Table of ~~a deferred tax asset valuation allowance of $33.5 million due to Spanish tax reform.~~C ontents


~~(6)~~	~~We reclassified prepaid commissions of $64.6 million from~~ ~~Customer deposits~~ to ~~Prepaid expenses and other assets~~ ~~in our consolidated balance sheet as of December 31, 2017 in order to conform to the current year presentation.~~

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Note Concerning Forward-Looking Statements

The discussion under this caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this document, ~~including, for example, under the "Risk Factors" and "Business" captions,~~ includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including statements regarding guidance (including our expectations for the first quarter and full year of ~~2019 and~~2020, our earnings and yield estimates for ~~2019~~2020 set forth under the heading "Outlook" ~~below)~~below and our goals for our

program), business and industry prospects or future results of operations or financial position, made in this Annual Report on Form 10-K are forward-looking. Words such as "anticipate," "believe," "could," "estimate," "expect," "goal," "intend," "may," "plan," "project," "seek," "should," "will," "driving" and similar expressions are intended to further identify any of these forward-looking statements. Forward-looking statements reflect management's current expectations but they are based on judgments and are inherently uncertain. Furthermore, they are subject to risks, uncertainties and other factors that could cause our actual results, performance or achievements to differ materially from the future results, performance or achievements expressed or implied in those forward-looking statements. Examples of these risks, uncertainties and other factors include, but are not limited to, those discussed in this Annual Report on Form 10-K and, in particular, the risks discussed under the caption "Risk Factors" in Part I, Item 1A ~~of this report.~~herein.

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

Overview

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

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

•a discussion of our results of operations for the year ended December 31, 2019 compared to the same period in 2018 and the year ended December 31, 2018 compared to the same period in ~~2017 and the year ended December 31, 2017 compared to the same period in 2016;~~2017;

•a discussion of our business outlook, including our expectations for selected financial items for the first quarter and full year of ~~2019;~~2020; and

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

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Critical Accounting Policies

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). (Refer to Note 1. General and Note 2. Summary of Significant Accounting Policies to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data). Certain of our accounting policies are deemed "critical," as they require management's highest degree of judgment, estimates and assumptions. We have discussed these accounting policies and estimates with the audit committee of our board of directors. We believe our most critical accounting policies are as follows:

Ship Accounting

~~Our ships~~Ships represent our most significant assets and are stated at cost less accumulated depreciation and amortization. Depreciation of ships is generally computed net of a ~~15%~~10%-15% projected residual value, using the straight-line method over the estimated useful life of the asset, which is generally 3030-35 years. The ~~30-year~~30-35 year useful life ~~of our newly~~

~~constructed ships~~ and ~~15% associated~~10%-15% residual value ~~are both based on~~is 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. We do not have cost segregation studies performed to specifically componentize our ship systems. ~~Therefore,~~However, we estimate the costs, useful lives and residual values of component systems based principally on general and technical information known about major ship component systems and their lives, ~~and~~as well as our knowledge of the cruise vacation industry. We do not identify and track depreciation by ship component systems, but instead utilize these estimates to determine the net cost basis of assets replaced or refurbished. Improvement costs that we believe add value to our ships are capitalized as additions to the ship and depreciated over the shorter of the improvements' estimated useful lives or that of the associated ship. The estimated cost and accumulated depreciation of replaced or refurbished ship components are written off and any resulting losses are recognized in within Cruise operating expensesin our Consolidated Statements of Comprehensive Income (Loss).

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. The level of capital investment, as well as planned investment levels in the other ships within the Oasis class, triggered a review of the estimated useful lives and residual values of the Oasis-class ships. Following a review of the estimate, considering the intended use of the vessel and assessment of the estimated lives of component assets forming the Oasis class ships, we concluded a change to the estimated lives and residual values of Oasis class ships was required. Effective fourth quarter of 2019, we revised the estimated useful lives and residual values of the 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. For further information regarding this change in accounting estimate, refer to Note 2. Summary of Significant Accounting Policies to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data.

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

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tanks, port services such as tugs, pilotage and line handling, and freight associated with these items. We perform a detailed analysis of the various activities performed for each drydock and only defer those costs that are directly related to planned major maintenance activities necessary to maintain Class. The costs deferred are related to activities not otherwise routinely periodically performed to maintain a vessel's designed and intended operating capability. Repairs and maintenance activities are charged to expense as incurred.

We use judgment when estimating the period between drydocks, which can result in adjustments to the estimated amortization of drydock costs. If the vessel is disposed of before the next drydock, the remaining balance in deferred drydock is written-off to the gain or loss upon disposal of vessel in the period in which the sale takes place. We also use judgment when identifying costs incurred during a drydock which are necessary to maintain the vessel's Class certification as compared to those costs attributable to repairs and maintenance which are expensed as incurred.

We believe we have made reasonable estimates for ship accounting purposes. However, should certain factors or circumstances cause us to revise our estimates of ship useful lives or projected residual values, depreciation expense could be materially higher or lower. If circumstances cause us to change our assumptions in making determinations as to whether ship improvements should be capitalized, the amounts we expense each year as repairs and maintenance costs could increase, partially offset by a decrease in depreciation expense. If we had reduced our estimated average ship useful life by one year, depreciation expense for ~~2018~~2019 would have increased by approximately ~~$63.8~~$129.3 million. If our ships were estimated to have no residual value, depreciation expense for ~~2018~~2019 would have increased by approximately ~~$243.0~~$325.1 million.

Business Combinations

On July 31, 2018, we acquired a 66.7% equity stake in Silversea Cruises for $1.02 billion in cash and contingent consideration. Refer to Note 3. Business Combination to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for further information on the ~~acquisition~~acquisition.

We account for business combinations in accordance with ASC 805, Business Combinations, by applying the acquisition method of accounting. The acquisition method of accounting requires that we record the assets acquired and liabilities assumed, and the noncontrolling interest, if any, at their respective fair values at the acquisition date. Goodwill is recognized as the excess of the purchase price over the fair value of the net assets acquired. Significant

estimates and assumptions are made by management to value such assets and liabilities based on third party valuations such as appraisals or internal valuations based on discounted cash flow analyses or other valuation techniques. Although we believe that those estimates and assumptions are reasonable and appropriate, they are inherently uncertain and subject to change. If during the measurement period (not to exceed one year), additional information is obtained about facts and circumstances that existed as of the acquisition date related to the fair value of the assets acquired and liabilities assumed, we may adjust our estimates to account for subsequent adjustments to the provisional amounts recognized at the acquisition date, resulting in an offsetting adjustment to the goodwill associated with the business acquired.

