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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
FORM 10-Q 
(Mark One) 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended March 31, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from            to            
Commission File Number: 1-11884
ROYAL CARIBBEAN CRUISES LTD.
(Exact name of registrant as specified in its charter) 
Republic of Liberia
  98-0081645
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification No.)
 
1050 Caribbean Way, Miami, Florida 33132
(Address of principal executive offices) (zip code) 
(305) 539-6000
(Registrant’s telephone number, including area code) 
N/A
(Former name, former address and former fiscal year, if changed since last report) 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, par value $0.01 per share RCL New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes   No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 
Large accelerated filer
 
Accelerated filer
 
Non-accelerated filer
 
Smaller reporting company ☐
Emerging growth company ☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes   No  
There were 209,385,377 shares of common stock outstanding as of May 13, 2020.
























EXPLANATORY NOTE

As previously disclosed in the Current Report on Form 8-K filed by Royal Caribbean Cruises Ltd. (the “Company”) on May 11, 2020, as amended on May 12, 2020, the Company delayed the filing of this Quarterly Report on Form 10-Q due to circumstances related to the COVID-19 pandemic and in reliance on the U.S. Securities and Exchange Commission’s order under Section 36 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and certain rules thereunder (Release No. 34-88465). In particular, the COVID-19 pandemic has resulted in the Company announcing a voluntary suspension of its global cruise operations from March 13 through at least July 31, 2020 and China sailings until at least June 30, 2020, interfering with the Company’s normal operations. In addition, voluntary and mandatory measures implemented by the Company to reduce the spread of the virus have limited access to many of the areas where the Company operates, including its corporate offices and facilities, resulting in limited support from staff. These restrictions impacted the Company’s ability to complete its internal quarterly review, including an evaluation of the various impacts of COVID-19 on the Company’s financial statements and to prepare and complete the Form 10-Q in a timely manner.


ROYAL CARIBBEAN CRUISES LTD.
TABLE OF CONTENTS



PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(unaudited; in thousands, except per share data)
Quarter Ended March 31,
  2020 2019
Passenger ticket revenues $ 1,376,851    $ 1,709,984   
Onboard and other revenues 655,899    729,783   
Total revenues 2,032,750    2,439,767   
Cruise operating expenses:    
Commissions, transportation and other 317,129    363,155   
Onboard and other 123,718    135,170   
Payroll and related 330,390    269,532   
Food 121,316    139,534   
Fuel 194,268    160,171   
Other operating 423,998    346,142   
Total cruise operating expenses 1,510,819    1,413,704   
Marketing, selling and administrative expenses 395,890    414,947   
Depreciation and amortization expenses 324,330    292,285   
Impairment and credit losses 1,108,118    —   
Operating (Loss) Income (1,306,407)   318,831   
Other income (expense):    
Interest income 5,534    9,784   
Interest expense, net of interest capitalized (92,911)   (100,415)  
Equity investment (loss) income (10,392)   33,694   
Other expense (32,859)   (5,088)  
  (130,628)   (62,025)  
Net (Loss) Income (1,437,035)   256,806   
Less: Net Income attributable to noncontrolling interest 7,444    7,125   
Net (Loss) Income attributable to Royal Caribbean Cruises Ltd. $ (1,444,479)   $ 249,681   
(Loss) Earnings per Share:    
Basic $ (6.91)   $ 1.19   
Diluted $ (6.91)   $ 1.19   
Weighted-Average Shares Outstanding:    
Basic 209,097    209,322   
Diluted 209,097    209,874   
Comprehensive (Loss) Income    
Net (Loss) Income $ (1,437,035)   $ 256,806   
Other comprehensive income (loss):    
Foreign currency translation adjustments 10,290    564   
Change in defined benefit plans (7,589)   (653)  
(Loss) gain on cash flow derivative hedges (300,605)   48,843   
Total other comprehensive (loss) income (297,904)   48,754   
Comprehensive (Loss) Income (1,734,939)   305,560   
Less: Comprehensive Income attributable to noncontrolling interest 7,444    7,125   
Comprehensive (Loss) Income attributable to Royal Caribbean Cruises Ltd. $ (1,742,383)   $ 298,435   
The accompanying notes are an integral part of these consolidated financial statements.
1

ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
  As of
  March 31, December 31,
  2020 2019
  (unaudited)  
Assets    
Current assets    
Cash and cash equivalents $ 3,890,811    $ 243,738   
Trade and other receivables, net 220,876    305,821   
Inventories 177,705    162,107   
Prepaid expenses and other assets 304,809    429,211   
Derivative financial instruments —    21,751   
Total current assets 4,594,201    1,162,628   
Property and equipment, net 25,857,215    25,466,808   
Operating lease right-of-use assets 619,439    687,555   
Goodwill 809,216    1,385,644   
Other assets 1,564,982    1,617,649   
Total assets $ 33,445,053    $ 30,320,284   
Liabilities, Redeemable Noncontrolling Interest and Shareholders’ Equity    
Current liabilities    
Current portion of debt $ 3,411,993    $ 1,186,586   
Commercial paper 343,557    1,434,180   
Current portion of operating lease liabilities 98,883    96,976   
Accounts payable 1,414,394    563,706   
Accrued interest 114,738    70,090   
Accrued expenses and other liabilities 1,022,405    1,078,345   
Derivative financial instruments 203,308    94,875   
Customer deposits 2,373,092    3,428,138   
Total current liabilities 8,982,370    7,952,896   
Long-term debt 12,273,322    8,414,110   
Long-term operating lease liabilities 583,979    601,641   
Other long-term liabilities 796,182    617,810   
Total liabilities 22,635,853    17,586,457   
Commitments and contingencies (Note 10)
Redeemable noncontrolling interest 577,425    569,981   
Shareholders’ equity    
Preferred stock ($0.01 par value; 20,000,000 shares authorized; none outstanding)
—    —   
Common stock ($0.01 par value; 500,000,000 shares authorized; 237,168,148 and 236,547,842 shares issued, March 31, 2020 and December 31, 2019, respectively)
2,372    2,365   
Paid-in capital 3,473,253    3,493,959   
Retained earnings 9,915,758    11,523,326   
Accumulated other comprehensive loss (1,095,617)   (797,713)  
Treasury stock (27,799,775 and 27,746,848 common shares at cost, March 31, 2020 and December 31, 2019, respectively)
(2,063,991)   (2,058,091)  
Total shareholders’ equity 10,231,775    12,163,846   
Total liabilities, redeemable noncontrolling interest and shareholders’ equity $ 33,445,053    $ 30,320,284   
The accompanying notes are an integral part of these consolidated financial statements.

