrues at a rate of 3.0% per annum with an increase of at least 0.5% every two years through maturity. The facilities, which are pari passu to each other, are each 100% guaranteed by Skysea Holding and are secured by first priority mortgages on the ship ~~SkySeaGolden Era.~~ ~~As of December 31, 2016, the net book value~~recoverability of our investment in Skysea Holding and determined that our investment, debt facility and other receivables due from the brand were impaired and recognized an impairment charge of $23.3 million which was included within Other (expense)income in our consolidated statement of comprehensive income (loss) for the year ended December 31, 2018. The charge reflected a full impairment of our investment in SkySea Holding and other receivables due to us and reduced the debt facility and related accrued interest due to us to Skysea Holdings to its ~~subsidiaries~~net realizable value.

In December 2018, the Golden Era, the ship operated by SkySea Cruises, and a wholly-owned subsidiary of Skysea Holdings, was ~~approximately $95.4 million, consisting~~sold to an affiliate of ~~$9.2 million~~TUI AG. Proceeds from the sale were distributed to Ctrip and us, which eliminated our net receivable balance due from Skysea Holding, resulting in ~~equity and loans of $86.2 million.~~no further impairment charges. As of December 31, 2015, the net book value of our investment in Skysea Holding and its subsidiaries was approximately $99.8 million, consisting of $17.3 million in equity and a loan of $82.5 million. The majority of these amounts were included within ~~Other assets~~ ~~in our consolidated balance sheets and represent our maximum exposure~~2019, we do not have any exposures to loss related to our investment in Skysea Holding.

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


	Year ended December 31,
	2019		2018		2017
Share of equity income from investments	$	230,980	$	210,756	$	156,247
Dividends received ⁽¹⁾	$	150,177	$	243,101	$	109,677

For the period ended December 31,
2016 2015 2014
Share of equity income from investments $ 128,350
$ 81,026
$ 51,640
Dividends received $ 75,942
$ 33,338
$ 5,814

(1) For the year ended December 31, 2019, TUI Cruises paid us dividends totaling €170.0 million, or approximately $190.3 million, based on the exchange rates at the time of the transactions. The amounts included in the table above are net of tax withholdings.


	As of December 31,
	2019		2018
Total notes receivable due from equity investments	$	184,558	$	201,979
Less-current portion⁽¹⁾	25,933		19,075
Long-term portion⁽²⁾	$	158,625	$	182,904

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

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

We also provide ship management services to TUI Cruises GmbH, Pullmantur Holdings and Skysea ~~Holding.~~Holding (which ceased cruising operations in September 2018). Additionally, we bareboat charter to Pullmantur Holdings the vessels currently operated by its brands, which were retained by us ~~in connection with~~following the sale of our ~~majority interest.~~51% interest in Pullmantur Holdings. We recorded the following as it relates to these services in our operating results within our consolidated statements of comprehensive income (loss) (in thousands):

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ROYAL CARIBBEAN CRUISES LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)


								Year ended December 31,
								2019		2018		2017

	For the period ended December 31,
	2016		2015		2014
Revenues	$	30,517	$	20,217	$	8,465	Revenues	$	47,242	$	54,705	$	53,532
Expenses	$	12,795	$	15,669	$	3,960	Expenses	$	4,304	$	11,531	$	15,176

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


	As of December 31,
	2019		2018
Current assets	$	435,152	$	471,428
Non-current assets	4,019,394		3,826,018
Total assets	$	4,454,546	$	4,297,446

Current liabilities	$	1,094,552	$	1,064,741
Non- current liabilities	2,267,936		2,217,909
Total liabilities	$	3,362,488	$	3,282,650

Equity attributable to:
Noncontrolling interest	$	1,784	$	1,672


	Year ended December 31,
	2019		2018		2017
Total revenues	$	2,354,744	$	2,255,352	$	1,994,014
Total expenses	(1,875,952)		(1,779,160)		(1,684,276)
Net income	$	478,792	$	476,192	$	309,738

~~F-20~~

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 9.Debt

As of December 31,
2016 2015
Current Assets $ 382,529
$ 315,264
Non Current Assets 2,922,471
2,246,809
Total Assets $ 3,305,000
$ 2,562,073

Current Liabilities $ 761,331
$ 585,887
Non Current Liabilities 1,693,941
1,231,262
Total Liabilities $ 2,455,272
$ 1,817,149

Equity Attributable to:
Noncontrolling Interest $ 1,544
$ 1,683

For the period ended December 31,
2016 2015 2014
Total Revenues $ 1,232,191
$ 990,172
$ 797,441
Total Expenses (972,454 ) (830,898 ) (682,430 )
Net Income $ 259,737
$ 159,274
$ 115,011

~~Note 7.Long-Term~~ Debt

~~Long-term debt~~ consists of the following (in thousands):


			As of December 31,
	Interest Rate⁽¹⁾	Maturities Through	2019		2018
Fixed rate debt:
Senior notes	2.65% to 7.50%	2020 - 2028	$	1,746,280	$	1,724,194
Secured senior notes	7.25%	2025	662,398		670,437
Unsecured term loans	2.53% to 5.41%	2021 - 2030	2,806,774		2,148,351
Total fixed rate debt			5,215,452		4,542,982
Variable rate debt:
Unsecured revolving credit facilities⁽²⁾	2.79%	2022 - 2024	165,000		795,000
Commercial paper	2.19%	2019	1,434,180		775,488
USD unsecured term loan	2.31% to 5.64%	2019 - 2028	3,519,853		4,005,848
Euro unsecured term loan	1.15% to 1.58%	2021 - 2028	676,740		734,176
Total variable rate debt			5,795,773		6,310,512
Finance lease liabilities			230,258		130,944
Total debt ⁽³⁾			11,241,483		10,984,438
Less: unamortized debt issuance costs			(206,607)		(206,739)
Total debt, net of unamortized debt issuance costs			11,034,876		10,777,699
Less—current portion including commercial paper			(2,620,766)		(2,422,329)
Long-term portion			$	8,414,110	$	8,355,370

(1)Interest rates based on outstanding loan balance as of December 31, 2019 and, for variable rate debt, include either LIBOR or EURIBOR plus the applicable margin.

~~F-21~~

~~Table~~(2)Includes $1.7 billion facility due in 2024 and $1.2 billion facility due in 2022, each of ~~Contents~~which accrue interest at LIBOR plus 1.00%, currently 2.91%, and are subject to a facility fee of 0.125%.

~~ROYAL CARIBBEAN CRUISES LTD.~~(3)At December 31, 2019 and 2018, the weighted average interest rate for total debt was 3.99% and 4.14%, respectively.

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

2016 2015
$1.4 billion unsecured revolving credit facility, LIBOR plus 1.50%, currently 2.26% and a facility fee of 0.25%, due 2020 $ 925,000
$ 945,000
$1.2 billion unsecured revolving credit facility, LIBOR plus 1.50%, currently 2.24% and a facility fee of 0.25%, due 2018 805,000
895,000
Unsecured senior notes and senior debentures, 5.25% to 7.50%, due 2018, 2022 and 2027 1,073,261
1,434,542
$200 million unsecured term loan, LIBOR plus 1.30%, currently 2.06% due 2017 200,000
—
$841.8 million unsecured term loan, LIBOR plus 1.00%, currently 2.26% due through 2028 806,756
—
$226.1 million unsecured term loan, 2.53%, due through 2028 216,677
—
€700.7 million unsecured term loan, EURIBOR plus 1.15% currently 1.15%, due through 2028 708,417
—
$742.1 million unsecured term loan, LIBOR plus 1.30%, currently 2.56%, due through 2027 649,338
711,180
$273.2 million unsecured term loan, LIBOR plus 1.75%, currently 2.52%, due 2017 273,166
—
$519 million unsecured term loan, LIBOR plus 0.45%, currently 1.71%, due through 2020 173,049
216,311
$420 million unsecured term loan, 5.41%, due through 2021 171,444
207,223
$420 million unsecured term loan, LIBOR plus 1.65%, currently 2.91%, due through 2021 175,000
210,000
€159.4 million unsecured term loan, EURIBOR plus 1.58%, currently 1.58%, due through 2021 70,082
86,650
$524.5 million unsecured term loan, LIBOR plus 0.50%, currently 1.48%, due through 2021 218,542
262,250
$566.1 million unsecured term loan, LIBOR plus 0.37%, currently 1.63%, due through 2022 259,448
306,621
$1.1 billion unsecured term loan, LIBOR plus 1.65%, currently 2.91%, due through 2022 460,652
537,426
$632.0 million unsecured term loan, LIBOR plus 0.40%, currently 1.38%, due through 2023 368,643
421,306
$673.5 million unsecured term loan, LIBOR plus 0.40%, currently 1.66%, due through 2024 448,983
505,106
$65.0 million unsecured term loan, LIBOR plus 1.75%, currently 2.52%, due through 2019 67,027
71,500
$380.0 million unsecured term loan, LIBOR plus 1.75%, currently 2.52%, due 2018 380,000
380,000
$791.1 million unsecured term loan, LIBOR plus 1.30%, currently 2.56%, due through 2026 659,256
725,182
$290.0 million unsecured term loan, LIBOR plus 1.75%, currently 2.52%, due 2018 290,000
290,000
€365 million unsecured term loan, EURIBOR plus 1.75%, currently 1.75%, due 2017 123,963
396,755
$7.3 million unsecured term loan, LIBOR plus 2.5%, currently 3.76%, due through 2023 3,964
4,440
$30.3 million unsecured term loan, LIBOR plus 3.75%, currently 4.70%, due through 2021 6,597
11,793
Capital lease obligations 40,385
48,770
Total debt 9,574,650
8,667,055
Less: unamortized debt issuance costs (187,214 ) (139,812 )
Total debt, net of unamortized debt issuance costs 9,387,436
8,527,243
Less: current portion (1,285,735 ) (899,542 )
Long-term portion $ 8,101,701
$ 7,627,701

In ~~February 2016,~~April 2019, we amended our $1.4 billion unsecured ~~term loans for~~ ~~Oasis of~~revolving credit facility due in 2020 to extend the ~~Seas~~termination date through April 2024, increase the facility size to $1.7 billion and ~~Allure of the Seas~~ to reduce ~~the margins on those facilities and incorporate certain covenant improvements included in our more recent credit facilities.~~pricing. The interest rate ~~on both the $420.0 million floating rate tranche of the~~ ~~Oasis of the Seas~~ ~~term loan~~ and ~~the $1.1 billion~~ ~~Allure of the Seas~~ ~~term loan was reduced from~~facility fee vary with our senior debt rating and are currently set at LIBOR plus ~~1.85% to LIBOR plus 1.65%.~~1.0% per annum and 0.125% per annum, respectively. These amendments did not result in the extinguishment of debt.