Uncertain tax positions and tax-related valuation allowances are initially established in connection with a business combination as of the acquisition date. We continue to collect information and reevaluate these estimates and assumptions quarterly. We will record any adjustments to our preliminary estimates to goodwill, provided that we are within the one-year measurement period. Our purchase price measurement period for the Silversea Cruises acquisition was closed during 2019.

Any contingent consideration is estimated at fair value at the acquisition date. Liability-classified contingent consideration is remeasured each reporting period, with changes in fair value recognized in earnings until the contingent consideration is settled.

Valuation of Goodwill, Indefinite-Lived Intangible Assets and Long-Lived Assets

We review goodwill and indefinite-lived intangible assets 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

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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. We estimate the fair value of our reporting units using a probability-weighted discounted cash flow model. The estimation of fair value utilizing discounted expected future cash flows includes numerous uncertainties which require our significant judgment when making assumptions of expected revenues, operating costs, marketing, selling and administrative expenses, interest rates, ship additions and retirements as well as assumptions regarding the cruise vacation industry's competitive environment and general economic and business conditions, among other factors. The principal assumptions we use in the discounted cash flow model are projected operating results, weighted-average cost of capital, and terminal value. The discounted cash flow model uses the most current projected operating results for the upcoming fiscal year as a base. To that base, we add future years' cash flows assuming multiple revenue and expense scenarios that reflect the impact of different global economic environments beyond the base year on the reporting unit. We discount the projected cash flows using rates specific to the reporting unit based on its weighted-average cost of capital. If the fair value of the reporting unit exceeds its carrying value, no 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.

The impairment review for indefinite-life intangible assets can be performed using a qualitative or quantitative impairment assessment. The quantitative assessment consists of a comparison of the fair value of the asset with its carrying amount. We estimate the fair value of these assets using a discounted cash flow model and various valuation methods depending on the nature of the intangible asset, such as the relief-from-royalty method for trademarks and trade names. 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. As of December 31, 2018, the carrying amount of indefinite-life intangible assets was $351.7 million, which primarily relates to the Silversea Cruises trade name acquired in the Silversea Cruises acquisition. Other intangible assets assigned finite useful lives are amortized on a straight-line basis over their estimated useful lives. Refer to Note 6, 6. Intangible

Assets to our consolidated financial statements under Item 8. Financial Statements and Supplemental Data for further information on indefinite-life intangible assets.

We review our ships and other 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. We evaluate asset impairment 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, prior to the sale of the aircraft, at the aggregated asset group level for our aircraft. 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 estimate fair value based on quoted market prices in active markets, if available. If active markets are not available, we base fair value on independent appraisals, sales price negotiations and projected future cash flows discounted at a rate estimated by management to be commensurate with the business risk. Quoted market prices are often not available for individual reporting units and for indefinite-life intangible assets. Accordingly, we estimate the fair value of a reporting unit and an indefinite-life intangible asset using an expected present value technique.

Royal Caribbean International

During the fourth quarter of ~~2018,~~2019, we performed a qualitative assessment of the Royal Caribbean International reporting unit. 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 and forecasts of operating results expected to be generated by the reporting unit appear sufficient to support its carrying value. As of

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December 31, ~~2018,~~2019, the carrying amount of goodwill attributable to our Royal Caribbean reporting unit was ~~$286.7~~$299.2 million.

Silversea Cruises

The goodwill for the Silversea Cruises reporting unit was recorded at fair value at July 31, 2018, the acquisition date. Refer to Note 3. Business Combination to our consolidated financial statements under Item 8. Financial Statements and Supplemental Data for further information on the Silversea Cruises acquisition. During the fourth quarter of ~~2018,~~2019, we performed a qualitative assessment of the Silversea Cruises reporting unit. 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 forecasts of operating results expected to be generated by the reporting unit appear sufficient to support its carrying value. As of December 31, ~~2018,~~2019, the carrying amount of goodwill attributable to our Silversea Cruises reporting unit was $1.1 billion.

The indefinite-life intangible asset related to the Silversea Cruises trade name acquired in the Silversea Cruises acquisition was recorded at fair value at July 31, 2018, the acquisition date. During the fourth quarter of 2019, we performed a qualitative assessment of the Silversea Cruises trade name. As a result of the assessment performed no impairment charge was recorded related to trade name intangible assets for the year ended December 31, 2019. As of December 31, 2019 and 2018, the carrying amount of indefinite-life intangible assets was $352.3 million and $351.7 million, respectively, which primarily relates to the Silversea Cruises trade name acquired in the Silversea Cruises acquisition.

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 not hold or issue derivative financial instruments for trading or other speculative purposes. We account for derivative financial instruments in accordance with authoritative guidance. Refer to Note 2. Summary of Significant Accounting Policies and Note ~~17.~~ 18. Fair Value Measurements and Derivative Instruments to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for more information on related authoritative guidance, the Company's hedging programs and derivative financial instruments.

On a regular basis, we enter into foreign currency forward contracts, interest rate and fuel swaps and options with third-party institutions in over-the-counter markets. We estimate the fair value of our foreign currency forward contracts and interest rate swaps using expected future cash flows based on the instruments' contract terms and published forward prices for foreign currency exchange and interest rates. We value floors which are embedded within our interest rate swaps using standard option pricing models with inputs based on the options’ contract terms, such as exercise price and maturity, and readily available market data, such as forward interest rates and interest rate volatility. We apply present value techniques and LIBOR or EURIBOR-based discount rates to convert the expected future cash flows to the current fair value of the instruments.

We estimate the fair value of our fuel swaps using expected future cash flows based on the swaps' contract terms and forward prices. We derive forward prices from published forward fuel curves which in turn are based on ~~pricing inputs provided by third-party institutions that transact in the fuel indices we hedge. We validate these pricing inputs against~~ actual market transactions and published price quotes for similar assets. We apply present value techniques and LIBOR-based discount rates to convert the expected future cash flows to the current fair value of the instruments. We also corroborate our fair value estimates using valuations provided by our counterparties.

We adjust the valuation of our derivative financial instruments to incorporate credit risk.

We believe it is unlikely that materially different estimates for the fair value of our foreign currency forward contracts and interest rate and fuel swaps and options would be derived from other appropriate valuation models using similar assumptions, inputs or conditions suggested by actual historical experience.