2

ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; in thousands)
Three Months Ended March 31,
  2020 2019
Operating Activities    
Net (Loss) Income $ (1,437,035)   $ 256,806   
Adjustments:    
Depreciation and amortization 324,330    292,285   
Impairment and credit losses 1,108,118    —   
Net deferred income tax expense 253    2,983   
Loss (gain) on derivative instruments not designated as hedges 120,765    (4,780)  
Share-based compensation (income) expense (7,428)   27,322   
Equity investment loss (income) 10,392    (33,694)  
Amortization of debt issuance costs 7,795    10,366   
Amortization of commercial paper notes discount 6,615    7,916   
Change in fair value of contingent consideration (51,019)   —   
Changes in operating assets and liabilities:    
Decrease (increase) in trade and other receivables, net 84,578    (44,382)  
Increase in inventories (15,598)   (4,366)  
Decrease (increase) in prepaid expenses and other assets 24,476    (12,323)  
Increase in accounts payable 851,342    8,843   
Increase in accrued interest 44,648    45,581   
Increase (decrease) in accrued expenses and other liabilities 110,440    (68,688)  
(Decrease) increase in customer deposits (959,555)   580,735   
Dividends received from unconsolidated affiliates 1,991    42,435   
Other, net (26,398)   (28,585)  
Net cash provided by operating activities 198,710    1,078,454   
Investing Activities    
Purchases of property and equipment (1,252,554)   (470,116)  
Cash received on settlement of derivative financial instruments 1,132    5,803   
Cash paid on settlement of derivative financial instruments (96,575)   (678)  
Investments in and loans to unconsolidated affiliates (2,000)   —   
Cash received on loans to unconsolidated affiliates 5,160    11,824   
Proceeds from the sale of property and equipment 5,256    —   
Other, net (1,596)   2,719   
Net cash used in investing activities (1,341,177)   (450,448)  
Financing Activities    
Debt proceeds 7,052,189    316,810   
Debt issuance costs (62,346)   (3,675)  
Repayments of debt (921,867)   (1,146,674)  
Proceeds from issuance of commercial paper notes 6,396,787    5,039,834   
Repayments of commercial paper notes (7,494,025)   (4,711,208)  
Dividends paid (163,563)   (146,817)  
Proceeds from exercise of common stock options 384    241   
Other, net (17,347)   (16,192)  
Net cash provided by (used in) financing activities 4,790,212    (667,681)  
Effect of exchange rate changes on cash (672)   20   
Net increase (decrease) in cash and cash equivalents 3,647,073    (39,655)  
Cash and cash equivalents at beginning of period 243,738    287,852   
Cash and cash equivalents at end of period $ 3,890,811    $ 248,197   
Supplemental Disclosure    
Cash paid during the period for:    
Interest, net of amount capitalized $ 31,481    $ 37,103   
Non-cash Investing Activities    
Notes receivable issued upon sale of property and equipment $ 6,294    $ —   
Purchase of property and equipment included in accounts payable and accrued expenses and other liabilities $ 29,022    $ —   
The accompanying notes are an integral part of these consolidated financial statements.
3

ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(unaudited; in thousands)
Common Stock Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Shareholders' Equity
Balance at January 1, 2020 $ 2,365    $ 3,493,959    $ 11,523,326    $ (797,713)   $ (2,058,091)   $ 12,163,846   
Activity related to employee stock plans   (20,706)   —    —    —    (20,699)  
Common stock dividends, $0.78 per share
—    —    (163,089)   —    —    (163,089)  
Changes related to cash flow derivative hedges —    —    —    (300,605)   —    (300,605)  
Change in defined benefit plans —    —    —    (7,589)   —    (7,589)  
Foreign currency translation adjustments —    —    —    10,290    —    10,290   
Purchases of treasury stock —    —    —    (5,900)   (5,900)  
Net Loss attributable to Royal Caribbean Cruises Ltd. —    —    (1,444,479)   —    —    (1,444,479)  
Balance at March 31, 2020 $ 2,372    $ 3,473,253    $ 9,915,758    $ (1,095,617)   $ (2,063,991)   $ 10,231,775   

Common Stock Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Shareholders' Equity
Balance at January 1, 2019 $ 2,358    $ 3,420,900    $ 10,263,282    $ (627,734)   $ (1,953,345)   $ 11,105,461   
Activity related to employee stock plans   11,519    —    —    —    11,525   
Common stock dividends, $0.70 per share
—    —    (146,351)   —    —    (146,351)  
Changes related to cash flow derivative hedges —    —    —    48,843    —    48,843   
Change in defined benefit plans —    —    —    (653)   —    (653)  
Foreign currency translation adjustments —    —    —    564    —    564   
Net Income attributable to Royal Caribbean Cruises Ltd. —    —    249,681    —    —    249,681   
Balance at March 31, 2019 $ 2,364    $ 3,432,419    $ 10,366,612    $ (578,980)   $ (1,953,345)   $ 11,269,070   

4

ROYAL CARIBBEAN CRUISES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
As used in this Quarterly Report on Form 10-Q, the terms “Royal Caribbean,” the “Company,” “we,” “our” and “us” refer to Royal Caribbean Cruises Ltd. and, depending on the context, Royal Caribbean Cruises Ltd.’s consolidated subsidiaries and/or affiliates. The terms “Royal Caribbean International,” “Celebrity Cruises,” “Azamara Club Cruises” and "Silversea Cruises" refer to our wholly- or majority-owned global cruise brands. Throughout this report, we also refer to regional brands in which we hold an ownership interest, including “TUI Cruises” and “Pullmantur.” However, because these regional brands are unconsolidated investments, our operating results and other disclosures herein do not include these brands unless otherwise specified. In accordance with cruise vacation industry practice, the term “berths” is determined based on double occupancy per cabin even though many cabins can accommodate three or more passengers. This report should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2019, including the audited consolidated financial statements and related notes included therein, as updated by our Current Report on Form-8K dated May 13, 2020.
This Quarterly Report on Form 10-Q also includes trademarks, trade names and service marks of other companies.  Use or display by us of other parties’ trademarks, trade names or service marks is not intended to and does not imply a relationship with, or endorsement or sponsorship of us by, these other parties other than as described herein.
Note 1. General
Description of Business 
We are a global cruise company. As of March 31, 2020, we control and operate four global cruise brands: Royal Caribbean International, Celebrity Cruises, Azamara Club Cruises and Silversea Cruises (collectively, our "Global Brands").
We also own a 50% joint venture interest in the German brand TUI Cruises and a 49% interest in the Spanish brand Pullmantur (collectively, our "Partner Brands"). We account for our investments in our Partner Brands under the equity method of accounting.
Management's Plan and Liquidity
As part of the global containment effort for the COVID-19 pandemic, the Company implemented a voluntary suspension of its global cruise operations effective March 13, 2020, which has subsequently been extended through at least July 31, 2020 and China sailings until at least June 30, 2020. On March 14, 2020, concurrent with our and the broader cruise industry’s suspension, the U.S. Centers for Disease Control and Prevention (“CDC”) issued a No Sail Order through April 13, 2020. On April 9, 2020, the CDC modified its existing No Sail Order to extend it until the earliest of (a) the expiration of the Secretary of Health and Human Services’ declaration that COVID-19 constitutes a public health emergency, (b) the date the Director of the CDC rescinds or modifies the No Sail Order or (c) 100 days after the order appears on the Federal Register, which would be July 24, 2020.
Significant events affecting travel, including COVID-19, typically have an impact on the booking pattern for cruise vacations, with the full extent of the impact generally determined by the length of time the event influences travel decisions. Based on our assumptions and estimates and our financial condition, we believe that the liquidity described in the following paragraphs will be sufficient to fund our liquidity requirements for at least the next twelve months. However, there can be no assurance that our assumptions and estimates are accurate due to possible unknown variables, including, but not limited to, whether the CDC will issue additional No Sail Orders on cruises out of the United States. The No Sail Order is currently set to expire on or before July 24, 2020. The Company, working with the CDC, is developing its enhanced safety and health protocols as well as other operational procedures necessary to return its vessels to service and is targeting mid-summer of 2020 to begin sailings; however, if the ban on cruising is extended beyond the third quarter of 2020, it will have a material adverse impact on our current and forecasted liquidity levels. There are also other unknown variables related to the unprecedented suspension of our operations and, as such, there is significant uncertainty in our ability to predict future liquidity requirements.
As of March 31, 2020, the Company had liquidity of $3.6 billion, consisting of cash and cash equivalents, net of our outstanding commercial paper notes. During the quarter ended March 31, 2020 and through the issuance of these financial statements, as described in Note 7. Debt, the Company:

increased the capacity under our revolving credit facilities by $0.6 billion and fully drew on both facilities;
entered into 364-day senior secured term loan for $2.2 billion, which was subsequently increased to $2.35 billion and was repaid in its entirety through the date of these financial statements; and
5

secured deferrals of existing debt amortization under our export-credit backed ship debt facilities which increased the Company’s liquidity by an additional $0.8 billion.

The Company has also undertaken several proactive measures as well as has future plans to mitigate the financial and operational impacts of COVID-19, through new financing options, reduction of capital expenditures and operating expenses, including furloughing staff, laying up vessels, as well as agreeing with certain of our lenders not to pay dividends or engage in stock repurchases.

We were in compliance with all of our debt covenants as of March 31, 2020 and the date these financial statements were issued. Subsequent to March 31, 2020, we amended each of our outstanding facilities to waive compliance with all financial covenants in such facilities through and including the first quarter of 2021.

We also have agreements with a number of credit card processors that transact advance passenger ticket deposits and onboard transactions related to our cruise voyages. These agreements allow the credit card processors to require under certain circumstances, including the existence of a material adverse change, excessive chargebacks and other triggering events, that we maintain a reserve which could be satisfied by posting collateral. While we have not posted any collateral under these agreements as of the date of the issuance of the financial statements, we are currently in discussions with certain processors which may result in the posting of collateral to satisfy reserve requirements. Based on the triggers in the various agreements and the conversations to date, we believe the maximum reserve we may need to provide under these agreements in the next twelve months is approximately $300 million.

Any covenant waiver may lead to increased costs, increased interest rates, additional restrictive covenants and other available lender protections that would be applicable. There can be no assurance that we would be able to obtain waivers in a timely manner, or on acceptable terms at all. If we were not able to obtain waivers or repay the debt facilities, this would lead to an event of default and potential acceleration of amounts due under all of our outstanding debt and derivative contract payables.

Note 2. Summary of Significant Accounting Policies
Adoption of Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326); Measurement of Credit Losses on Financial Instruments. This ASU, along with subsequent ASUs issued to clarify certain of its provisions, introduces new guidance which makes substantive changes to the accounting model for financial assets subject to credit losses that are measured at amortized cost, as well as certain off-balance sheet credit exposures. The updates include the introduction of a new current expected credit loss (“CECL”) model that is based on expected rather than incurred losses. On January 1, 2020, we adopted these updates using the modified retrospective approach. The adoption did not have a material impact to our consolidated financial statements.

Recent Accounting Pronouncements
In January 2020, the FASB issued ASU No. 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivative and Hedging (Topic 815), which clarifies the interaction of rules for equity securities, the equity method of accounting, and forward contracts and purchase options on certain types of securities. The guidance clarifies how to account for the transition into and out of the equity method of accounting when considering observable transactions under the measurement alternative. The ASU is effective for annual reporting periods beginning after December 15, 2020, including interim reporting periods within those annual periods, with early adoption permitted. We are currently evaluating the impact of the new guidance on our consolidated financial statements.
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848), which provides optional expedients and exceptions to the current guidance on contract modifications and hedging relationships to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates. The guidance was effective upon issuance and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. We are currently evaluating the impact of the new guidance on our consolidated financial statements.


Note 3. Impairment and Credit Losses
6

The increased challenges related to COVID-19 has significantly impacted our expected investments, operating plans and projected cash flows. Refer to Note 1. General for further information regarding COVID-19 and its impact to the Company. As a result of these developments, we performed interim impairment evaluations on certain assets as further discussed below.

Goodwill & Intangible Assets

The following are the carrying amounts of goodwill attributable to our Royal Caribbean International, Celebrity Cruises and Silversea Cruises reporting units and the changes in such balances during the quarter ended March 31, 2020 (in thousands) are as follows:
Royal Caribbean International Celebrity Cruises Silversea Cruises Total
Balance at December 31, 2019 $ 299,226    $ 1,632    $ 1,084,786    $ 1,385,644   
Impairment charge —    —    (576,208)   (576,208)  
Transfer of goodwill attributable to the 2019 purchase of photo operations onboard our ships (2,694)   2,694    —    —   
Foreign currency translation adjustment (220)   —    —    (220)  
Balance at March 31, 2020 $ 296,312    $ 4,326    $ 508,578    $ 809,216   

We performed an interim impairment evaluation of Royal Caribbean International’s goodwill in connection with the preparation of our financial statements during the quarter ended March 31, 2020. As a result of the test, we determined that the fair value of the Royal Caribbean International reporting unit exceeded its carrying value by approximately 32% resulting in no impairment to the Royal Caribbean International goodwill. As of March 31, 2020, the carrying amount of goodwill attributable to our Royal Caribbean reporting unit was $296.3 million.

We also performed an interim impairment evaluation of Silversea Cruises’ goodwill in connection with the preparation of our financial statements for the quarter ended March 31, 2020. We estimated the fair value of the Silversea Cruises reporting unit using a probability-weighted discounted cash flow model in combination with a market based valuation approach. As a result of this analysis, we determined that the carrying value of the Silversea Cruises reporting unit exceeded its fair value. Accordingly, we recognized a goodwill impairment charge of $576.2 million during the quarter ended March 31, 2020, which is also the accumulated impairment charge as of March 31, 2020.