In ~~February 2016,~~addition, in May 2019, we ~~agreed with the lenders~~amended our $1.15 billion unsecured revolving credit facility due in 2022 to reduce pricing to match pricing on our ~~€365.0 million~~$1.7 billion unsecured revolving credit facility due in 2024.

In April 2019, we entered into and drew in full on an unsecured three-year term loan ~~due 2017 to convert €247.5 million, or $273.2 million,~~agreement in the amount of ~~the outstanding principal balance from Euro to United States dollars. Interest on the new United States dollar tranche~~$1.0 billion. The loan accrues interest at a floating rate ~~based on~~of LIBOR plus an applicable margin, which varies with our senior debt rating, and is currently 1.075% per annum. Proceeds of this loan were used to repay the ~~applicable margin. The~~$700 million 364-day loan due July 2019 related to the acquisition of Silversea Cruises and the remaining balance of the ~~facility~~unsecured term loan originally incurred in 2010 to purchase Allure of ~~€117.5 million will remain outstanding~~the Seas. The repayment of these loans resulted in ~~Euro and will continue to accrue interest at~~ a ~~floating rate~~

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~~ROYAL CARIBBEAN CRUISES LTD.~~

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~based~~total loss on ~~EURIBOR, subject to a 0% floor, plus the applicable margin. The applicable margin varies with our debt rating and was 1.75% as of December 31, 2016. The amendment did not result in~~ the extinguishment of ~~debt.~~debt of $6.3 million, which was recognized within Other (expense) income within our consolidated statements of comprehensive income (loss) for the twelve months ended December 31, 2019.

In April ~~2016,~~2019, we took delivery of ~~Ovation~~Spectrum of the Seas. To finance the purchase, we borrowed ~~$841.8~~$908.0 million under a previously committed unsecured term loan which is 95% guaranteed by Euler Hermes ~~Deutschland AG ("Hermes"),~~Aktiengesellschaft, the official export credit agency of Germany. The loan amortizes semi-annually over 12 years and bears interest at LIBOR plus a margin of 1.00%, totaling 2.26% as of December 31, 2016. During 2015, we entered into forward-starting interest rate swap agreements which effectively converted $830.0 million of the loan from the floating rate available to us per the credit agreement to a fixed rate ~~including the applicable margin,~~ of ~~3.16% effective from April 2016~~3.45% per annum.

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ROYAL CARIBBEAN CRUISES LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In May 2019, we took delivery of Celebrity Flora. The purchase was financed through ~~the maturity of the loan. See Note 14.~~ ~~Fair Value Measurements and Derivative Instruments~~ ~~for further information regarding these agreements.~~

~~In April 2016, we entered into and drew in full on a credit agreement which provides~~ an unsecured term loan facility entered into in November 2017 in an amount up to €80.0 million, or approximately $89.8 million based on the ~~amount~~exchange rate at December 31, 2019. As of ~~$200 million.~~December 31, 2019, we had fully drawn on this facility. The loan is due and payable at maturity in ~~April 2017.~~November 2024. Interest on the loan accrues at a floating rate based on ~~LIBOR~~EURIBOR plus athe applicable margin. The applicable margin ~~of 1.30%, totaling 2.06%~~varies with our debt rating and was 1.195% as of December 31, ~~2016.~~2019.

In June 2018, we established a commercial paper program pursuant to which we may issue short-term unsecured notes from time to time in an aggregate amount of up to $1.2 billion, which was increased to $2.9 billion in August 2019. The ~~proceeds from this loan were used to repay amounts outstanding under~~commercial paper issued is backstopped by our ~~unsecured~~ revolving credit facilities.

~~In May 2016, we took delivery of~~ ~~Harmony of the Seas~~. To finance the purchase, we borrowed an unsecured Euro-denominated term loan in the amount of €700.7 million, or $739.2 million based on the exchange rate at December 31, 2016, and an unsecured United States dollar-denominated term loan in the amount of $226.1 million under previously committed credit agreements. Both of the facilities are 100% guaranteed by Compagnie Francaise d’Assurance pour le Commerce Extérieur (“COFACE”), the official export credit agency of France. The Euro-denominated term loan amortizes semi-annually over 12 years and bears interest at EURIBOR, subject to a 0% floor, plus the applicable margin of 1.15%, totaling 1.15% as As of December 31, ~~2016. The United States dollar-denominated term loan amortizes semi-annually over 12 years and bears~~2019, we had $1.4 billion of commercial paper notes outstanding with a weighted average interest ~~at a fixed~~ rate of ~~2.53%. During 2015,~~2.19% and a weighted average maturity of approximately 21 days. As of December 31, 2018 we ~~entered into forward-starting~~had $777.0 million of commercial paper notes outstanding with a weighted average interest rate ~~swap agreements which effectively converted €693.4 million, or $731.5 million based on the exchange rate at December 31, 2016,~~ of ~~the Euro-denominated term loan from the floating rate per the credit agreement to~~3.19% and a ~~fixed rate, including the applicable margin, of 2.26% effective from May 2016 through the~~weighted average maturity of ~~the loan. See Note 14.~~ ~~Fair Value Measurements and Derivative Instruments~~approximately 23 days.

Except for ~~further information regarding these agreements.~~

~~All~~Celebrity Flora, all of our unsecured ship financing term loans are guaranteed by the export credit agency in the respective country in which the ship is constructed. In consideration for these guarantees, depending on the financing arrangement, we pay to the applicable export credit agency (1) ~~fees from 1.48%~~a fee of 0.77% per annum based on the outstanding loan balance semi-annually over the term of the loan (subject to adjustment ~~under certain of our facilities~~ based upon our credit ratings) or (2) an upfront fee of 2.35% to 2.37% of the maximum loan amount. We amortize the fees that are paid upfront over the life of the loan and those that are paid semi-annually over each respective payment period. ~~We classify~~Prior to the loan being drawn, we present these fees within ~~Debt issuance costs~~Other assets in our consolidated balance sheets. Once the loan is drawn, such fees are classified as a discount to the related loan, or contra-liability account, within Current portion of long-term debt or Long-term debt. In our consolidated statements of cash flows, ~~and~~we classify these fees within ~~Other assets~~ ~~in our consolidated balance sheets.~~Amortization of debt issuance costs.

Under certain of our agreements, the contractual interest rate, facility fee and/or export credit agency fee vary with our debt rating.

The unsecured senior notes and senior debentures are not redeemable prior to maturity, except that certain series may be redeemed upon the payment of a make-whole premium.

~~Following is a schedule of annual maturities on long-term debt including capital~~Finance Leases

Silversea Cruises operates 2 ships, the Silver Whisper and Silver Explorer, under finance leases ~~as of December 31, 2016~~. Thefinance lease for ~~each~~the Silver Whisper will expire in 2022, subject to an option to purchase the ship, and the finance lease for the Silver Explorer will expire in 2021, subject to an option to extend the lease for up to an additional six years. The total aggregate amount of the ~~next five years (in thousands):~~finance lease liabilities recorded for these ships at the acquisition date was $82.8 million. The lease payments on the Silver Whisper are subject to adjustments based on the LIBOR rate. Refer to Note 3. Business Combination for further information regarding the assets acquired and liabilities assumed in the Silversea Cruises acquisition.

~~F-23~~

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ROYAL CARIBBEAN CRUISES LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Following is a schedule of annual maturities on our total debt net of debt issuance costs, and including capital leases and commercial paper, as of December 31, 2019 for each of the next five years (in thousands):


Year
2020	$	2,620,766
2021	843,906
2022	2,479,303
2023	763,382
2024	723,697
Thereafter	3,603,822
	$	11,034,876

Note 10. Leases

Our operating leases primarily relate to preferred berthing arrangements, real estate and shipboard equipment and are included within Operating lease right-of-use assets, and Long-term operating lease liabilities with the current portion of the liability included within Current portion of operating lease liabilities in our consolidated balance sheet as of December 31, 2019. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet. We recognize lease expense for these leases on a straight-line basis over the lease term. Refer to Note 2. Summary of Significant Accounting Policies, for further information on the adoption of ASC 842.

Finance leases are included within Property and equipment, net and Long-term debt, with the current portion of the debt reported within Current portion of debt, in our consolidated balance sheets.

Our finance leases include 2 ships, Silver Whisper and Silver Explorer, operated by Silversea Cruises. The finance lease for Silver Whisper will expire in 2022, subject to an option to purchase the ship, and the finance lease for Silver Explorer will expire in 2021, subject to an option to extend the lease for up to an additional 6 years.