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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.

Seasonality

Our revenues are seasonal based on demand for cruises. Demand is strongest for cruises during the Northern Hemisphere's summer months and holidays. In order to mitigate the impact of the winter weather in the Northern Hemisphere and to capitalize on the summer season in the Southern Hemisphere, our brands have focused on deployment to the Caribbean, Asia and Australia during that period.

Financial Presentation

Description of Certain Line Items

Revenues

Our revenues are comprised of the following:

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

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

Cruise Operating Expenses

Our cruise operating expenses are comprised of the following:

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

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

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

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

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

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

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

Selected Operational and Financial Metrics

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

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 Income ~~attributable to Royal Caribbean Cruises Ltd. ("Adjusted Net Income"~~) represents 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) ~~the impairment loss related to Skysea Holding, (ii) the impairment loss and other~~ costs, net of insurance recoveries, related to the ~~exit of our tour operations business, (iii) the transaction costs related to the Silversea Cruises acquisition, (iv) the amortization~~Grand Bahama drydock structure incident involving Oasis of the ~~Silversea Cruises intangible assets resulting from~~Seas;(ii)our equity share of the ~~acquisition, (v)~~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.'s) noncontrolling ~~interest,~~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 impairment loss related to Skysea Holding; and (xii) 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, (vii) the net loss related to the elimination of the Pullmantur reporting lag, (viii) the net gain related to the 51% sale of the Pullmantur and CDF Croisières de France ("CDF") brands, (ix) the restructuring charges and other initiative costs related to our Pullmantur right-sizing strategy and (x) other restructuring initiatives.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, 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.

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, the transaction costs related to the Silversea Cruises acquisition,~~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, ~~and restructuring charges,~~ which were included withinMarketing, 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. ~~For the periods presented,~~ Net Cruise Costs ~~excludes~~and Net Cruise Costs Excluding Fuel exclude the costs,net ~~gain~~of insurance recoveries, related to the ~~51% sale~~Grand Bahama drydock structure incident involving Oasis of the ~~Pullmantur and CDF brands, restructuring charges and other initiative costs related to our Pullmantur right-sizing strategy and other restructuring initiatives.~~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).

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 they are the most relevant measures of our pricing performance because 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. ~~For the periods presented, Net Yields 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 period's currency exchange rates had remained constant with the comparable prior 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 GAAP based financial measures. There are no specific rules or regulations for determining non-GAAP and Constant Currency measures, and as such, 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

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 digital transformation platform, on most of the fleet. In addition, we continued to find efficiencies, implement synergies and reduce costs, while at the same time, remained focused on strategic investments in areas that will boost revenue.

Our ~~2018~~2019 net income was $1.9 billion, or $8.95 per diluted share, compared to $1.8 billion, or $8.56 per diluted share, ~~compared to $1.6 billion, or $7.53 per diluted share,~~ in ~~2017.~~2018. Adjusted Net Income for ~~2018~~2019 was $2.0 billion, or $9.54 per diluted share, compared to $1.9 billion, or $8.86 per diluted share, ~~compared to $1.6 billion, or $7.53 per diluted share,~~ in ~~2017.~~2018. Adjusted EPS for ~~2018~~2019, on a diluted basis, represents ~~the fifth straight year we achieved double digit~~an 8% increase in earnings ~~growth with an 18% increase~~ compared to ~~2017.~~

~~Additionally, Net Yields on a Constant-Currency basis increased~~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 ~~ninth consecutive year. For the~~ year ~~ended December 31,~~by approximately $0.80.

Total revenues increased $1.5 billion in 2019 to $11.0 billion, compared to $9.5 billion in 2018, ~~our Net Yields on a Constant-Currency basis increased by 4.4%,~~ primarily driven by increases in both ticket and onboard yields. During 2019, our Gross Yields and Net Yields increased by 8.0%, on a Constant-Currency basis, marking the tenth consecutive year of revenue growth. The addition of new vessels to the fleet, the consolidation of Silversea Cruises, Perfect Day at CocoCay and our Miami terminal operation also contributed to our year-over-year revenue growth. Onboard revenue and Net onboard revenue ~~yield in 2018 grew by 5.1% year-over-year on a Constant Currency basis. Growth~~growth came from a variety of revenue enhancing initiatives, including beverage package sales and promotions, gaming initiatives and new strategies and promotions on our shore excursions, specialty restaurants and Internet services.

~~We remain dedicated~~

Cruise operating expenses increased $801.0 million in 2019 to ~~finding efficiencies, identifying synergies~~$6.1 billion from $5.3 billion in 2018. Adjusting for capacity, our Gross Cruise Costs and ~~reducing costs, while at the same time, focusing on strategic investments in areas that will boost revenue. In 2018, our~~ Net Cruise Costs Excluding Fuel increased by ~~4.1%~~8.7% and 11.4%, respectively, on a Constant Currency basis compared to ~~2017.~~2018 driven primarily by the consolidation of Silversea Cruises, our new operations of Perfect Day at CocoCay and our terminal operation in Miami.

The Company remains focused on improving returns for our shareholders. In ~~2018,~~2019, we bought back ~~$575~~$100.0 million in shares of common stock and we have ~~$700~~$600.0 million remaining under our $1.0 billion share repurchase program that was announced in May 2018. Consistent with our earnings growth, we also announced a ~~17%~~11% increase to our common stock dividend, our ~~sixth~~seventh consecutive year with a dividend increase.

~~For~~

Perfect Day at CocoCay is the first ~~time in our history, in 2018, three~~ of our ~~Global Brands each welcomed~~Perfect Day Island Collection of next-level private destinations. The island debuted a ~~ship. Royal Caribbean International welcomed newbuild~~ ~~Symphony~~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 2020 has started off challenging as we address the impact of the ~~Seas~~recent coronavirus outbreak on our operations. Prior to the outbreak, our sailings in ~~March; Azamara Club Cruises welcomed~~ ~~Azamara Pursuit~~ China were trending particularly well both in ~~September;~~terms of rate and ~~Celebrity Cruises welcomed newbuild~~ ~~Celebrity Edge~~volume. Our itineraries in ~~November. Also in 2018, TUI Cruises,~~China were expected to represent 6% and 4% of our ~~50% joint venture, took delivery of a new~~ ~~Mein Schiff 1~~.