Intangible assets consist of finite and indefinite life assets and are reported within Other assets in our consolidated balance sheets. The following is a summary of our intangible assets as of March 31, 2020 and December 31, 2019 (in thousands):


March 31, 2020
Gross Carrying Value Accumulated Amortization Accumulated Impairment losses Net Carrying Value
Finite-life intangible assets:
Customer relationships $ 97,400    $ 9,199    $ —    $ 88,201   
Galapagos operating license 47,669    6,506    —    41,163   
Other finite-life intangible assets 11,560    8,188    —    3,372   
Total finite-life intangible assets 156,629    23,893    —    132,736   
Indefinite-life intangible assets 352,275    —    30,800    321,475   
Total intangible assets, net $ 508,904    $ 23,893    $ 30,800    $ 454,211   



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

Impairment charges related to the Silversea Cruises trade name included within Indefinite-life intangible assets in the table above was $30.8 million as of March 31, 2020.

Long-lived Assets

We identified that the undiscounted cash flows of certain long-lived assets, consisting of 8 ships and certain right-of-use assets, were less than their carrying values. Events surrounding the COVID-19 pandemic negatively impacted the expected undiscounted cash flows of these assets. As a result of this determination, we evaluated these assets pursuant to our long -lived asset impairment test, which resulted in an impairment charge of $463.0 million to write down these assets to their estimated fair values during the quarter ended March 31, 2020.

Notes Receivable

We reviewed our notes receivable for credit losses in connection with the preparation of our financial statements for the quarter ended March 31, 2020. In evaluating the allowance for loan losses, management considered factors such as historical loss experience, the types of loans and the amount of loans in the loan portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, peer group information and prevailing economic conditions. Based on these credit loss estimation factors, we recorded and subsequently wrote-off loan loss allowances of $38.1 million primarily due to loans and other net receivables related to Pullmantur Holdings S.L. ("Pullmantur Holdings"). Refer to Note 6. Other Assets for further information regarding our investment in Pullmantur Holdings.

Equity Investments

For an equity method investment that experiences a loss in fair value determined to be other than temporary, we will reduce our basis in the investment to fair value and record an impairment loss. Given the recent impact of the COVID-19 pandemic to our business, we evaluated whether our equity method investments were other than temporarily impaired. Based on our review of each of the investment's most recent financial results and projections, we determined that certain of our equity method investments, primarily Grand Bahama Shipyard Ltd. (“Grand Bahama”), were other than temporarily impaired, which resulted in an impairment charge of $39.7 million during the quarter ended March 31, 2020. Refer to Note 6. Other Assets for information regarding our significant equity investments.

The combined impairment and credit loss charge of $1.1 billion related to our goodwill, trademarks and trade names, vessels, right-of-use assets and notes receivable was recognized in earnings during the quarter ended March 31, 2020 and is reported within Impairment and credit losses within our consolidated statements of comprehensive (loss) income. The impairment charge of $39.7 million related to our equity investments was recognized in earnings during the quarter ended March 31, 2020 and is reported within Equity investment (loss) income within our consolidated statements of comprehensive (loss) income. For further information on the measurements used to estimate the fair value of these assets, refer to Note 13. Fair Value Measurements and Derivative Instruments. These impairment assessments and the resulting charges were determined based on management’s current estimates and projections using information through the time of the issuance of these financial statements. The adverse impact COVID-19 will continue to have on our business, operating results, cash flows and overall financial condition is uncertain and may result in changes to the assumptions used in the impairment tests discussed above, which may result in additional impairments to these assets in the future.



Note 4. Revenues
Revenue Recognition
Revenues are measured based on consideration specified in our contracts with customers and are recognized as the related performance obligations are satisfied.
The majority of our revenues are derived from passenger cruise contracts which are reported within Passenger ticket revenues in our consolidated statements of comprehensive (loss) income. Our performance obligation under these contracts is to provide a cruise vacation in exchange for the ticket price. We satisfy this performance obligation and recognize revenue over the duration of each cruise, which generally range from two to 25 nights.
Passenger ticket revenues include charges to our guests for port costs that vary with passenger head counts. These type of port costs, along with port costs that do not vary by passenger head counts, are included in our cruise operating expenses. The amounts of port costs charged to our guests and included within Passenger ticket revenues on a gross basis were $124.5 million and $152.0 million for the quarters ended March 31, 2020 and 2019, respectively.
Our total revenues also include Onboard and other revenues, which consist primarily of revenues from the sale of goods and services onboard our ships that are not included in passenger ticket prices. We receive payment before or concurrently with the transfer of these goods and services to passengers during a cruise and recognize revenue at the time of transfer over the duration of the related cruise.
Disaggregated Revenues
The following table disaggregates our total revenues by geographic regions where we provide cruise itineraries (in thousands):
Quarter Ended March 31,
2020 2019
Revenues by itinerary
North America(1) $ 1,324,573    $ 1,681,058   
Asia/Pacific(2) 362,398    490,075   
Europe(3) 19,540    7,982   
Other regions(4) 158,043    162,505   
Total revenues by itinerary 1,864,554    2,341,620   
Other revenues(5) 168,196    98,147   
Total revenues $ 2,032,750    $ 2,439,767   
(1)Includes the United States, Canada, Mexico and the Caribbean.
(2)Includes Southeast Asia (e.g., Singapore, Thailand and the Philippines), East Asia (e.g., China and Japan), South Asia (e.g., India and Pakistan) and Oceania (e.g., Australia and Fiji Islands) regions.
(3)Includes European countries (e.g., Nordics, Germany, France, Italy, Spain and the United Kingdom).
(4)Includes seasonality impacted itineraries primarily in South and Latin American countries.
(5)Includes revenues primarily related to cancellation fees, vacation protection insurance, pre- and post-cruise tours and fees for operating certain port facilities. Amounts also include revenues related to our bareboat charter, procurement and management related services we perform on behalf of our unconsolidated affiliates. Refer to Note 6. Other Assets for more information on our unconsolidated affiliates.
9

Passenger ticket revenues are attributed to geographic areas based on where the reservation originates. For the quarters ended March 31, 2020 and 2019, our guests were sourced from the following areas:
Quarter Ended March 31,
2020 2019
Passenger ticket revenues:
United States 68  % 66  %
Australia % %
All other countries (1) 23  % 26  %

(1)No other individual country's revenue exceeded 10% for the quarters ended March 31, 2020 and 2019.
Customer Deposits and Contract Liabilities
Our payment terms generally require an upfront deposit to confirm a reservation, with the balance due prior to the cruise. Deposits received on sales of passenger cruises are initially recorded as Customer deposits in our consolidated balance sheets and subsequently recognized as passenger ticket revenues during the duration of the cruise. ASC 606, Revenues from Contracts with Customers, defines a “contract liability” as an entity’s obligation to transfer goods or services to a customer for which the entity has received consideration from the customer. We do not consider customer deposits to be a contract liability until the customer no longer retains the unilateral right, resulting from the passage of time, to cancel such customer's reservation and receive a full refund.