In June 2019, the Company entered into a new master lease agreement (“Master Lease”) with Miami-Dade County relating to the buildings and surrounding land located at its Miami headquarters, which are classified as finance leases in accordance with ASC 842. Prior to entering into the Master Lease, the buildings were classified as operating lease assets. The finance lease for the buildings and land will expire in 2072, which includes an initial 43 years lease term and 2 five-year options to extend the lease. We consider the possibility of exercising the 2 five-year options reasonably certain.

For some of our real estate leases and berthing agreements, we do have the option to extend our current lease term. For those lease agreements with renewal options, the renewal periods for real estate leases range from one to 10 years and the renewal periods for berthing agreements range from one year to 20 years. Generally, we do not include renewal options as a component of our present value calculation for berthing agreements. However, for certain real estate leases, we include them. Additionally, we do have a residual value guarantee associated with our lease of a terminal at PortMiami in Miami, Florida that approximates a percentage of cost of the asset as of the inception of the lease. We consider the possibility of incurring costs associated with the residual value guarantee to be remote.

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

Additionally, we bareboat charter to Pullmantur Holdings the vessels currently operated by its brands, which were retained by us following the sale of our 51% interest in Pullmantur Holdings in 2016. We account for the

F-29

Year
2017 $ 1,285,735
2018 2,309,952
2019 754,496
2020 1,608,187
2021 632,920
Thereafter 2,796,146
$ 9,387,436
bareboat charters of these vessels as operating leases for which we are the lessor. The remaining payments and term of these leases are immaterial to our consolidated financial statements.

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


	As of December 31, 2019
Lease assets:
Finance lease right-of-use assets, net:
Property and equipment, gross	$	376,159
Accumulated depreciation	(57,955)
Property and equipment, net	318,204
Operating lease right-of-use assets	687,555
Total lease assets	$	1,005,759
Lease liabilities:
Finance lease liabilities:
Current portion of debt	$	33,561
Long-term debt	196,697
Total finance lease liabilities	230,258
Operating lease liabilities:
Current portion of operating lease liabilities	96,976
Long-term operating lease liabilities	601,641
Total operating lease liabilities	698,617
Total lease liabilities	$	928,875

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


	Consolidated Statement of Comprehensive Income (Loss) Classification	Twelve Months Ended December 31, 2019
Lease costs:
Operating lease costs	Commission, transportation and other	$	76,226
Operating lease costs	Other operating expenses	27,868
Operating lease costs	Marketing, selling and administrative expenses	18,837
Finance lease costs:
Amortization of right-of-use-assets	Depreciation and amortization expenses	22,044
Interest on lease liabilities	Interest expense, net of interest capitalized	8,355
Total lease costs		$	153,330

In addition, certain of our berth agreements include variable lease costs based on the number of passengers berthed. During the twelve months ended December 31, 2019, we had $103.3 million of variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive income (loss).

F-30

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


	As of December 31, 2019
Weighted average of the remaining lease term
Operating leases	10.3
Finance leases	30.22
Weighted average discount rate
Operating leases	4.65	%
Finance leases	4.47	%

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


	Twelve Months Ended December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	125,307
Operating cash flows from finance leases	$	8,355
Financing cash flows from finance leases	$	32,090

As of December 31, 2019, maturities related to lease liabilities were as follows (in thousands):


Years	Operating Leases		Finance Leases

2020	$	126,235	$	43,793
2021	113,033		46,726
2022	104,907		23,801
2023	101,547		12,539
2024	75,510		12,528
Thereafter	417,122		405,756
Total lease payments	938,354		545,143
Less: Interest	(239,737)		(314,885)
Present value of lease liabilities	$	698,617	$	230,258

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

F-31

Under ASC 840, Leases, future minimum lease payments under noncancelable operating leases, primarily for offices, warehouses and motor vehicles, as of December 31, 2018 were as follows (in thousands):


Years
2019	$	67,682
2020	64,237
2021	56,142
2022	52,759
2023	52,522
Thereafter	383,974
	$	677,316

Total expense for operating leases, under ASC 840, primarily for offices, warehouses and motor vehicles amounted to $32.2 million and $29.3 million for the years ended December 31, 2018 and 2017, respectively.

In July 2016, we executed an agreement with Miami Dade County (“MDC”), which was simultaneously assigned to Sumitomo Banking Corporation (“SMBC”), to lease land from MDC and construct a new cruise terminal of approximately 170,000 square feet at PortMiami in Miami, Florida, which was completed during the fourth quarter of 2018 and serves as a homeport. During the construction period, SMBC funded the costs of the terminal’s construction and land lease. Once the terminal was substantially completed, we commenced operating and leasing the terminal from SMBC for a five-year term. We determined that the lease arrangement between SMBC and us should be accounted for as an operating lease.

Note 11. Redeemable Noncontrolling Interest

In connection with the acquisition of Silversea Cruises, we recorded a redeemable noncontrolling interest of $537.8 million due to the put options held by HCH. The put options may require us to purchase HCH's remaining interest, or 33.3% of Silversea Cruises, upon the occurrence or nonoccurrence of certain future events that are not solely within our control. As of December 31, 2019, HCH's interest is presented as Redeemable noncontrolling interest and is classified outside of shareholders' equity in our consolidated balance sheets. Additionally, the noncontrolling interest's share in the net earnings (loss) and contractual accretion requirements associated with the put options are included in Net Income attributable to noncontrolling interests in our consolidated statements of comprehensive income (loss).

The following table presents changes in the redeemable noncontrolling interest as of December 31, 2019 (in thousands):


Balance as of January 1, 2018	$	—
Additions (Silversea Cruises acqusition)	537,770
Net income attributable to noncontrolling interest, including the contractual accretion of the put options	4,750
Other	(500)
Balance at December 31, 2018	$	542,020
Net income attributable to noncontrolling interest, including the contractual accretion of the put options	28,713
Distribution to noncontrolling interest	(752)

Balance at December 31, 2019	$	569,981

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 8.12.Shareholders' Equity

Dividends Declared

During the fourth and third quarters of ~~2016,~~2019, we declared a cash dividend on our common stock of $0.78 per share which was paid in the first quarter of 2020 and fourth quarter of 2019, respectively. During the first and second quarters of 2019, we declared a cash dividend on our common stock of $0.70 per share which was paid in the second and third quarters of 2019, respectively.

During the fourth and third quarters of 2018, we declared a cash dividend on our common stock of $0.70 per share which was paid in the first quarter of 2019 and fourth quarter of 2018, respectively. During the first and second quarters of 2018, we declared a cash dividend on our common stock of $0.60 per share which was paid in the second and third quarters of 2018, respectively. During the first quarter of 2018, we also paid a cash dividend on our common stock of $0.60 per share which was declared during the fourth quarter of 2017.

During the fourth and third quarters of 2017, we declared a cash dividend on our common stock of $0.60 per share which was paid in the first quarter of 2018 and fourth quarter of 2017, respectively. During the first and second quarters of 2017, we declared a cash dividend on our common stock of $0.48 per share which was paid in the ~~first quarter of 2017 and fourth quarter of 2016, respectively. We also declared and paid a cash dividend on our common stock of $0.375 per share during each of the first and~~ second ~~quarters of 2016.~~

~~During the fourth~~ and third quarters of ~~2015, we declared a cash dividend on our common stock of $0.375 per share which was paid in the first quarter of 2016 and fourth quarter of 2015,~~2017, respectively. ~~We also declared and paid a cash dividend on our common stock of $0.30 per share during each of the first and second quarters of 2015.~~ During the first quarter of ~~2015,~~2017, we also paid a cash dividend on our common stock of ~~$0.30~~$0.48 per share which was declared during the fourth quarter of ~~2014.~~2016.

Common Stock Repurchase Program

~~During the fourth quarter of 2015,~~In May 2018, our board of directors authorized a 24-month common stock repurchase program for up to ~~$500~~$1.0 billion. The timing and number of shares to be repurchased will depend on a variety of factors, including price and market conditions. Repurchases under the program may be made at management's discretion from time to time on the open market or through privately negotiated transactions. During the year ended December 31, 2019, we repurchased 0.9 million ~~that was completed in August 2016. During 2016, we purchased 4.1 million~~ shares of our common stock under this program, for a total of ~~$300.0~~$99.6 million, in open market ~~transactions. These~~ transactions that were recorded within Treasury stock in our consolidated balance ~~sheet. Our repurchases~~sheets. As of December 31, 2019, we have $600.0 million that remains available for future stock repurchase transactions under ~~this program, including the 2.1 million shares repurchased for $200.0 million during the fourth quarter of 2015, totaled $500.0 million.~~our Board authorized program.