~~In addition, in July 2018, we acquired a 66.7% equity stake in Silversea Cruises, an ultra-luxury~~full year and ~~expedition cruise line with nine ships. This acquisition enhances our presence~~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 ~~ultra-luxury~~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 ~~expedition markets~~crew on our ships. These and ~~provide us with~~other concerns and restrictions relating to the coronavirus outbreak are having an ~~opportunity~~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 ~~drive long-term capacity growth in~~source our crew, provisions or supplies from certain places. All of these ~~markets.~~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 ~~2019,~~2020, we expect our capacity to increase ~~by 8.6%~~4.8% year-over-year as ~~each~~we add Odyssey of the ~~ships added~~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 ~~Global Brands' fleet~~capacity in ~~2018~~the Caribbean to over 50% of our total capacity in 2020, driven by the inaugural winter seasons of Odyssey of the Seas and Celebrity Apex. Our European itineraries will ~~have it first full~~account for 17% of our 2020 capacity with the year-over-year increase driven by the timing of drydocks and the addition of Celebrity Apex and Silver Moon. Excluding the impact of the recent coronavirus outbreak, we expect another year of ~~sailings.~~ total revenue and net yield growth driven by our new ships, strong demand for our core products and continued growth from our onboard revenue areas.

In addition, we recently announced our ~~Royal Caribbean brand~~

program which presents specific goals to be achieved by 2025: delivering $20.00 adjusted earnings per share; further 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 aim, through this program, is to establish clear, simple, and ambitious targets that will ~~welcome~~ ~~Spectrum~~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 ~~the Seas, our first ship tailored to the Chinese market, which will expand our commitment to that market. In the second quarter of 2019, our Celebrity Cruises brand will welcome~~ ~~Celebrity Flora~~, the brand's first newbuild designed specifically for the Galapagos Islands. Additionally, we will have our first full year with Silversea Cruises and will launch Perfect Day at CocoCay in Spring 2019, the first development in our ~~Perfect Day Island Collection.~~C ontents

~~From an offering perspective, we are expanding our short Caribbean program that includes the newly modernized~~ ~~Mariner of the Seas~~ ~~and the soon-to-be modernized~~ ~~Navigator of the Seas. We are also improving our Alaska itineraries to include larger ships for both our Royal Caribbean International and Celebrity Cruises brands. Additionally, Silversea Cruises' newest ship, the~~ ~~Silver Muse,~~ ~~will be in Alaska and Azamara will have its first Alaskan season~~.

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 ~~2018~~2019 include:

•Our Net Income attributable to Royal Caribbean Cruises Ltd. and Adjusted Net Income for the year ended December 31, ~~2018~~2019 was $1.9 billion and $2.0 billion, or $8.95 and $9.54 per share on a diluted basis, respectively, as compared to Net Income attributable to Royal Caribbean Cruises Ltd. and Adjusted Net Income of $1.8 billion and $1.9 billion, or $8.56 and $8.86 per share on a diluted basis, respectively, ~~as compared to both Net Income attributable to Royal Caribbean Cruises Ltd. and Adjusted Net Income of $1.6 billion, or $7.53 per share on a diluted basis, respectively,~~ for the year ended December 31, ~~2017.~~2018.

•Total revenues, excluding the effect of changes in foreign currency rates, increased by ~~$704.9 million~~$1.6 billion for the year ended December 31, ~~2018~~2019 compared to the same period in ~~2017~~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, denominated in currencies other than the United States dollar, resulted in ~~an increase~~a decrease in total revenues of ~~$11.1~~$127.4 million for the year ended December 31, ~~2018~~2019 compared to the same period in ~~2017.~~2018.

•Total cruise operating expenses, excluding the effect of changes in foreign currency rate, increased by ~~$357.5~~$837.5 million for the year ended December 31, ~~2018~~2019 compared to the same period in ~~2017,~~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 ~~an increase~~a decrease in total operating expenses of ~~$8.1~~$36.9 million for the year ended December 31, ~~2018~~2019 compared to the same period in ~~2017.~~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 prohibited travel to Cuba via cruise ships. The estimated negative impact resulting from this regulatory change, primarily due to changes in itineraries, is approximately $0.29 per share on a diluted basis to our Net Income attributable to Royal Caribbean Cruises Ltd.

On•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 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 364-day loan due July ~~31, 2018, we acquired a 66.7% equity stake in~~2019 related to the acquisition of Silversea Cruises ~~for $1.02 billion~~and the remaining balance of the unsecured term loan originally incurred in ~~cash and contingent consideration payable upon achievement~~2010 to purchase Allure of ~~certain 2019-2020 performance metrics by Silversea Cruises. Due to~~ the ~~three-month reporting lag,~~Seas. The repayment of these loans resulted in a total loss on the extinguishment of debt of $6.3 million, which was recognized within Other (expense) income within our consolidated ~~results~~statements of ~~operations for the year ended December 31, 2018 only include results for August and September 2018 for Silversea Cruises. Refer to Note 1.~~ ~~General~~ ~~and Note 3.~~ ~~Business Combination~~ ~~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.~~comprehensive income (loss).

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Other items for ~~2018~~2019 include:

•In ~~March 2018, we took delivery of~~ ~~Symphony of the Seas. To finance the purchase, we borrowed $1.2 billion under a previously committed unsecured term loan. Refer to Note 9.~~ ~~Debt~~ ~~to our consolidated financial statements under Item 8.~~ ~~Financial Statements and Supplementary Data~~ ~~for further information. The ship entered service at the end of the first quarter of 2018.~~

~~In March 2018, we completed the purchase of~~ ~~Azamara Pursuit, which entered service during the third quarter of 2018.~~

~~In April 2018,~~February 2019, TUI Cruises, our 50% joint venture, took delivery of a new Mein Schiff 12 and ~~also sold~~ the ~~original~~ existingMein Schiff 1 ~~to an affiliate~~2 was renamed Mein Schiff Herz.