The current reduction in demand for cruising due to the COVID-19 pandemic has resulted in an unprecedented low level of advance bookings and the associated customer deposits received. At the same time, we experienced significant cancellations beginning in the second half of March, which has led to issuance of refunds to customers, while the remainder have been rebooked on future cruises or received credits in lieu of cash refunds. As of March 31, 2020, refunds due to customers mostly as a result of booking cancellations were $847.2 million compared to $32.9 million as of March 31, 2019. Due to the uncertainty around the return of demand for cruising, we are unable to estimate the amount of the March 31, 2020 customer deposits that will be recognized in earnings compared to amounts that will be refunded to customers or issued as a credit for future travel through the end of 2020. Customer deposits presented in our consolidated balance sheets include contract liabilities of $470.2 million and $1.7 billion as of March 31, 2020 and December 31, 2019, respectively.
Contract Receivables and Contract Assets
Although we generally require full payment from our customers prior to their cruise, we grant credit terms to a relatively small portion of our revenue sourced in select markets outside of the United States. As a result, we have outstanding receivables from passenger cruise contracts in those markets. We also have receivables from credit card merchants for cruise ticket purchases and goods and services sold to guests during cruises that are collected before, during or shortly after the cruise voyage. In addition, we have receivables due from concessionaires onboard our vessels. These receivables are included within Trade and other receivables, net in our consolidated balance sheets.
We have contract assets that are conditional rights to consideration for satisfying the construction services performance obligations under a service concession arrangement. As of March 31, 2020 and December 31, 2019, our contract assets were $54.9 million and $55.5 million, respectively, and were included within Other assets in our consolidated balance sheets. Given the short duration of our cruises and our collection terms, we do not have any other significant contract assets.
Assets Recognized from the Costs to Obtain a Contract with a Customer
Prepaid travel agent commissions are an incremental cost of obtaining contracts with customers that we recognize as an asset and include within Prepaid expenses and other assets in our consolidated balance sheets. Prepaid travel agent commissions were $33.5 million and $163.2 million as of March 31, 2020 and December 31, 2019, respectively. Substantially all of our prepaid travel agent commissions at December 31, 2019 were expensed and reported primarily within Commissions, transportation and other in our consolidated statements of comprehensive income (loss) for the quarter ended March 31, 2020.
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Note 5. (Loss) Earnings Per Share
A reconciliation between basic and diluted (loss) earnings per share is as follows (in thousands, except per share data):
Quarter Ended March 31,
  2020 2019
Net (Loss) Income attributable to Royal Caribbean Cruises Ltd. for basic and diluted earnings per share $ (1,444,479)   $ 249,681   
Weighted-average common shares outstanding 209,097    209,322   
Dilutive effect of stock-based awards —    552   
Diluted weighted-average shares outstanding 209,097    209,874   
Basic (loss) earnings per share $ (6.91)   $ 1.19   
Diluted (loss) earnings per share $ (6.91)   $ 1.19   
 
There were approximately 877,000 antidilutive shares for the quarter ended March 31, 2020 and no antidilutive shares for the quarter ended March 31, 2019. 
Note 6. Other Assets
A Variable Interest Entity (“VIE”) is an entity in which the equity investors have not provided enough equity to finance the entity’s activities or the equity investors: (1) cannot directly or indirectly make decisions about the entity’s activities through their voting rights or similar rights; (2) do not have the obligation to absorb the expected losses of the entity; (3) do not have the right to receive the expected residual returns of the entity; or (4) have voting rights that are not proportionate to their economic interests and the entity’s activities involve or are conducted on behalf of an investor with a disproportionately small voting interest.
We have determined that TUI Cruises GmbH, our 50%-owned joint venture, which operates the brand TUI Cruises, is a VIE. As of March 31, 2020, the net book value of our investment in TUI Cruises was $613.9 million, primarily consisting of $467.9 million in equity and a loan of €130.8 million, or approximately $143.5 million based on the exchange rate at March 31, 2020. As of December 31, 2019, the net book value of our investment in TUI Cruises was $598.1 million, primarily consisting of $443.1 million in equity and a loan of €133.2 million, or approximately $149.5 million based on the exchange rate at December 31, 2019. The loan, which was made in connection with the sale of Splendour of the Seas in April 2016, accrues interest at a rate of 6.25% per annum and is payable over 10 years. This loan is 50% guaranteed by TUI AG, our joint venture partner in TUI Cruises, and is secured by a first priority mortgage on the ship. The majority of these amounts were included within Other assets in our consolidated balance sheets. TUI Cruises has various ship construction and financing agreements which include certain restrictions on each of our and TUI AG’s ability to reduce our current ownership interest in TUI Cruises below 37.55% through May 2031.
Our investment amount, outstanding term loan and the potential obligations under the bank loan guarantee are substantially our maximum exposure to loss in connection with our investment in TUI Cruises. We have determined that we are not the primary beneficiary of TUI Cruises. We believe that the power to direct the activities that most significantly impact TUI Cruises’ economic performance are shared between ourselves and TUI AG. All the significant operating and financial decisions of TUI Cruises require the consent of both parties, which we believe creates shared power over TUI Cruises. Accordingly, we do not consolidate this entity and account for this investment under the equity method of accounting.
On February 7, 2020, TUI Cruises entered into an agreement to acquire Hapag-Lloyd Cruises, a luxury and expedition brand for German-speaking guests, from TUI AG. Hapag-Lloyd Cruises operates two luxury liners and three smaller expedition ships. The transaction is subject to regulatory approval and customary closing conditions. The majority of the purchase price for this acquisition is being financed by third-party financing, however, each shareholder is making a contribution of €75 million to fund a portion of the purchase price.







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We have determined that Pullmantur Holdings, in which we have a 49% noncontrolling interest and Springwater Capital LLC has a 51% interest, is a VIE for which we are not the primary beneficiary, as we do not have the power to direct the activities that most significantly impact the entity's economic performance. Accordingly, we do not consolidate this entity and we account for this investment under the equity method of accounting. As of March 31, 2020, we did not have any exposure to loss in Pullmantur Holdings as a result of the loans and net receivables written-off as of March 31, 2020. Refer to Note 3. Impairment and Credit Losses for further information on our credit loss evaluation related to these receivables as of March 31, 2020.

As of December 31, 2019, our maximum exposure to loss in Pullmantur Holdings was $49.7 million, consisting of loans and other receivables. These amounts were included within Trade and other receivables, net and Other assets in our consolidated balance sheets.