Note 9.13.Stock-Based Employee Compensation

We currently have awards outstanding under ~~two~~1 stock-based compensation ~~plans,~~plan, our 2008 Equity Plan, which ~~provide~~provides for awards to our officers, directors and key employees. The ~~plans consist~~plan consists of a ~~2000 Stock Award Plan and a 2008 Equity Plan. Our ability to issue new awards under the 2000 Stock Award Plan terminated in accordance with the terms of the plan in September 2009. The~~ 2008 Equity Plan, as amended, provides for the issuance of up to 14,000,000 shares of our common stock pursuant to grants of (i) incentive and non-qualified stock options, (ii) stock appreciation rights, (iii) stock awards (including time-based and/or performance-based stock awards) and (iv) restricted stock units (including time-based and performance-based restricted stock units). During any calendar year, no one individual (other than non-employee members of our ~~Board~~board of ~~Directors)~~directors) may be granted awards of more than 500,000 shares and no non-employee member of our ~~Board~~board of ~~Directors~~directors may be granted awards with a value in excess of $500,000 at the grant date. Options and restricted stock units outstanding as of December 31, ~~2016~~2019 generally vest in equal installments over four years from the date of grant. In addition, performance shares and performance share units generally vest in three years. With certain limited exceptions, awards are forfeited if the recipient ceases to be an employee before the shares vest. ~~Options are granted at a price not less than the fair value of the shares on the date of grant and expire not later than ten years after the date of grant.~~

Prior to 2012, our officers received a combination of stock options and restricted stock units. Beginning in 2012, our officers instead receive their long-term incentive awards through a combination of performance share units and restricted stock units. Each performance share unit award is expressed as a target number of performance share units based upon the fair market value of our common stock on the date the award is issued. The actual number of shares underlying each award (not to exceed 200% of the target number of performance share units) will be determined based upon the Company's achievement of a specified performance target range. In ~~2016,~~2019, we issued a target number of

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~~ROYAL CARIBBEAN CRUISES LTD.~~

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~182,464~~ 187,924 performance share units, which will vest approximately three years following the award issue date. The performance payout of these grants will be based on return on our invested capital ("ROIC") and

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

earnings per share (“EPS”) for the year ended December 31, ~~2018,~~2021, as may be adjusted by the Talent and Compensation Committee of our ~~Board~~board of ~~Directors~~directors in early ~~2019~~2022 for events that are outside of management's control. In 2014, we also issued a one-time performance-based equity award to our Chairman & Chief Executive Officer in a target amount of 63,771 performance share units, with the actual number of shares payable under the grant to range from 0% to 200% of target based on our 2015 ROIC performance. In February 2016, the Compensation Committee set the payout level for this grant at 165% of target. The shares issued in settlement of this award vested in February 2016 but remain subject to restrictions on transfer until December 2017, the third anniversary of the award issuance date.

Beginning in 2016, our senior officers meeting certain minimum age and service criteria receive their long-term incentive awards through a combination of restricted stock awards and restricted stock units. The restricted stock awards are subject to both performance and time-based vesting criteria while the restricted stock units are subject only to time-based vesting criteria. Each restricted stock award is issued in an amount equal to 200% of the target number of shares underlying the award based upon the fair market value of our common stock on the date the award is issued. Dividends accrue (but do not get paid) on the restricted stock awards during the vesting period, with the accrued amounts to be paid out following vesting only on the number of shares underlying the award which actually vest based on satisfaction of the performance criteria. The actual number of shares that vest (not to exceed 200% of the shares) will be determined based upon the Company's achievement of a specified performance target range. In ~~2016,~~2019, we issued ~~132,228~~194,486 restricted stock awards, representing 200% of the target number of shares underlying the award, all of which are considered issued and outstanding from the date of issuance, however; grantees will only retain those shares earned as the result of the Company achieving the performance goals during the measurement period. The performance payout of the ~~2016~~2019 awards will be based on ~~our return on invested capital ("ROIC")~~ROIC and ~~earnings per share (“EPS”)~~EPS for the year ended December 31, ~~2018,~~2021, as may be adjusted by the Talent and Compensation Committee of our ~~Board~~board of ~~Directors~~directors in early ~~2019~~2022 for events that are outside of management's control.

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

We also provide an Employee Stock Purchase Plan ("ESPP") to facilitate the purchase by employees of up to 1,300,000 shares of common stock in the aggregate. Offerings to employees are made on a quarterly basis. Subject to certain limitations, the purchase price for each share of common stock is equal to 85% of the average of the market prices of the common stock as reported on the New York Stock Exchange on the first business day of the purchase period and the last business day of each month of the purchase period. During ~~2016, 2015~~the years ended December 31, 2019, 2018 and ~~2014, 42,347, 28,724~~2017, 91,586, 74,100 and ~~26,921~~51,989 shares of our common stock were purchased under the ESPP at a weighted-average price of ~~$65.48, $72.52~~$98.20, $97.50 and ~~$52.08,~~$93.15, respectively.

In 1994, we granted to our Chairman and Chief Executive Officer an award of common stock, issuable in quarterly installments of 10,086 shares until the earlier of the termination of his employment or June 2014. In furtherance of this grant, we issued an aggregate of 20,172 shares of common stock in 2014.

Total compensation expense recognized for employee stock-based compensation for the years ended December 31, ~~2016, 2015~~2019, 2018 and ~~2014~~2017 was as ~~follows:~~follows (in thousands):


	Employee Stock-Based Compensation							Employee Stock-Based Compensation
Classification of expense	2016		2015		2014		Classification of expense	2019		2018		2017
(In thousands)
Marketing, selling and administrative expenses	$	32,659	$	36,073	$	26,116	Marketing, selling and administrative expenses	$	75,930	$	46,061	$	69,459

Total compensation expense	$	32,659	$	36,073	$	26,116	Total compensation expense	$	75,930	$	46,061	$	69,459

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model. The estimated fair value of stock options, less estimated forfeitures, is amortized over the vesting period using the graded-vesting method. We did not issue any stock options during the years ended December 31, ~~2016, 2015~~2019, 2018 and ~~2014.~~

2017.

~~F-25~~

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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


Stock Option Activity	Number of Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value⁽¹⁾		Stock Option Activity	Number of Options	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value⁽¹⁾
					(years)	(in thousands)						(years)	(in thousands)
Outstanding at January 1, 2016	411,809		$	33.69	3.12	$	28,111
Outstanding at January 1, 2019								Outstanding at January 1, 2019	153,093	$	29.06	1.23	$	10,399
Granted	—		—		—	—		Granted	—	—
Exercised	(61,014	)	$	37.87	—	—		Exercised	(87,262)	$	19.96
Canceled	(4,485	)	$	44.72	—	—		Canceled	(844)	$	33.73
Outstanding at December 31, 2016	346,310		$	32.82	2.39	$	17,221
Vested and expected to vest at December 31, 2016	346,310		$	32.82	2.39	$	17,221
Options Exercisable at December 31, 2016	346,310		$	32.82	2.39	$	17,221
Outstanding at December 31, 2019								Outstanding at December 31, 2019	64,987	$	41.22	0.87	$	5,990
Vested at December 31, 2019								Vested at December 31, 2019	64,987	$	41.22	0.87	$	5,990
Options Exercisable at December 31, 2019								Options Exercisable at December 31, 2019	64,987	$	41.22	0.87	$	5,990


~~(1)~~	~~The intrinsic value represents the amount by which the fair value of stock exceeds the option exercise price as of December 31, 2016.~~

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

The total intrinsic value of stock options exercised during the years ended December 31, ~~2016, 2015~~2019, 2018 and ~~2014~~2017 was ~~$17.2~~$8.1 million, ~~$13.8~~$11.1 million and ~~$35.9~~$4.5 million, respectively. As of December 31, ~~2016,~~2019, there was no0 unrecognized compensation cost, net of estimated forfeitures, related to stock options granted under our stock incentive plan.

Restricted stock units are converted into shares of common stock upon vesting or, if applicable, are settled on a ~~one-for-one~~1-for-one basis. The cost of these awards is determined using the fair value of our common stock on the date of the grant, and compensation expense is recognized over the vesting period. Restricted stock activity is summarized in the following table:


Restricted Stock Units Activity	Number of Awards		Weighted- Average Grant Date Fair Value
Non-vested share units as of January 1, 2019	$	800,585	$	103.32
Granted	293,707		112.13
Vested	(267,134)		96.96
Canceled	(25,323)		109.32
Non-vested share units as of December 31, 2019	$	801,835	$	88.97

Restricted Stock Units Activity Number of
Awards Weighted-
Average
Grant Date
Fair Value
Non-vested share units at January 1, 2016 820,649
$ 54.98
Granted 376,744
$ 64.51
Vested (333,733 ) $ 48.91
Canceled (115,144 ) $ 58.45
Non-vested share units expected to vest as of December 31, 2016 748,516
$ 61.95

The weighted-average estimated fair value of restricted stock units granted during the ~~year~~years ended ~~2015~~December 31, 2018 and ~~2014~~2017 was ~~$73.98~~$122.12 and ~~$54.60,~~$99.03, respectively. The total fair value of shares released on the vesting of restricted stock units during the years ended December 31, ~~2016, 2015~~2019, 2018 and ~~2014~~2017 was ~~$23.2~~$30.8 million, ~~$27.6~~$33.9 million and ~~$20.7~~$38.7 million, respectively. As of December 31, ~~2016,~~2019, we had ~~$13.7~~$37.1 million of total unrecognized compensation expense, net of estimated forfeitures, related to restricted stock unit grants, which will be recognized over the weighted-average period of ~~1.08~~1.39 years.