•During the second quarter of ~~TUI AG. Due to the sale~~2019, we took delivery of Spectrum of the ~~original~~ ~~Mein Schiff 1~~,Seas and Celebrity Flora. To finance the purchases, we ~~recognized a gain of $21.8~~borrowed $908.0 million ~~for~~and €80.0 million, or approximately $89.8 million based on the ~~year ended~~exchange rate at December 31, ~~2018 related to our deferred gain from the 2009 sale of this ship to TUI Cruises.~~2019, respectively, under previously committed unsecured term loans. Refer to Note 8. ~~Other Assets~~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 ~~October 2018,~~April 2019, we ~~took delivery of~~ ~~Celebrity Edge.~~ ~~To finance~~amended our $1.4 billion unsecured revolving credit facility due in 2020 to extend the ~~purchase, we borrowed $729.0 million under a previously committed unsecured term loan.~~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 8. 1. Financial Statements ~~and Supplementary Data~~ for further information. ~~The ship~~

•In April 2019, Silversea Cruises entered ~~service in December 2018.~~

~~For~~into an agreement with Meyer Werft to build two ships of a new generation, known as the ~~year ended December 31, 2018,~~Evolution-class. In September 2019, we ~~recognized an impairment loss~~entered into credit agreements for the unsecured financing of ~~$23.3 million related~~these ships for up to ~~the Skysea Holding investment, debt facility and other receivables due, which is reported within~~ ~~Other income~~

~~(expense)~~ ~~within our consolidated statements~~80% of ~~comprehensive income (loss).~~each ship's contract price. Refer to Note 8. ~~Other Assets~~11. Commitments and Contingencies to our consolidated financial statements under Item 8. 1. Financial Statements ~~and Supplementary Data~~for further ~~information~~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 ~~impairment.~~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 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

(1)Amount includes incidental costs, net of insurance recoveries of $14.5 million related to the collapse of the 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.

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Year Ended December 31,
2018 2017 2016
Net Income attributable to Royal Caribbean Cruises Ltd. $ 1,811,042
$ 1,625,133
$ 1,283,388
Adjusted Net Income attributable to Royal Caribbean Cruises Ltd. 1,873,363
1,625,133
1,314,689
Net Adjustments to Net Income attributable to Royal Caribbean Cruises Ltd. - Increase $ 62,321
$ —
$ 31,301
Adjustments to Net Income attributable to Royal Caribbean Cruises Ltd.:
Impairment loss related to Skysea Holding ⁽¹⁾
$ 23,343
$ —
$ —
Impairment and other costs related to exit of tour operations business ⁽²⁾
11,255
—
—
Transaction costs related to the Silversea Cruises acquisition ⁽³⁾
31,759
—
—
Amortization of Silversea Cruises intangible assets resulting from the acquisition ⁽³⁾
2,046
—
—
Noncontrolling interest adjustment ⁽⁴⁾
3,156
—
—
Impact of change in accounting principle ⁽⁵⁾
(9,238 ) —
—
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
Other initiative costs —
—
5,027
Net Adjustments to Net Income attributable to Royal Caribbean Cruises Ltd. - Increase $ 62,321
$ —
$ 31,301

Basic:
   Earnings per Share $ 8.60
$ 7.57
$ 5.96
   Adjusted Earnings per Share $ 8.90
$ 7.57
$ 6.10

Diluted:
   Earnings per Share $ 8.56
$ 7.53
$ 5.93
   Adjusted Earnings per Share $ 8.86
$ 7.53
$ 6.08

Weighted-Average Shares Outstanding:
Basic 210,570
214,617
215,393
Diluted 211,554
215,694
216,316
(6)In 2014, we created a 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.

~~(1)~~

(7)In January 2018, we elected to change our accounting policy for 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.

~~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.~~


~~(2)~~	In 2014, we created a 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.


~~(3)~~	~~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.~~


~~(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 10.~~ ~~Noncontrolling Interest~~ ~~to our consolidated financial statements under Item 8.~~ ~~Financial Statements and Supplementary Data~~ ~~for further information on noncontrolling interest.~~

~~(5)~~

In January 2018, we elected to change our accounting policy for 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,
	2018		2017		2016			2019		2018		2017
Passenger ticket revenues	71.5	%	71.9	%	72.4	%	Passenger ticket revenues	71.7	%	71.5	%	71.9	%
Onboard and other revenues	28.5	%	28.1	%	27.6	%	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	15.1	%	15.5	%	15.9	%	Commissions, transportation and other	15.1	%	15.1	%	15.5	%
Onboard and other	5.7	%	5.6	%	5.8	%	Onboard and other	5.8	%	5.7	%	5.6	%
Payroll and related	9.7	%	9.7	%	10.4	%	Payroll and related	9.9	%	9.7	%	9.7	%
Food	5.5	%	5.6	%	5.7	%	Food	5.3	%	5.5	%	5.6	%
Fuel	7.5	%	7.8	%	8.4	%	Fuel	6.4	%	7.5	%	7.8	%
Other operating	12.0	%	11.5	%	12.8	%	Other operating	12.8	%	12.0	%	11.5	%
Total cruise operating expenses	55.4	%	55.8	%	59.0	%	Total cruise operating expenses	55.4	%	55.4	%	55.8	%
Marketing, selling and administrative expenses	13.7	%	13.5	%	13.0	%	Marketing, selling and administrative expenses	14.2	%	13.7	%	13.5	%
Depreciation and amortization expenses	10.9	%	10.8	%	10.5	%	Depreciation and amortization expenses	11.4	%	10.9	%	10.8	%

Operating income	20.0	%	19.9	%	17.4	%	Operating income	19.0	%	20.0	%	19.9	%
Other income (expense):							Other income (expense):
Interest income	0.3	%	0.3	%	0.2	%	Interest income	0.2	%	0.3	%	0.3	%
Interest expense, net of interest capitalized	(3.5	)%	(3.4	)%	(3.6	)%	Interest expense, net of interest capitalized	(3.7)	%	(3.5)	%	(3.4)	%
Equity investment income	2.2	%	1.8	%	1.5	%	Equity investment income	2.1	%	2.2	%	1.8	%
Other income (expense)	0.1	%	(0.1	)%	(0.4	)%

Other (expense) income							Other (expense) income	(0.2)	%	0.1	%	(0.1)	%
	(0.8	)%	(1.4	)%	(2.3	)%		(1.6)	%	(0.8)	%	(1.4)	%
Net Income	19.1	%	18.5	%	15.1	%	Net Income	17.4	%	19.1	%	18.5	%
Less: Net Income attributable to noncontrolling interest	0.1	%	—	%	—	%	Less: Net Income attributable to noncontrolling interest	0.3	%	0.1	%	—	%
Net Income attributable to Royal Caribbean Cruises Ltd.	19.1	%	18.5	%	15.1	%	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,							Year Ended December 31,
	2018 ⁽¹⁾		2017		2016 ⁽²⁾			2019⁽¹⁾		2018 ⁽¹⁾		2017
Passengers Carried	6,084,201		5,768,496		5,754,747		Passengers Carried	6,553,865		6,084,201		5,768,496
Passenger Cruise Days	41,853,052		40,033,527		40,250,557		Passenger Cruise Days	44,803,953		41,853,052		40,033,527
APCD	38,425,304		36,930,939		37,844,644		APCD	41,432,451		38,425,304		36,930,939
Occupancy	108.9	%	108.4	%	106.4	%	Occupancy	108.1	%	108.9	%	108.4	%