We have provided a non-revolving working capital facility to a Pullmantur Holdings subsidiary in the amount of up to €15.0 million or approximately $16.5 million based on the exchange rate at March 31, 2020. Proceeds of the facility, which were available to be drawn through December 2018 accrued interest at an interest rate of 6.5% per annum and are payable through 2022. An affiliate of Springwater Capital LLC has guaranteed repayment of 51% of the outstanding amounts under the facility. As of March 31, 2020, €11.4 million, or approximately $12.5 million, based on the exchange rate at March 31, 2020, was outstanding under this facility and was fully written-off as of March 31, 2020. As of December 31, 2019, €11.0 million, or approximately $12.3 million, based on the exchange rate at December 31, 2019, was outstanding under this facility.

We have determined that Grand Bahama, a ship repair and maintenance facility in which we have a 40% noncontrolling interest, is a VIE. This facility serves cruise and cargo ships, oil and gas tankers and offshore units.  We utilize this facility, among other ship repair facilities, for our regularly scheduled drydocks and certain emergency repairs as may be required. During the quarters ended March 31, 2020 and 2019, we made payments of $0.2 million and $40.3 million, respectively, to Grand Bahama for ship repair and maintenance services. We have determined that we are not the primary beneficiary of this facility as we do not have the power to direct the activities that most significantly impact the facility’s economic performance. Accordingly, we do not consolidate this entity and we account for this investment under the equity method of accounting. During the quarter ended March 31, 2020, we performed an impairment evaluation on our investment in Grand Bahama. As a result of the evaluation, we did not deem our investment balance to be recoverable and recorded an impairment charge of $30.1 million. Refer to Note 3. Impairment and Credit Losses for further information regarding the impairment evaluation. As of March 31, 2020, the net book value of our investment in Grand Bahama was $24.0 million, consisting of loans. As of December 31, 2019, the net book value of our investment in Grand Bahama was $47.9 million, consisting of $27.0 million in equity and loans of $20.9 million. These amounts represent our maximum exposure to loss related to our investment in Grand Bahama. Our loans to Grand Bahama mature between December 2020 and March 2026 and bear interest at LIBOR plus 2.00% to 3.75%, capped at 5.75% for the majority of the outstanding loan balance. Interest payable on the loans is due on a semi-annual basis. We did not receive any principal and interest payments during the quarter ended March 31, 2020. During the quarter ended March 31, 2019, we received principal and interest payments of $6.6 million. The loan balances are included within Trade and other receivables, net and Other assets in our consolidated balance sheets. As of March 31, 2020, the loans were accruing interest under the effective yield method. Effective April 1, 2020, we determined the loans to be in non-accrual status.
We monitor credit risk associated with the loans through our participation on Grand Bahama’s board of directors along with our review of Grand Bahama’s financial statements and projected cash flows. Based on this review, we do not expect to realize credit losses associated with the outstanding loans as of March 31, 2020.
The following tables set forth information regarding our investments accounted for under the equity method of accounting, including the entities discussed above (in thousands):
Quarter Ended March 31,
2020 2019
Share of equity (loss) income from investments $ (10,392)   $ 33,694   
Dividends received (1) $ 1,991    $ 42,435   
(1)There were no dividends received from TUI Cruises for the quarter ended March 31, 2020. For the quarter ended March 31, 2019, amount includes dividends of €50.0 million from TUI Cruises, net of tax withholdings.
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As of March 31, 2020 As of December 31, 2019
Total notes receivable due from equity investments $ 167,352    $ 193,351   
Less-current portion (1) 27,323    19,681   
Long-term portion (2) $ 140,029    $ 173,670   
(1)Included within Trade and other receivables, net in our consolidated balance sheets.
(2)Included within Other assets in our consolidated balance sheets.
We also provide ship management services to TUI Cruises GmbH and Pullmantur Holdings. Additionally, we bareboat charter to Pullmantur Holdings the vessels currently operated by its brands, which were retained by us following the sale of our 51% interest in Pullmantur Holdings. We recorded the following as it relates to these services in our operating results within our consolidated statements of comprehensive income (loss) (in thousands):
Quarter Ended March 31,
2020 2019
Revenues $ 7,411    $ 11,882   
Expenses $ 782    $ 974   
As of March 31, 2020 and December 31, 2019, our total credit loss allowance related to receivables subject to credit loss evaluation was $5.7 million and $5.6 million, respectively.

Note 7. Debt
Debt consist of the following (in thousands):
Interest Rate (1)
Maturities Through Quarter ended March 31, 2020 Year ended December 31, 2019
Fixed rate debt:
Unsecured senior notes
2.65% to 7.50%
2020 - 2028 $ 1,767,059    $ 1,746,280   
Secured senior notes 7.25% 2025 658,645    662,398   
Unsecured term loans
2.53% to 5.41%
2021 - 2032 3,480,147    2,806,774   
Total fixed rate debt 5,905,851    5,215,452   
Variable rate debt:
Unsecured revolving credit facilities (2)
2.79% 2022 - 2024 3,475,000    165,000   
Commercial paper 1.93% 2020 343,557    1,434,180   
USD secured term loan
2.25% to 2.75%
2021 2,200,000    —   
USD unsecured term loan
1.55% to 5.64%
2020 - 2028 3,471,256    3,519,853   
Euro unsecured term loan
1.15% to 1.58%
2021 - 2028 661,487    676,740   
Total variable rate debt 10,151,300    5,795,773   
Finance lease liabilities 226,471    230,258   
Total debt (3)
16,283,622    11,241,483   
Less: unamortized debt issuance costs (254,750)   (206,607)  
Total debt, net of unamortized debt issuance costs 16,028,872    11,034,876   
Less—current portion including commercial paper (3,755,550)   (2,620,766)  
Long-term portion $ 12,273,322    $ 8,414,110   
(1) Interest rates based on outstanding loan balance as of March 31, 2020 and, for variable rate debt, include either LIBOR or EURIBOR plus the applicable margin.
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(2) Includes $1.9 billion facility due in 2024 and $1.6 billion facility due in 2022, each of which accrue interest at LIBOR plus 1.10%, which interest rate was 2.55% as of March 31, 2020 and each is subject to a facility fee of 0.15%.
(3) At March 31, 2020 and December 31, 2019, the weighted average interest rate for total debt was 3.98% and 3.99%, respectively.