Performance share units are converted into shares of common stock upon vesting on a ~~one-for-one~~1-for-one basis. We estimate the fair value of each performance share when the grant is authorized and the related service period has commenced. We remeasure the fair value of our performance shares in each subsequent reporting period until the grant date has occurred, which is the date when the performance conditions are satisfied. We recognize compensation cost over the vesting period based on the probability of the service and performance conditions being achieved adjusted for each subsequent fair value measurement until the grant date. If the specified service and performance conditions

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~~ROYAL CARIBBEAN CRUISES LTD.~~

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

are not met, compensation expense will not be recognized and any previously recognized compensation expense will be reversed. Performance share units activity is summarized in the following table:

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ROYAL CARIBBEAN CRUISES LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Performance Share Units Activity	Number of Awards		Weighted- Average Grant Date Fair Value		Performance Share Units Activity	Number of Awards	Weighted- Average Grant Date Fair Value
Non-vested share units at January 1, 2016	504,211		$	53.57
Non-vested share units as of January 1, 2019					Non-vested share units as of January 1, 2019	302,561	88.57
Granted	182,464		$	65.83	Granted	187,924	87.39
Vested	(253,509	)	$	52.25	Vested	(198,537)	62.49
Canceled	(91,014	)	$	50.99	Canceled	(5,931)	95.12
Non-vested share units expected to vest as of December 31, 2016	342,152		$	61.78
Non-vested share units as of December 31, 2019					Non-vested share units as of December 31, 2019	286,017	105.76

The weighted-average estimated fair value of performance share units granted during the ~~year~~years ended ~~2015~~December 31, 2018 and ~~2014~~2017 was ~~$71.36~~$97.98 and ~~$56.72,~~$84.16, respectively. The total fair value of shares released on the vesting of performance share units during the years ended December 31, ~~2016~~2019, ~~2015~~2018 and ~~2014~~2017 was ~~$16.9~~$23.0 million, $~~18.3~~27.3 million and ~~$0.4~~$10.0 million, respectively. As of December 31, ~~2016,~~2019, we had ~~$7.9~~$10.0 million of total unrecognized compensation expense, net of estimated forfeitures, related to performance share unit grants, which will be recognized over the weighted-average period of 1.06 ~~years.~~year.

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


Restricted Stock Awards Activity	Number of Awards	Weighted- Average Grant Date Fair Value
Non-vested share units as of January 1, 2019	390,198	96.03
Granted	194,486	118.08
Vested	(120,329)	66.93
Canceled	(11,899)	66.93
Non-vested share units as of December 31, 2019	452,456	114.01

Restricted Stock Awards Activity Number of
Awards Weighted-
Average
Grant Date
Fair Value
Non-vested share units at January 1, 2016 —
$ —
Granted 132,228
$ 66.93
Vested —
$ —
Canceled —
$ —
Non-vested share units expected to vest as of December 31, 2016 132,228
$ 66.93

The weighted-average estimated fair value of restricted stock awards granted during the years ended December 31, 2018 and 2017 was $129.23 and $95.04, respectively. As of December 31, ~~2016,~~2019, we had ~~$1.5~~$3.2 million of total unrecognized compensation expense, net of estimated forfeitures, related to restricted stock award grants, which will be recognized over the weighted-average period of ~~0.18~~1.24 years.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note ~~10.~~14.Earnings Per Share

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


	Year Ended December 31,
	2019		2018		2017
Net Income attributable to Royal Caribbean Cruises Ltd. for basic and diluted earnings per share	$	1,878,887	$	1,811,042	$	1,625,133
Weighted-average common shares outstanding	209,405		210,570		214,617
Dilutive effect of stock-based awards	525		984		1,077
Diluted weighted-average shares outstanding	209,930		211,554		215,694
Basic earnings per share	$	8.97	$	8.60	$	7.57
Diluted earnings per share	$	8.95	$	8.56	$	7.53

~~F-27~~

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~~ROYAL CARIBBEAN CRUISES LTD.~~

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

Year Ended December 31,
2016 2015 2014
Net income for basic and diluted earnings per share $ 1,283,388
$ 665,783
$ 764,146
Weighted-average common shares outstanding 215,393
219,537
221,658
Dilutive effect of stock options, performance share awards and restricted stock awards 923
1,152
1,386
Diluted weighted-average shares outstanding 216,316
220,689
223,044
Basic earnings per share:
Net income $ 5.96
$ 3.03
$ 3.45
Diluted earnings per share:
Net income $ 5.93
$ 3.02
$ 3.43

There were no0 antidilutive shares for the ~~year~~years ended December 31, ~~2016~~2019, ~~2015~~2018 and ~~2014.~~2017.

Note ~~11.~~15.Retirement Plan

We maintain a defined contribution plan covering ~~full-time~~ shoreside ~~employees who have completed~~employees. Effective January 1, 2016, we commenced annual, non-elective contributions to the ~~minimum period~~plan on behalf of ~~continuous service. Annual~~all eligible participants equal to 3% of participants' eligible earnings. Remaining annual contributions to the plan are discretionary and are based on fixed percentages of participants' salaries and years of service, not to exceed certain maximums. Contribution expenses were ~~$16.7~~$21.2 million, ~~$16.8~~$18.9 million and ~~$15.4~~$17.4 million for the years ended December 31, ~~2016, 2015~~2019, 2018 and ~~2014,~~2017, respectively.

Note ~~12.~~16.Income Taxes

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

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

Income tax expense ~~(benefit)~~ for items not qualifying under Section 883, tonnage ~~taxes~~tax and income taxes for the remainder of our subsidiaries was approximately ~~$20.1~~$32.6 million, ~~$11.1~~$20.9 million and ~~$(20.9)~~$18.3 million ~~and was recorded within~~ ~~Other income (expense)~~ for the years ended December 31, ~~2016, 2015~~2019, 2018 and ~~2014, respectively.~~2017, respectively, and was recorded within Other income (expense). In addition, all interest expense and penalties related to income tax liabilities are classified as income tax expense within Other income (expense).

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

As of December 31, ~~2016,~~2019, the Company had ~~Net Operating Losses~~deferred tax assets, for foreign net operating losses (“NOLs”) ~~in foreign jurisdictions~~ of ~~$67.6~~$25.1 million. ~~If not utilized, $51.8~~We have provided a full valuation allowance for these NOLs. $17.6 million of the NOLs are subject to ~~expiration~~expire between ~~2017~~2020 and ~~2024. The Company has not recognized any benefits related to these NOLs, as all NOLs have full valuation allowances.~~

2025.

~~F-28~~

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

~~Net~~Our deferred tax assets and deferred tax liabilities and corresponding valuation allowances related to our operations were not material as of December 31, ~~2016~~2019 and ~~2015.~~2018.

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

During the fourth quarter of 2014, Spain adopted tax reform legislation, which included among other things, a reduction of the corporate income tax rate from 30% to 28% in 2015 and a further reduction to 25% in 2016. As a result, we adjusted our deferred tax assets and deferred tax liabilities in Spain to reflect the new tax rate at which we believe they will be realized. This change resulted in a net deferred income tax benefit of $10.0 million. The tax reform also amended the net operating loss carryforward rules by changing the carryforward period from 18 years to unlimited and by changing the annual utilization limitation from 25% of taxable income to 70% of taxable income for certain taxpayers, including Pullmantur. As a result of the change of the net operating loss carryforward period, we reversed a portion of the valuation allowance recorded in 2012 to the extent of 70% of the rate-adjusted deferred tax liability recorded for the basis difference between the tax and book values of the trademarks and trade names recorded at the time of the Pullmantur acquisition and other indefinite lived assets recorded. The amount of the valuation allowance reversed in the fourth quarter of 2014 was $33.5 million which was recorded as a deferred tax benefit. These deferred tax adjustments are reported within ~~Other income (expense)~~ ~~in our consolidated statements of comprehensive income (loss).~~

During the third quarter of 2015, the Pullmantur trademark and trade names were impaired. As a result of the impairment, there was no longer a difference between the book and tax basis of the trademark and trade names. During the third quarter of 2015, we reversed the deferred tax liability of $43.4 million and increased the deferred tax asset valuation allowance by $31.4 million, or to 100% of the deferred tax asset balance. The resulting net $12.0 million deferred tax benefit was recorded as part of our income tax provision and was reported within ~~Other income (expense)~~ ~~in our consolidated statements of comprehensive income (loss). Effective July 31, 2016, we sold 51% of our interest in Pullmantur Holdings. For further information on the sale transaction, refer to~~ Note 1. ~~General~~.

~~Note 13.~~ 17. Changes in Accumulated Other Comprehensive Income (Loss)

The following table presents the changes in accumulated other comprehensive ~~income (loss)~~loss by component for the years ended December 31, ~~2016~~2019, 2018 and ~~2015~~2017 (in thousands):


	Changes related to cash flow derivative hedges		Changes in defined benefit plans		Foreign currency translation adjustments		Accumulated other comprehensive (loss) income

Accumulated comprehensive loss at January 1, 2017	$	(820,850)	$	(28,083)	$	(67,551)	$	(916,484)
Other comprehensive income (loss) before reclassifications	381,865		(6,755)		17,307		392,417
Amounts reclassified from accumulated other comprehensive loss	188,630		1,172		—		189,802
Net current-period other comprehensive income (loss)	570,495		(5,583)		17,307		582,219

Accumulated comprehensive loss at January 1, 2018	(250,355)		(33,666)		(50,244)		(334,265)
Other comprehensive income (loss) before reclassifications	(297,994)		6,156		(14,251)		(306,089)
Amounts reclassified from accumulated other comprehensive loss	11,133		1,487		—		12,620
Net current-period other comprehensive (loss) income	(286,861)		7,643		(14,251)		(293,469)

Accumulated comprehensive loss at January 1, 2019	(537,216)		(26,023)		(64,495)		(627,734)
Other comprehensive (loss) income before reclassifications	(146,108)		(20,314)		869		(165,553)
Amounts reclassified from accumulated other comprehensive loss	(5,205)		779		—		(4,426)
Net current-period other comprehensive (loss) income	(151,313)		(19,535)		869		(169,979)

Accumulated comprehensive loss at December 31, 2019	$	(688,529)	$	(45,558)	$	(63,626)	$	(797,713)

~~F-29~~

F-38

Table of Contents

ROYAL CARIBBEAN CRUISES LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Changes related to cash flow derivative hedges Changes in defined
benefit plans Foreign currency translation adjustments Accumulated other comprehensive income (loss)