~~(1)~~

~~Due to the three-month reporting lag, these amounts only include August and September 2018 amounts for Silversea Cruises. Refer to Note 1.~~ ~~General~~ ~~and Note 3.~~ ~~Business Combination~~ ~~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.~~


~~(2)~~	~~These amounts do not include November and December 2015 amounts for Pullmantur as the net Pullmantur result for those months was included within~~ ~~Other expense~~ in our consolidated statements of comprehensive income (loss) for the year ended December 31, 2016, as a result of the elimination of the Pullmantur reporting lag, and did not affect Gross Yields, Net Yields, Gross Cruise Costs,

(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

~~Net Cruise Costs~~

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under Item 8. Financial Statements and ~~Net Cruise Costs Excluding Fuel. Additionally, effective August 2016, we no longer include Pullmantur Holdings in these amounts.~~Supplementary Data for further information on the three-month reporting lag and the 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,
2018 2018
On a
Constant
Currency
basis 2017 2016
Passenger ticket revenues $ 6,792,716
$ 6,784,937
$ 6,313,170
$ 6,149,323
Onboard and other revenues 2,701,133
2,697,798
2,464,675
2,347,078
Total revenues 9,493,849
9,482,735
8,777,845
8,496,401
Less:
Commissions, transportation and other 1,433,739
1,432,267
1,363,170
1,349,677
Onboard and other 537,355
536,941
495,552
493,558
Net revenues including other initiative costs 7,522,755
7,513,527
6,919,123
6,653,166
Less:
Other initiative costs included within Net Revenues —
—
—
(2,230 )
Net Revenues $ 7,522,755
$ 7,513,527
$ 6,919,123
$ 6,655,396

APCD 38,425,304
38,425,304
36,930,939
37,844,644
Gross Yields $ 247.07
$ 246.78
$ 237.68
$ 224.51
Net Yields $ 195.78
$ 195.54
$ 187.35
$ 175.86

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,
	2018		2018 On a Constant Currency basis		2017		2016				2019		2019 On a Constant Currency basis		2018		2017
Total cruise operating expenses	$	5,262,207	$	5,254,105	$	4,896,579	$	5,015,539		Total cruise operating expenses	$	6,062,765	$	6,099,657	$	5,262,207	$	4,896,579
Marketing, selling and administrative expenses ^{(1) (2)}	1,269,368		1,264,509		1,186,016		1,100,290			Marketing, selling and administrative expenses ^{(1) (2)}	1,543,498		1,555,703		1,269,368		1,186,016
Gross Cruise Costs	6,531,575		6,518,614		6,082,595		6,115,829			Gross Cruise Costs	7,606,263		7,655,360		6,531,575		6,082,595
Less:										Less:
Commissions, transportation and other	1,433,739		1,432,267		1,363,170		1,349,677			Commissions, transportation and other	1,656,297		1,675,941		1,433,739		1,363,170
Onboard and other	537,355		536,941		495,552		493,558			Onboard and other	639,782		643,350		537,355		495,552
Net Cruise Costs including other initiative costs	4,560,481		4,549,406		4,223,873		4,272,594
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		)
Other initiative costs included within cruise operating expenses and marketing, selling and administrative expenses	—		—		—		2,433

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	4,560,481		4,549,406		4,223,873		4,273,995			Net Cruise Costs	5,295,654		5,321,539		4,560,481		4,223,873
Less:										Less:
Fuel ⁽³⁾	710,617		710,621		681,118		713,252
Fuel										Fuel	697,962		697,981		710,617		681,118
Net Cruise Costs Excluding Fuel	$	3,849,864	$	3,838,785	$	3,542,755	$	3,560,743		Net Cruise Costs Excluding Fuel	$	4,597,692	$	4,623,558	$	3,849,864	$	3,542,755

APCD	38,425,304		38,425,304		36,930,939		37,844,644			APCD	41,432,451		41,432,451		38,425,304		36,930,939
Gross Cruise Costs per APCD	$	169.98	$	169.64	$	164.70	$	161.60		Gross Cruise Costs per APCD	$	183.58	$	184.77	$	169.98	$	164.70
Net Cruise Costs per APCD	$	118.68	$	118.40	$	114.37	$	112.94		Net Cruise Costs per APCD	$	127.81	$	128.44	$	118.68	$	114.37
Net Cruise Cost Excluding Fuel per APCD	$	100.19	$	99.90	$	95.93	$	94.09
Net Cruise Costs Excluding Fuel per APCD										Net Cruise Costs Excluding Fuel per APCD	$	110.97	$	111.59	$	100.19	$	95.93


Year	North America⁽¹⁾⁽²⁾	Europe⁽¹⁾⁽³⁾	Asia/Pacific⁽¹⁾⁽⁴⁾	Year	North America⁽¹⁾⁽²⁾	Europe⁽¹⁾⁽³⁾	Asia/Pacific⁽¹⁾⁽⁴⁾
2014	3.46%	1.23%	0.06%
2015	3.36%	1.25%	0.08%	2015	3.36%	1.25%	0.08%
2016	3.43%	1.23%	0.11%	2016	3.43%	1.23%	0.11%
2017	3.56%	1.28%	0.15%	2017	3.56%	1.28%	0.15%
2018	3.59%	1.31%	0.19%	2018	3.87%	1.38%	0.16%
2019				2019	3.89%	1.41%	0.20%