In March 2020, we increased the capacity of our $1.7 billion and $1.2 billion unsecured revolving credit facilities due in 2024 and 2022, by $200 million and $400 million, respectively, utilizing their respective accordion features. As of March 31, 2020, our aggregate revolving borrowing capacity was $3.5 billion and was fully drawn upon.
In March 2020, we took delivery of Celebrity Apex. To finance the purchase, we borrowed $722.2 million under a previously committed unsecured term loan which is 100% guaranteed by Bpifrance Assurance Export, the official export credit agency of France. The loan amortizes semi-annually over 12 years and bears interest at a fixed rate of 3.23% per annum.
As of March 31, 2020, we had $343.6 million of commercial paper notes outstanding with a weighted average interest rate of 1.93% and a weighted average maturity of approximately 4 days. As of March 31, 2019, we had $1.1 billion of commercial paper notes outstanding with a weighted average interest rate of 3.04% and a weighted average maturity of approximately 34 days.
In March 2020, we borrowed $2.2 billion pursuant to a 364-day senior secured term loan agreement. The loan would have matured 364 days after funding and maturity could have been extended at our option for an additional 364 days subject to customary conditions, including the payment of a 1.00% extension fee. Our obligation under the loan was guaranteed by our wholly-owned subsidiaries, Celebrity Cruises Holdings Inc., Celebrity Cruises Inc. and certain of our wholly-owned vessel-owning subsidiaries, and was secured by certain of our trademarks and a pledge of 100% of the equity interests of certain of our vessel-owning subsidiaries. Interest accrued at LIBOR plus a margin of 2.25% which would have increased to 2.50% and 2.75%, 180 days and 365 days, respectively, after funding. We were also required to pay a duration fee in an amount equal to 0.25% of the aggregate loan principal amount every 60 days. Two of our board members each purchased a participation interest equal to $100 million in our 364-day, $2.2 billion senior secured term loan agreement. In May 2020, this secured term loan was increased by an additional $150 million through an accordion feature.
In May 2020, we issued $3.32 billion in senior secured notes, less original issue discount. $1.0 billion of the notes accrue interest at 10.875% and mature in 2023. The remaining $2.32 billion of the notes accrue interest at a fixed rate of 11.5% and mature in 2025. The notes are fully and unconditionally guaranteed by Celebrity Cruises Holdings Inc., Celebrity Cruises Inc., and certain of our wholly-owned vessel-owning subsidiaries. The notes are secured by first priority security interests in the collateral (which generally includes certain of our material intellectual property, a pledge of 100% of the equity interests of certain of our vessel-owning subsidiaries and mortgages on the 28 vessels owned by such subsidiaries, subject to permitted liens and certain exclusions and release provisions). The obligations under the senior secured notes will be secured by the collateral in an amount not to exceed $1.662 billion based on our debt rating as of the date of issuance. We repaid the $2.35 billion, 364-day senior secured term loan in its entirety with a portion of the proceeds of these $3.32 billion secured notes. We expect to use the remainder of the proceeds for general corporate purposes, which may include repayment of additional indebtedness.
Subsequent to March 31, 2020 and through the date of these financial statements, we amended certain export-credit backed ship debt facilities to benefit from a 12-month debt amortization and financial covenant holiday ("Debt Holiday"). Under the Debt Holiday, deferred debt amortization of approximately $0.8 billion will be paid over a period of four years after the 12-month deferral period. The Debt Holiday was offered by certain export credit agencies as a result of the current impact to cruise-line borrowers as a result of COVID-19.
Except for Celebrity Flora and Azamara Pursuit, all of our unsecured ship financing term loans are guaranteed by the export credit agency in the respective country in which the ship is constructed. As of March 31, 2020, in consideration for these guarantees, depending on the financing arrangement, we pay to the applicable export credit agency (1) a fee of 1.01% per annum based on the outstanding loan balance semi-annually over the term of the loan (subject to adjustments based upon our credit ratings) or (2) an upfront fee of 2.35% to 2.37% of the maximum loan amount. We amortize the fees that are paid upfront over the life of the loan and those that are paid semi-annually over each respective payment period. Prior to the loan being drawn, we present these fees within Other assets in our consolidated balance sheets. Once the loan is drawn, such fees are classified as a discount to the related loan, or contra-liability account, within Current portion of long-term debt or long-term debt. In our consolidated statements of cash flows, we classify these fees within Amortization of debt issuance costs.
Except for the 2027 series (which are not redeemable), unsecured senior notes outstanding as of March 31, 2020 are redeemable upon the payment of a make-whole premium prior to maturity, or with respect to the 2028 series, prior to the par call date. The 2028 series may also be redeemed three months prior to maturity at par.
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Certain of our debt agreements contain covenants that, among other things, require us to maintain a minimum level of shareholder's equity and certain financial ratios. We were in compliance with our financial covenants as of March 31, 2020. However, subsequent to March 31, 2020, we amended these debt agreements to waive the quarterly testing of our financing covenants through and including the first quarter of 2021. For information related to the covenant in our PortMiami Terminal "A" operating lease agreement, refer to Note 8. Leases.
As part of obtaining these debt compliance waivers, we are now required to maintain a minimum of $300 million in cash and cash equivalents tested on a monthly basis through March 31, 2021, and we are not permitted during the covenant waiver period, subject to limited exceptions, to pay cash dividends or make share repurchases unless we would have been compliant with our fixed charge coverage ratio at such time. In addition, the lenders under such unsecured bank facilities required a number of structural enhancements to such facilities. Under certain of our agreements, the contractual interest rate, facility fee and/or export credit agency fee vary with our debt rating. On April 2, 2020, S&P Global downgraded us from BBB- to BB and on May 13, 2020, Moody’s downgraded us from Baa3 to Ba2.

The following is a schedule of annual maturities on our total debt net of debt issuance costs, and including capital leases and commercial paper, as of March 31, 2020 for each of the next five years (in thousands):
Year
Remainder of 2020 1,082,153   
2021 3,102,445   
2022 4,289,601   
2023 823,209   
2024 2,706,216   
Thereafter 4,025,248   
16,028,872   

Finance Leases
Silversea Cruises operates two ships, the Silver Whisper and Silver Explorer, under finance leases. The finance lease for the Silver Whisper will expire in 2022, subject to an option to purchase the ship, and the finance lease for the Silver Explorer will expire in 2021, subject to an option to extend the lease for up to an additional six years. The total aggregate amount of the finance lease liabilities recorded for these ships was $54.3 million and $55.6 million at March 31, 2020 and December 31, 2019, respectively. The lease payments on the Silver Whisper are subject to adjustments based on the LIBOR rate.