Accumulated comprehensive income (loss) at January 1, 2014 $ 43,324
$ (23,994 ) $ (13,659 ) $ 5,671
Other comprehensive loss before reclassifications (919,094 ) (8,937 ) (28,099 ) (956,130 )
Amounts reclassified from accumulated other comprehensive income (loss) 49,744
1,724
1,997
53,465
Net current-period other comprehensive loss (869,350 ) (7,213 ) (26,102 ) (902,665 )

Accumulated comprehensive loss at January 1, 2015 (826,026 ) (31,207 ) (39,761 ) (896,994 )
Other comprehensive (loss) income before reclassifications (697,671 ) 3,053
(25,952 ) (720,570 )
Amounts reclassified from accumulated other comprehensive loss 291,624
1,707
(4,200 ) 289,131
Net current-period other comprehensive (loss) income (406,047 ) 4,760
(30,152 ) (431,439 )

Accumulated comprehensive loss at January 1, 2015 (1,232,073 ) (26,447 ) (69,913 ) (1,328,433 )
Other comprehensive income (loss) before reclassifications 73,973
(2,777 ) 2,362
73,558
Amounts reclassified from accumulated other comprehensive income (loss) 337,250
1,141
—
338,391
Net current-period other comprehensive income (loss) 411,223
(1,636 ) 2,362
411,949

Accumulated comprehensive loss at December 31, 2016 $ (820,850 ) $ (28,083 ) $ (67,551 ) $ (916,484 )

The following table presents reclassifications out of accumulated other comprehensive ~~income (loss)~~loss for the years ended December 31, ~~2016~~2019, 2018 and ~~2015~~2017 (in thousands):


	Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income
Details about Accumulated Other Comprehensive Loss Components	Year Ended December 31, 2019		Year Ended December 31, 2018		Year Ended December 31, 2017		Affected Line Item in Statements of Comprehensive Income (Loss)
Gain (loss) on cash flow derivative hedges:


Interest rate swaps	(4,289)		(10,931)		(31,603)		Interest expense, net of interest capitalized
Foreign currency forward contracts	(14,063)		(12,843)		(10,840)		Depreciation and amortization expenses
Foreign currency forward contracts	(5,080)		12,855		(9,472)		Other income (expense)

Foreign currency forward contracts	—		—		—		Other indirect operating expenses
Foreign currency collar options	—		—		(2,408)		Depreciation and amortization expenses
Fuel swaps	(1,292)		(1,580)		7,382		Other income (expense)
Fuel swaps	29,929		1,366		(141,689)		Fuel
	5,205		(11,133)		(188,630)
Amortization of defined benefit plans:
Actuarial loss	(779)		(1,487)		(1,172)		Payroll and related

	(779)		(1,487)		(1,172)


Total reclassifications for the period	$	4,426	$	(12,620)	$	(189,802)

~~F-30~~

~~Table of Contents~~

~~ROYAL CARIBBEAN CRUISES LTD.~~

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

Amount of Loss Reclassified from Accumulated Other Comprehensive Income (Loss) into Income
Details about Accumulated Other Comprehensive Income (Loss) Components Year Ended December 31, 2016 Year Ended December 31, 2015 Year Ended December 31, 2014 Affected Line Item in Statements of Comprehensive Income (Loss)
Loss on cash flow derivative hedges:
     Cross currency swaps $ —
$ —
$ (261 ) Interest expense, net of interest capitalized
     Interest rate swaps (41,480 ) (36,401 ) (15,264 ) Interest expense, net of interest capitalized
     Foreign currency forward contracts (8,114 ) (2,871 ) (1,887 ) Depreciation and amortization expenses
     Foreign currency forward contracts (14,342 ) 7,580
(4,291 ) Other income (expense)
     Foreign currency forward contracts —
—
(57 ) Interest expense, net of interest capitalized
     Foreign currency forward contracts (207 ) —
—
Other indirect operating expenses
     Foreign currency collar options (2,408 ) (1,605 ) —
Depreciation and amortization expenses
     Fuel swaps 13,685
(9,583 ) —
Other income (expense)
     Fuel swaps (284,384 ) (248,744 ) (27,984 ) Fuel
(337,250 ) (291,624 ) (49,744 )
Amortization of defined benefit plans:
    Actuarial loss (1,141 ) (1,414 ) (888 ) Payroll and related

Prior service costs —
(293 ) (836 )

Payroll and related
(1,141 ) (1,707 ) (1,724 )
Release of foreign cumulative translation due to sale or liquidation of businesses:
Foreign cumulative translation —
4,200
(1,997 ) Other operating
Total reclassifications for the period $ (338,391 ) $ (289,131 ) $ (53,465 )

Note ~~14.~~18. Fair Value Measurements and Derivative Instruments

Fair Value Measurements

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


	Fair Value Measurements at December 31, 2016 Using										Fair Value Measurements at December 31, 2015 Using											Fair Value Measurements at December 31, 2019																		Fair Value Measurements at December 31, 2018
Description	Total Carrying Amount		Total Fair Value		Level 1⁽¹⁾		Level 2⁽²⁾		Level 3⁽³⁾		Total Carrying Amount		Total Fair Value		Level 1⁽¹⁾		Level 2⁽²⁾		Level 3⁽³⁾		Description	Total Carrying Amount		Total Fair Value		Level 1⁽¹⁾		Level 2⁽²⁾		Level 3⁽³⁾		Total Carrying Amount		Total Fair Value		Level 1⁽¹⁾		Level 2⁽²⁾		Level 3⁽³⁾
Assets:																					Assets:
Cash and cash equivalents⁽⁴⁾	$	132,603	$	132,603	$	132,603	$	—	$	—	$	121,565	$	121,565	$	121,565	$	—	$	—
Cash and cash equivalents(4)																					Cash and cash equivalents(4)	$	243,738	$	243,738	$	243,738	—		—		$	287,852	$	287,852	$	287,852	—		—
Total Assets	$	132,603	$	132,603	$	132,603	$	—	$	—	$	121,565	$	121,565	$	121,565	$	—	$	—	Total Assets	$	243,738	$	243,738	$	243,738	$	—	$	—	$	287,852	$	287,852	$	287,852	$	—	$	—
Liabilities:																					Liabilities:
Long-term debt (including current portion of long-term debt)⁽⁵⁾	$	9,347,051	$	9,859,266	$	—	$	9,859,266	$	—	$	8,478,473	$	8,895,009	$	—	$	8,895,009	$	—
Long-term debt (including current portion of long-term debt)(5)																					Long-term debt (including current portion of long-term debt)(5)	$	9,370,438	$	10,059,055	—		$	10,059,055	—		$	9,871,267	$	10,244,214	—		$	10,244,214	—
Total Liabilities	$	9,347,051	$	9,859,266	$	—	$	9,859,266	$	—	$	8,478,473	$	8,895,009	$	—	$	8,895,009	$	—	Total Liabilities	$	9,370,438	$	10,059,055	$	—	$	10,059,055	$	—	$	9,871,267	$	10,244,214	$	—	$	10,244,214	$	—


Year	North America⁽¹⁾⁽²⁾	Europe⁽¹⁾⁽³⁾	Asia/Pacific⁽¹⁾⁽⁴⁾
2015	3.36%	1.25%	0.08%
2016	3.43%	1.23%	0.11%
2017	3.56%	1.28%	0.15%
2018	3.87%	1.38%	0.16%
2019	3.89%	1.41%	0.20%



Year	North America⁽¹⁾⁽²⁾	Europe⁽¹⁾⁽³⁾	Asia/Pacific⁽¹⁾⁽⁴⁾
2012	3.33%	1.21%	0.04%
2013	3.32%	1.24%	0.05%
2014	3.46%	1.23%	0.06%
2015	3.36%	1.25%	0.08%
2016	3.49%	1.24%	0.09%


Year	Weighted-Average Supply of Berths Marketed Globally⁽¹⁾	Royal Caribbean Cruises Ltd. Total Berths⁽²⁾	Global Cruise Guests⁽¹⁾	North American Cruise Guests⁽¹⁾⁽³⁾	European Cruise Guests⁽¹⁾⁽⁴⁾	Asia/Pacific Cruise Guests⁽¹⁾⁽⁵⁾	Year	Weighted-Average Supply of Berths Marketed Globally⁽¹⁾	Royal Caribbean Cruises Ltd. Total Berths⁽²⁾	Global Cruise Guests⁽¹⁾	North American Cruise Guests⁽¹⁾⁽³⁾	European Cruise Guests⁽¹⁾⁽⁴⁾	Asia/Pacific Cruise Guests⁽¹⁾⁽⁵⁾
2012	425,000	98,650	20,813	11,641	6,225	1,474
2013	432,000	98,750	21,343	11,710	6,430	2,045
2014	448,000	105,750	22,039	12,269	6,387	2,382
2015	469,000	112,700	23,000	12,004	6,587	3,129	2015	469,000	112,700	23,000	12,004	6,587	3,129
2016	493,000	123,270	24,000	12,581	6,542	3,636	2016	493,000	123,270	24,000	12,274	6,512	4,466
2017							2017	515,000	124,070	26,700	12,865	6,779	5,415
2018							2018	546,000	135,520	28,500	14,062	7,343	5,685
2019							2019	579,000	141,570	30,000	14,246	7,554	7,317