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⁾
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	12,274	6,512	4,466	2016	493,000	123,270	24,000	12,274	6,512	4,466
2017	515,000	124,070	26,700	12,865	6,779	5,415	2017	515,000	124,070	26,700	12,865	6,779	5,415
2018	546,000	135,520	28,000	13,054	6,986	7,006	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/Will Enter Service⁽¹⁾	Approximate Berths	Primary Areas of Operation
Royal Caribbean International
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	4,150	Southern Caribbean, Bahamas, Bermuda, Canada
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, Europe
Independence of the Seas	2008	2008	3,850	Western Caribbean, Europe
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/Southern Caribbean, Europe, Middle East
Mariner of the Seas	2003	2003	3,300	Bahamas
Serenade of the Seas	2003	2003	2,100	Eastern/Southern Caribbean, Bermuda, Canada
Navigator of the Seas	2002	2002	3,250	Western/Southern Caribbean, Bahamas
Brilliance of the Seas	2002	2002	2,100	Western Caribbean, Europe
Adventure of the Seas	2001	2001	3,300	Eastern/Western Caribbean, Bahamas, Canada
Radiance of the Seas	2001	2001	2,100	Australia, Alaska
Explorer of the Seas	2000	2000	3,250	Australia, Europe, Western/Southern Caribbean
Voyager of the Seas	1999	1999	3,250	Eastern Asia, Australia
Vision of the Seas	1998	1998	2,000	Western/Southern Caribbean, Europe
Enchantment of the Seas	1997	1997	2,250	Western Caribbean
Rhapsody of the Seas	1997	1997	2,000	Western Caribbean, Europe
Grandeur of the Seas	1996	1996	1,950	Bahamas, Southern Caribbean, Bermuda, Canada
Majesty of the Seas	1992	1992	2,350	Western Caribbean, Cuba
Empress of the Seas	1990	2016	1,550	Cuba
Celebrity Cruises
Celebrity Flora	2019	2019	100	Galapagos Islands
Celebrity Edge	2018	2018	2,900	Eastern/Western Caribbean, Europe
Celebrity Reflection	2012	2012	3,000	Southern Caribbean, Europe


Ship	Year Ship Built	Year Ship Entered/Will Enter Service⁽¹⁾	Approximate Berths	Primary Areas of Operation
Celebrity Reflection	2012	2012	3,000	Southern Caribbean, Europe
Celebrity Silhouette	2011	2011	2,850	Southern Caribbean, Europe
Celebrity Eclipse	2010	2010	2,850	South America, Alaska
Celebrity Equinox	2009	2009	2,850	Eastern/Western Caribbean
Celebrity Solstice	2008	2008	2,850	Australia, Alaska
Celebrity Xploration	2007	2016	20	Galapagos Islands
Celebrity Constellation	2002	2002	2,150	Middle East, India, Europe, Caribbean
Celebrity Summit	2001	2001	2,200	Southern Caribbean, Bermuda, Canada
Celebrity Infinity	2001	2001	2,150	Western Caribbean, Bahamas, Europe
Celebrity Xpedition	2001	2004	50	Galapagos Islands
Celebrity Millennium	2000	2000	2,200	Eastern Asia, Alaska
Celebrity Xperience	1982	2016	50	Galapagos Islands
Azamara
Azamara Pursuit	2001	2018	700	South America, Europe
Azamara Quest	2000	2007	700	Australia, Asia, Alaska
Azamara Journey	2000	2007	700	Europe
Silversea Cruises⁽³⁾
Silver Origin	2020	2020	100	Galapagos Islands
Silver Moon	2020	2020	550	Europe, Caribbean
Silver Muse	2017	2017	550	Australia, Asia, Alaska
Silver Spirit	2009	2009	500	Southern Caribbean, Europe, Asia
Silver Whisper	2001	2001	350	Southern Caribbean, Europe
Silver Shadow	2000	2000	350	Asia, Europe, Southern Caribbean
Silver Wind	1995	1995	250	Southern Caribbean, Europe, Canada
Silver Cloud	1994	1994	250	South America, Europe
Silver Galapagos	1990	2013	100	Galapagos Islands
Silver Explorer	1989	2008	100	South America, Europe
Pullmantur⁽⁴⁾
Monarch	1991	2013	2,350	Southern Caribbean
Horizon	1990	2010	1,400	Middle East, Europe
Sovereign	1988	2008	2,300	South America, Europe
TUI Cruises
Mein Schiff 2⁽⁵⁾	2019	2019	2,900	Europe, Southern Caribbean
Mein Schiff 1	2018	2018	2,850	Europe, Canada, Western Caribbean
Mein Schiff 6	2017	2017	2,500	Western Caribbean, Europe, Asia
Mein Schiff 5	2016	2016	2,500	Southern Caribbean, Europe, Middle East
Mein Schiff 4	2015	2015	2,500	Middle East, Europe
Mein Schiff 3	2014	2014	2,500	Asia, Europe
Mein Schiff Herz	1997	2011	1,850	Europe
Total					149,320



(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. In addition, our estimates incorporate our own analysis utilizing the same publicly available cruise industry data as a base.


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


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


~~(4)~~	Our estimates include the Southeast Asia (most notably: Singapore, Thailand and the Philippines), East Asia (most notably: China and Japan), South Asia (most notably: India and Pakistan) and Oceania (most notably: Australia and Fiji Islands) regions.


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


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


~~(2)~~	~~TUI Cruises' newbuild entered service as~~ ~~Mein Schiff 2~~ ~~in February 2019 and the existing~~ ~~Mein Schiff 2~~ ~~was renamed~~ ~~Mein Schiff Herz~~.



Name	Age	Position
Richard D. Fain	7172	Chairman, Chief Executive Officer and Director
Jason T. Liberty	4344	Executive Vice President, Chief Financial Officer
Michael W. Bayley	6061	President and Chief Executive Officer, Royal Caribbean International
Lisa Lutoff-Perlo	6162	President and Chief Executive Officer, Celebrity Cruises
Lawrence Pimentel	6768	President and Chief Executive Officer, Azamara ~~Club Cruises~~
Harri U. Kulovaara	6667	Executive Vice President, Maritime
Bradley H. Stein	6364	Senior Vice President, General Counsel, Chief Compliance Officer
Henry L. Pujol	5152	Senior Vice President, Chief Accounting Officer


	12/13	12/14	12/15	12/16	12/17	12/18		12/14	12/15	12/16	12/17	12/18	12/19
Royal Caribbean Cruises Ltd.	100.00	176.94	220.72	182.99	271.25	227.46	Royal Caribbean Cruises Ltd.	100.00	124.74	103.42	153.30	128.55	179.92
S&P 500	100.00	113.69	115.26	129.05	157.22	150.33	S&P 500	100.00	101.38	113.51	138.29	132.23	173.86
Dow Jones U.S. Travel & Leisure	100.00	116.37	123.23	132.56	164.13	154.95	Dow Jones U.S. Travel & Leisure	100.00	105.90	113.92	141.05	133.16	165.04


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)~~	~~On July 31, 2018, we acquired a 66.7% equity stake in Silversea Cruise Holding Ltd ("Silversea Cruises"). 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.~~


~~(2)~~	~~For 2018, 2017 and 2016, refer to~~ ~~Financial Presentation~~ ~~and~~ ~~Results of Operations~~ ~~under Item 7.~~ ~~Management's Discussion and Analysis of Financial Condition and Results of Operations~~ ~~for the definition of Adjusted Net Income and a reconciliation of Adjusted Net Income to Net income.~~


~~(3)~~	~~Amount for 2017 includes a gain of $30.9 million related to the sale of~~ ~~Legend of the Seas~~.