Ship	Year Ship Built	Year Ship Entered/Will Enter Service⁽¹⁾	Approximate Berths	Primary Areas of Operation
Royal Caribbean International
Odyssey of the Seas	2020	2020	4,200	Eastern/Western Caribbean
Spectrum of the Seas	2019	2019	4,250	Eastern Asia
Symphony of the Seas	2018	2018	5,500	Eastern/Western Caribbean
Harmony of the Seas	2016	2016	5,450	Eastern/Western Caribbean
Ovation of the Seas	2016	2016	4,100	Australia, Alaska
Anthem of the Seas	2015	2015	4,100	Southern Caribbean, Bahamas, Europe
Quantum of the Seas	2014	2014	4,150	Eastern Asia
Allure of the Seas	2010	2010	5,450	Eastern/Western Caribbean, Europe
Oasis of the Seas	2009	2009	5,650	Eastern/Western Caribbean, Bahamas
Independence of the Seas	2008	2008	3,850	Western Caribbean, Bahamas
Liberty of the Seas	2007	2007	3,750	Western Caribbean
Freedom of the Seas	2006	2006	3,750	Southern Caribbean
Jewel of the Seas	2004	2004	2,150	Western Caribbean, Europe, Middle East
Mariner of the Seas	2003	2003	3,300	Bahamas
Serenade of the Seas	2003	2003	2,100	Southern Caribbean, Alaska, Australia
Navigator of the Seas	2002	2002	3,350	Bahamas
Brilliance of the Seas	2002	2002	2,100	Western Caribbean, Europe, Canada
Adventure of the Seas	2001	2001	3,300	Eastern/Western Caribbean, Bermuda, Canada
Radiance of the Seas	2001	2001	2,100	Australia, Alaska
Explorer of the Seas	2000	2000	3,250	Europe, Western/Southern Caribbean
Voyager of the Seas	1999	1999	3,400	Eastern Asia, Australia
Vision of the Seas	1998	1998	2,000	Southern Caribbean, Europe, Canada
Enchantment of the Seas	1997	1997	2,250	Southern/Western Caribbean, Bahamas
Rhapsody of the Seas	1997	1997	2,000	Western Caribbean, Europe
Grandeur of the Seas⁽²⁾	1996	1996	1,950	Bahamas, Southern Caribbean, Bermuda, Canada
Majesty of the Seas	1992	1992	2,350	Western Caribbean, Bahamas
Empress of the Seas	1990	2016	1,550	Eastern/Western Caribbean, Canada, Bermuda
Celebrity Cruises
Celebrity Apex	2020	2020	2,900	Europe, Eastern/Western Caribbean
Celebrity Flora	2019	2019	100	Galapagos Islands
Celebrity Edge	2018	2018	2,900	Eastern/Western Caribbean, Europe



Ship	Year Ship Built	Year Ship Entered Service⁽¹⁾	Approximate Berths	Primary Areas of Operation
Royal Caribbean International
Harmony of the Seas	2016	2016	5,450	Eastern/Western Caribbean
Ovation of the Seas	2016	2016	4,100	Eastern Asia, Australia/New Zealand
Anthem of the Seas	2015	2015	4,150	Bermuda, Canada, Eastern/Western/Southern Caribbean
Quantum of the Seas	2014	2014	4,150	Eastern Asia
Allure of the Seas	2010	2010	5,450	Eastern/Western Caribbean
Oasis of the Seas	2009	2009	5,450	Eastern/Western Caribbean
Independence of the Seas	2008	2008	3,600	Northern Europe, Mediterranean, Western Caribbean
Liberty of the Seas	2007	2007	3,750	Western Caribbean
Freedom of the Seas	2006	2006	3,750	Eastern/Western Caribbean, Mediterranean
Jewel of the Seas	2004	2004	2,150	Mediterranean, Southern Caribbean
Mariner of the Seas	2003	2003	3,100	Eastern Asia and Southeastern Asia
Serenade of the Seas	2003	2003	2,100	Southern Caribbean, Northern Europe, Canada
Navigator of the Seas	2002	2002	3,250	Northern Europe, Southern/Western Caribbean, Mediterranean
Brilliance of the Seas	2002	2002	2,100	Mediterranean, Western Caribbean
Adventure of the Seas	2001	2001	3,100	Southern Caribbean
Radiance of the Seas	2001	2001	2,100	Alaska, Australia/New Zealand
Explorer of the Seas	2000	2000	3,250	Alaska, Australia/New Zealand
Voyager of the Seas	1999	1999	3,250	Eastern Asia, Australia/New Zealand
Vision of the Seas	1998	1998	2,000	Northern Europe, Canada, Western Caribbean
Enchantment of the Seas	1997	1997	2,250	Bahamas
Rhapsody of the Seas	1997	1997	2,000	Mediterranean, Western Caribbean
Grandeur of the Seas	1996	1996	1,950	Southern/Eastern/Western Caribbean, Bermuda, Bahamas
Legend of the Seas⁽²⁾	1995	1995	1,800	Australia/New Zealand
Majesty of the Seas	1992	1992	2,350	Bahamas
Empress of the Seas	1990	2016	1,550	Western Caribbean
Celebrity Cruises
Celebrity Reflection	2012	2012	3,000	Mediterranean, Eastern/Western Caribbean
Celebrity Silhouette	2011	2011	2,850	Northern Europe, Mediterranean, Eastern/Western Caribbean
Celebrity Eclipse	2010	2010	2,850	Northern Europe, Southern Caribbean
Celebrity Equinox	2009	2009	2,850	Eastern/Western/Southern Caribbean
Celebrity Solstice	2008	2008	2,850	Alaska, Australia/New Zealand
Celebrity Xploration	2007	2016	20	Galapagos Islands
Celebrity Constellation	2002	2002	2,150	Mediterranean, Middle East, Southeast Asia
Celebrity Summit	2001	2001	2,150	Eastern/Western/Southern Caribbean, Bermuda, Canada



(Mark One)
x☒			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



o☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



Republic of Liberia (State or other jurisdiction of incorporation or organization)			98-0081645 (I.R.S. Employer Identification No.)


~~(1)~~	Source: Our estimates are based on a combination of data obtained from publicly available sources including the International Monetary Fund, United Nations, Department of Economic and Social Affairs, Cruise Lines International Association ("CLIA") and G.P. Wild.


~~(2)~~	~~Our estimates include the United States and Canada.~~


~~(3)~~	~~Our estimates include European countries relevant to the industry (e.g., Nordics, Germany, France, Italy, Spain and the United Kingdom).~~


~~(4)~~	Our estimates include the Southeast Asia (e.g., Singapore, Thailand and the Philippines), East Asia (e.g., China and Japan), South Asia (e.g. India and Pakistan) and Oceanian (e.g., Australia and Fiji Islands) regions.


~~(2)~~	~~Total berths include our berths related to our Global Brands and Partner Brands.~~


~~(5)~~	Our estimates include the Southeast Asia (e.g., Singapore, Thailand and the Philippines), East Asia (e.g., China and Japan), South Asia (e.g., India and Pakistan) and Oceanian (e.g., Australia and Fiji Islands) regions.


~~(1)~~	~~The year a ship entered service refers to the year in which the ship commenced cruise revenue operations for the brand.~~



	NYSE Common Stock
	High	Low
2016
Fourth Quarter	$86.84	$67.53
Third Quarter	$75.72	$65.10
Second Quarter	$84.56	$64.95
First Quarter	$99.81	$64.21
2015
Fourth Quarter	$103.40	$87.08
Third Quarter	$97.60	$77.74
Second Quarter	$83.32	$65.91
First Quarter	$85.56	$72.79


	12/11	12/12	12/13	12/14	12/15	12/16		12/14	12/15	12/16	12/17	12/18	12/19
Royal Caribbean Cruises Ltd.	100.00	139.36	198.03	350.40	437.09	362.38	Royal Caribbean Cruises Ltd.	100.00	124.74	103.42	153.30	128.55	179.92
S&P 500	100.00	116.00	153.58	174.60	177.01	198.18	S&P 500	100.00	101.38	113.51	138.29	132.23	173.86
Dow Jones US Travel & Leisure	100.00	113.33	164.87	191.85	203.17	218.56
Dow Jones U.S. Travel & Leisure							Dow Jones U.S. Travel & Leisure	100.00	105.90	113.92	141.05	133.16	165.04


~~(1)~~	~~TUI Cruises plans to offset this additional capacity through the planned transfer of the their first two ships,~~ ~~Mein Schiff 1~~ ~~and~~ ~~Mein Schiff 2, to Thomson Cruises in 2018 and 2019, respectively.~~


	Year Ended December 31,											Year Ended December 31,
	2016 ⁽¹⁾		2015		2014		2013		2012			2019⁽¹⁾	2018⁽²⁾	2017	2016⁽³⁾	2015
Passengers Carried	5,754,747		5,401,899		5,149,952		4,884,763		4,852,079		Passengers Carried	6,553,865	6,084,201	5,768,496	5,754,747	5,401,899
Passenger Cruise Days	40,250,557		38,523,060		36,710,966		35,561,772		35,197,783		Passenger Cruise Days	44,803,953	41,853,052	40,033,527	40,250,557	38,523,060
Available Passenger Cruise Days (APCD)	37,844,644		36,646,639		34,773,915		33,974,852		33,705,584		Available Passenger Cruise Days (APCD)	41,432,451	38,425,304	36,930,939	37,844,644	36,646,639
Occupancy	106.4	%	105.1	%	105.6	%	104.7	%	104.4	%	Occupancy	108.1%	108.9%	108.4%	106.4%	105.1%



Name		Age			Position
Richard D. Fain		6972			Chairman, Chief Executive Officer and Director
~~Adam M. Goldstein~~Jason T. Liberty		5744			Executive Vice President, ~~and~~ Chief ~~Operating~~Financial Officer
Michael W. Bayley		5861			President and Chief Executive Officer, Royal Caribbean International
Lisa Lutoff-Perlo		5962			President and Chief Executive Officer, Celebrity Cruises
Lawrence Pimentel		6568			President and Chief Executive Officer, Azamara ~~Club Cruises~~
~~Jason T. Liberty~~		41	~~Chief Financial Officer~~
Harri U. Kulovaara	6467			Executive Vice President, Maritime
Bradley H. Stein		6164			Senior Vice President, General Counsel, Chief Compliance Officer
Henry L. Pujol		4952			Senior Vice President, Chief Accounting Officer


Period	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Approximate dollar value of shares that may yet be purchased under the plans or programs
October 1, 2019 - October 31, 2019	—	—		—	$	700,000,000
November 1, 2019 - November 30, 2019	859,701	$	115.83	859,701	$	600,417,000
December 1, 2019 - December 31, 2019	—	—		—	$	600,417,000
Total	859,701			859,701


~~(1)~~	~~For 2016, 2015 and 2014, refer to~~ ~~Financial Presentation~~ ~~and~~ ~~Results of Operations~~ ~~under Item 7.~~ ~~Management's Discussion and Analysis of Financial Condition and Results of Operations~~ ~~for definition of Adjusted Net Income and reconciliation of Adjusted Net Income to Net income.~~ 38 Table of C ontents


~~(2)~~	Amount for 2013 excludes restructuring and related impairment charges of $56.9 million and an $8.6 million loss related to the estimated impact of Pullmantur's non-core businesses that were sold in 2014.