~~(4)~~	~~Amount for 2015 excludes the impairment of Pullmantur related assets of $399.3 million.~~



	Year Ended December 31,
	2018		2018 On a Constant Currency basis		2017		2016
Passenger ticket revenues	$	6,792,716	$	6,784,937	$	6,313,170	$	6,149,323
Onboard and other revenues	2,701,133		2,697,798		2,464,675		2,347,078
Total revenues	9,493,849		9,482,735		8,777,845		8,496,401
Less:
Commissions, transportation and other	1,433,739		1,432,267		1,363,170		1,349,677
Onboard and other	537,355		536,941		495,552		493,558
Net revenues including other initiative costs	7,522,755		7,513,527		6,919,123		6,653,166
Less:
Other initiative costs included within Net Revenues	—		—		—		(2,230		)
Net Revenues	$	7,522,755	$	7,513,527	$	6,919,123	$	6,655,396

APCD	38,425,304		38,425,304		36,930,939		37,844,644
Gross Yields	$	247.07	$	246.78	$	237.68	$	224.51
Net Yields	$	195.78	$	195.54	$	187.35	$	175.86


~~(2)~~	~~For the year ended December 31, 2016, the amount does not include restructuring charges of $8.5 million.~~



	As Reported	Constant Currency
Net Yields	~~6.0%~~2.5% to ~~8.0%~~4.5%	~~6.5%~~2.25% to ~~8.5%~~4.25%
Net Cruise Costs per APCD	~~5.25%~~1.75% to ~~5.75%~~2.25%	~~5.5%~~1.75% to ~~6.0%~~2.25%
Net Cruise Costs per APCD, excluding Fuel	~~8.25%~~1.75% to ~~8.75%~~2.25%	~~8.5%~~1.75% to ~~9.0%~~2.25%
Capacity Change	~~8.6%~~4.8%
Depreciation and Amortization	$~~1,245~~1,376 to ~~$1,255~~$1,392 million
Interest Expense, net	$~~393~~368 to ~~$403~~$384 million
Fuel Consumption (metric tons)	~~1,486,300~~1,534,300
Fuel Expenses	$~~690~~744 million
Percent Hedged (fwd consumption)	~~58%~~54%
10% change in Fuel Prices	$37 million
1% Change in Currency	$21 million
1% Change in Net Yields	$8791 million
1% Change in NCC x Fuel	$4548 million
100 basis pt. Change in LIBOR	$3637 million
Adjusted Earnings per Share — Diluted	$~~9.75~~10.40 to ~~$10.00~~$10.70



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		Euro
GBP		British Pound
MXN		Mexican Peso


	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⁾	$	677,316	$	67,682	$	120,380	$	105,281	$	383,973	Operating lease obligations⁽¹⁾	$	938,354	$	126,234	$	217,941	$	177,057	$	417,122
Interest on long-term debt⁽²⁾	1,654,937		349,736		510,679		414,775		379,747		Interest on long-term debt⁽²⁾	1,918,714		348,821		588,296		383,167		598,430
Other⁽³⁾	819,841		224,253		321,225		124,668		149,695		Other⁽³⁾	455,404		202,879		194,936		23,356		34,233
Investing Activities:											Investing Activities:
Ship purchase obligations⁽⁴⁾	9,075,882		1,241,657		4,107,744		2,500,756		1,225,725		Ship purchase obligations⁽⁴⁾	11,418,681		2,195,931		4,958,432		3,060,998		1,203,320

Financing Activities:											Financing Activities:
Commercial paper⁽⁵⁾	775,488		775,488		—		—		—		Commercial paper⁽⁵⁾	1,434,180		1,434,180		—		—		—
Debt obligations⁽⁶⁾	9,871,267		1,614,506		2,456,251		2,252,831		3,547,679		Debt obligations⁽⁶⁾	9,370,438		1,153,024		3,270,006		1,476,538		3,470,870
Capital lease obligations⁽⁷⁾	130,944		32,335		69,703		19,168		9,738		Capital lease obligations⁽⁷⁾	230,258		33,562		53,203		10,541		132,952
Other⁽⁸⁾	18,365		8,018		8,632		1,715		—		Other⁽⁸⁾	15,008		4,841		7,406		2,761
Total	$	23,024,040	$	4,313,675	$	7,594,614	$	5,419,194	$	5,696,557	Total	$	25,781,037	$	5,499,472	$	9,290,220	$	5,134,418	$	5,856,927


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


~~(6)~~	Debt denominated in other currencies is calculated based on the applicable exchange rate at December 31, 2018. In addition, debt obligations presented above are net of debt issuance costs of $206.7 million as of December 31, 2018.


Debt Instrument	Swap Notional as of December 31, 2018 (In thousands)		Maturity	Debt Fixed Rate	Swap Floating Rate: LIBOR plus	All-in Swap Floating Rate as of December 31, 2018	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	$	105,000	October 2021	5.41%	3.87%	6.63%	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%	6.25%	Unsecured senior notes	650,000		November 2022	5.25%	3.63%	5.54%
	$	755,000						$	720,000



		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*
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*
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*
10.1	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



~~101~~	The following financial statements from Royal Caribbean Cruises Ltd.'s Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 formatted in ~~XBRL~~iXBRL (Inline eXtensible Business Reporting Language) are as follows:
		(i)	the Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2019, 2018 ~~2017~~ and ~~2016;~~2017;
		(ii)	the Consolidated Balance Sheets at December 31, ~~2018~~2019 and ~~2017;~~2018;
		(iii)	the Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 ~~2017~~ and ~~2016;~~2017;
		(iv)	the Consolidated Statements of Shareholders' Equity for the years ended December 31, 2019, 2018 ~~2017~~ and ~~2016;~~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



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)



/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



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


~~(1)~~	~~For the year ended December 31, 2016,~~ ~~Other income (expense)~~ ~~included a $21.7 million loss related to the 2016 elimination of the Pullmantur reporting lag.~~