	Year Ended December 31,
	2016			2016 On a Constant Currency basis			2015		2014
Passenger ticket revenues	$	6,149,323		$	6,320,827		$	6,058,821	$	5,893,847
Onboard and other revenues	2,347,078			2,363,497			2,240,253		2,180,008
Total revenues	8,496,401			8,684,324			8,299,074		8,073,855
Less:
Commissions, transportation and other	1,349,677			1,382,295			1,400,778		1,372,785
Onboard and other	493,558			495,101			553,104		582,750
Net revenues including other initiative costs and divested businesses	6,653,166			6,806,928			6,345,192		6,118,320
Less:
Other initiative costs included within Net Revenues	(2,230		)	(2,129		)	—		—
Net revenues related to divested businesses prior to sales transaction	—			—					35,656
Net Revenues	$	6,655,396		$	6,809,057		$	6,345,192	$	6,082,664

APCD	37,844,644			37,844,644			36,646,639		34,773,915
Gross Yields	$	224.51		$	229.47		$	226.46	$	232.18
Net Yields	$	175.86		$	179.92		$	173.15	$	174.92



Net increase (decrease) in cash and cash equivalents	11,038		(67,676		)	(15,446		)
Cash and cash equivalents at beginning of year	121,565		189,241			204,687
Cash and cash equivalents at end of year	$	132,603	$	121,565		$	189,241
Supplemental Disclosures
Cash paid during the year for:
Interest, net of amount capitalized	$	256,775	$	248,611		$	276,933

Non-Cash Investing Activities
Notes receivable issued upon sale of property and equipment	$	213,042	$	—		$	—



	Royal Caribbean International			Celebrity Cruises		Total
Balance at December 31, 2014	$	286,958		$	—	$	286,958
Foreign currency translation adjustment	(194		)	—		(194		)
Balance at December 31, 2015	286,764			—		286,764
Goodwill attributable to purchase of Ocean Adventures⁽¹⁾	—			1,600		1,600
Foreign currency translation adjustment	(10		)	32		22
Balance at December 31, 2016	$	286,754		$	1,632	$	288,386



	Pullmantur
Balance at December 31, 2014	$	133,584
Impairment charge	(123,814		)
Foreign currency translation adjustment	(9,770		)
Balance at December 31, 2015	$	—



	2015
Indefinite-life intangible asset—Pullmantur trademarks and trade names	$	188,038
Impairment charge	(174,285		)
Foreign currency translation adjustment	(13,753		)
Total	$	—



	2016			2015
$1.4 billion unsecured revolving credit facility, LIBOR plus 1.50%, currently 2.26% and a facility fee of 0.25%, due 2020	$	925,000		$	945,000
$1.2 billion unsecured revolving credit facility, LIBOR plus 1.50%, currently 2.24% and a facility fee of 0.25%, due 2018	805,000			895,000
Unsecured senior notes and senior debentures, 5.25% to 7.50%, due 2018, 2022 and 2027	1,073,261			1,434,542
$200 million unsecured term loan, LIBOR plus 1.30%, currently 2.06% due 2017	200,000			—
$841.8 million unsecured term loan, LIBOR plus 1.00%, currently 2.26% due through 2028	806,756			—
$226.1 million unsecured term loan, 2.53%, due through 2028	216,677			—
€700.7 million unsecured term loan, EURIBOR plus 1.15% currently 1.15%, due through 2028	708,417			—
$742.1 million unsecured term loan, LIBOR plus 1.30%, currently 2.56%, due through 2027	649,338			711,180
$273.2 million unsecured term loan, LIBOR plus 1.75%, currently 2.52%, due 2017	273,166			—
$519 million unsecured term loan, LIBOR plus 0.45%, currently 1.71%, due through 2020	173,049			216,311
$420 million unsecured term loan, 5.41%, due through 2021	171,444			207,223
$420 million unsecured term loan, LIBOR plus 1.65%, currently 2.91%, due through 2021	175,000			210,000
€159.4 million unsecured term loan, EURIBOR plus 1.58%, currently 1.58%, due through 2021	70,082			86,650
$524.5 million unsecured term loan, LIBOR plus 0.50%, currently 1.48%, due through 2021	218,542			262,250
$566.1 million unsecured term loan, LIBOR plus 0.37%, currently 1.63%, due through 2022	259,448			306,621
$1.1 billion unsecured term loan, LIBOR plus 1.65%, currently 2.91%, due through 2022	460,652			537,426
$632.0 million unsecured term loan, LIBOR plus 0.40%, currently 1.38%, due through 2023	368,643			421,306
$673.5 million unsecured term loan, LIBOR plus 0.40%, currently 1.66%, due through 2024	448,983			505,106
$65.0 million unsecured term loan, LIBOR plus 1.75%, currently 2.52%, due through 2019	67,027			71,500
$380.0 million unsecured term loan, LIBOR plus 1.75%, currently 2.52%, due 2018	380,000			380,000
$791.1 million unsecured term loan, LIBOR plus 1.30%, currently 2.56%, due through 2026	659,256			725,182
$290.0 million unsecured term loan, LIBOR plus 1.75%, currently 2.52%, due 2018	290,000			290,000
€365 million unsecured term loan, EURIBOR plus 1.75%, currently 1.75%, due 2017	123,963			396,755
$7.3 million unsecured term loan, LIBOR plus 2.5%, currently 3.76%, due through 2023	3,964			4,440
$30.3 million unsecured term loan, LIBOR plus 3.75%, currently 4.70%, due through 2021	6,597			11,793
Capital lease obligations	40,385			48,770
Total debt	9,574,650			8,667,055
Less: unamortized debt issuance costs	(187,214		)	(139,812		)
Total debt, net of unamortized debt issuance costs	9,387,436			8,527,243
Less: current portion	(1,285,735		)	(899,542		)
Long-term portion	$	8,101,701		$	7,627,701



Year
2017	$	1,285,735
2018	2,309,952
2019	754,496
2020	1,608,187
2021	632,920
Thereafter	2,796,146
	$	9,387,436



	Amount of Loss Reclassified from Accumulated Other Comprehensive Income (Loss) into Income
Details about Accumulated Other Comprehensive Income (Loss) Components	Year Ended December 31, 2016			Year Ended December 31, 2015			Year Ended December 31, 2014			Affected Line Item in Statements of Comprehensive Income (Loss)
Loss on cash flow derivative hedges:
Cross currency swaps	$	—		$	—		$	(261	)	Interest expense, net of interest capitalized
Interest rate swaps	(41,480		)	(36,401		)	(15,264		)	Interest expense, net of interest capitalized
Foreign currency forward contracts	(8,114		)	(2,871		)	(1,887		)	Depreciation and amortization expenses
Foreign currency forward contracts	(14,342		)	7,580			(4,291		)	Other income (expense)
Foreign currency forward contracts	—			—			(57		)	Interest expense, net of interest capitalized
Foreign currency forward contracts	(207		)	—			—			Other indirect operating expenses
Foreign currency collar options	(2,408		)	(1,605		)	—			Depreciation and amortization expenses
Fuel swaps	13,685			(9,583		)	—			Other income (expense)
Fuel swaps	(284,384		)	(248,744		)	(27,984		)	Fuel
	(337,250		)	(291,624		)	(49,744		)
Amortization of defined benefit plans:
Actuarial loss	(1,141		)	(1,414		)	(888		)	Payroll and related
Prior service costs	—			(293		)	(836		)	Payroll and related
	(1,141		)	(1,707		)	(1,724		)
Release of foreign cumulative translation due to sale or liquidation of businesses:
Foreign cumulative translation	—			4,200			(1,997		)	Other operating
Total reclassifications for the period	$	(338,391	)	$	(289,131	)	$	(53,465	)


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


~~(3)~~	~~Inputs that are unobservable. The Company did not use any Level 3 inputs as of December 31, 2016 and December 31, 2015.~~


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


~~(5)~~	~~Consists of unsecured revolving credit facilities, senior notes, senior debentures and term loans. Does not include our capital lease obligations.~~


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


~~(6)~~	~~Consists of foreign currency forward contracts, interest rate swaps and fuel swaps. Please refer to the "Fair Value of Derivative Instruments" table for breakdown by instrument type.~~