Note 8. Leases
Our operating leases primarily relate to preferred berthing arrangements, real estate and shipboard equipment and are included within Operating lease right-of-use assets, and Long-term operating lease liabilities with the current portion of the liability included within Current portion of operating lease liabilities in our consolidated balance sheets as of March 31, 2020 and December 31, 2019. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet. We recognize lease expense for these leases on a straight-line basis over the lease term.
During the first quarter ended March 31, 2020, we identified that the undiscounted cash flows of certain right-of-use assets, were less than their carrying values. Events surrounding the COVID-19 pandemic negatively impacted the expected undiscounted cash flows of these assets. As a result of this determination, we evaluated these assets pursuant to our long-lived asset impairment test, which resulted in an impairment charge of $45.9 million to write down these right-of-use assets to their estimated fair values during the quarter ended March 31, 2020.
Our finance leases include two ships, Silver Whisper and Silver Explorer, operated by Silversea Cruises. Finance leases are included within Property and equipment, net and Long-term debt, with the current portion of the debt reported within Current portion of debt, in our consolidated balance sheets. The finance lease for Silver Whisper will expire in 2022, subject to an option to purchase the ship, and the finance lease for Silver Explorer will expire in 2021, subject to an option to extend the lease for up to an additional six years.
For some of our real estate leases and berthing agreements, we do have the option to extend our current lease term. For those lease agreements with renewal options, the renewal periods for real estate leases range from one to 10 years and the
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renewal periods for berthing agreements range from one to 20 years. Generally, we do not include renewal options as a component of our present value calculation for berthing agreements. However, for certain real estate leases, we include them. Additionally, we do have a residual value guarantee associated with our lease of a terminal at Port of Miami in Miami, Florida that approximates a percentage of cost of the asset as of the inception of the lease. We consider the possibility of incurring costs associated with the residual value guarantee to be remote. As of March 31, 2020, we were not in compliance with one covenant in our Port of Miami Terminal "A" operating lease agreement, which we subsequently obtained a waiver for and amended our agreement with the lessor to increase the lien basket in line with our debt facilities.
As most of our leases do not provide an implicit rate, we use our incremental borrowing rate in determining the present value of lease payments. We estimate our incremental borrowing rates based on LIBOR and U.S. Treasury note rates corresponding to lease terms increased by the Company’s credit risk spread and reduced by the estimated impact of collateral. We used the incremental borrowing rate as of the adoption date for operating leases that commenced prior to that date. In addition, we have lease agreements with lease and non-lease components, which are generally accounted for separately. However, for berthing agreements, we account for the lease and non-lease components as a single lease component.
Additionally, we bareboat charter to Pullmantur Holdings the vessels currently operated by its brands, which were retained by us following the sale of our 51% interest in Pullmantur Holdings in 2016. We account for the bareboat charters of these vessels as operating leases for which we are the lessor.  The remaining payments and term of these leases are immaterial to our consolidated financial statements.
The components of lease expense were as follows (in thousands):
Consolidated Statement of Comprehensive Income (Loss) Classification Quarter Ended March 31, 2020 Quarter Ended March 31, 2019
Lease costs:
Operating lease costs Commission, transportation and other $ 14,745    $ 19,056   
Operating lease costs Other operating expenses 7,001    6,931   
Operating lease costs Marketing, selling and administrative expenses 5,368    5,679   
Financial lease costs:
Amortization of right-of-use-assets Depreciation and amortization expenses 4,881    3,195   
Interest on lease liabilities Interest expense, net of interest capitalized 1,933    596   
Total lease costs $ 33,928    $ 35,457   
In addition, certain of our berth agreements include variable lease costs based on the number of passengers berthed. During the quarter ended March 31, 2020, we had $25.6 million of variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive income (loss).
Weighted average of the remaining lease terms and weighted average discount rates are as follows:
As of March 31, 2020
Weighted average of the remaining lease term
Operating leases 8.6 years
Finance leases 30.17 years
Weighted average discount rate
Operating leases 4.7  %
Finance leases 4.5  %
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Supplemental cash flow information related to leases is as follows (in thousands):
Quarter Ended March 31, 2020 Quarter Ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 27,841    $ 31,981   
Operating cash flows from finance leases $ 1,933    $ 596   
Financing cash flows from finance leases $ 3,823    $ 3,606   











As of March 31, 2020, maturities related to lease liabilities were as follows (in thousands):
Year Operating Leases Finance Leases
Remainder of 2020 $ 97,082    $ 37,905   
2021 117,145    46,451   
2022 106,714    23,480   
2023 101,557    12,539   
2024 75,509    12,528   
Thereafter 417,122    406,088   
Total lease payments 915,129    538,991   
Less: Interest (232,267)   (312,520)  
Present value of lease liabilities $ 682,862    $ 226,471   

Note 9. Redeemable Noncontrolling Interest
In connection with the acquisition of Silversea Cruises, we recorded redeemable noncontrolling interest due to the put options held by the non-controlling interest shareholder, which may require us to purchase the remaining interest, or 33.3% of Silversea Cruises, upon the occurrence or nonoccurrence of certain future events that are not solely within our control. At the acquisition date, the estimated fair value of the redeemable noncontrolling interest was based on 33.3% of Silversea Cruises' equity value, which was determined based on the transaction price paid for 66.7% of Silversea Cruises. As of March 31, 2020, the non-controlling controlling interest shareholder's interest is presented as Redeemable noncontrolling interest and is classified outside of shareholders' equity in our consolidated balance sheets. Additionally, the noncontrolling interest's share in the net earnings (loss) and contractual accretion requirements associated with the put options are included in Net Income attributable to noncontrolling interest in our consolidated statements of comprehensive income (loss).

The following table presents changes in the redeemable noncontrolling interest as of March 31, 2020 (in thousands):
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Beginning balance January 1, 2019 $ 542,020   
Net income attributable to noncontrolling interest, including the contractual accretion of the put options 28,713   
Distribution to noncontrolling interest (752)  
Balance at December 31, 2019 $ 569,981   
Net income attributable to noncontrolling interest, including the contractual accretion of the put options 7,444   
Ending balance March 31, 2020 $ 577,425   

Note 10. Commitments and Contingencies
Ship Purchase Obligations
Our future capital commitments consist primarily of new ship orders. As of March 31, 2020, we had one Quantum-class ship, two Oasis-class ships and three ships of a new generation, known as our Icon-class, on order for our Royal Caribbean International brand with an aggregate capacity of approximately 32,400 berths. As of March 31, 2020, we had two Edge-class ships on order for our Celebrity Cruises brand with an aggregate capacity of approximately 6,500 berths. Additionally, as of March 31, 2020, we have five ships on order for our Silversea Cruises brand with an aggregate capacity of approximately 2,400 berths.
In June 2019, Silversea Cruises entered into a $300 million unsecured term loan facility for the financing of Silver Moon to pay a portion of the ship's contract price through a facility guaranteed by us. We expect to draw upon this loan when we take delivery of the ship. The loan will be due and payable at maturity in June 2028. Interest on the loan will accrue at LIBOR plus 1.50%.
In September 2019, Silversea Cruises entered into two credit agreements, guaranteed by us, for the unsecured financing of the first and second Evolution-class ships for an amount of up to 80% of each ship's contract price through facilities to be guaranteed 95% by Euler Hermes, the official export credit agency of Germany. The maximum loan amount under each facility is not to exceed the United States dollar equivalent of €351.6 million in the case of the first Evolution-class ship and €359.0 million in the case of the second Evolution-class ship, or approximately $385.8 million and $393.9 million, respectively, based on the exchange rate at March 31, 2020. Each loan, once funded, will amortize semi-annually and will mature 12 years following the delivery of each ship. At our election, interest on each loan will accrue either (1) at a fixed rate of 4.14% and 4.18%, respectively (inclusive of the applicable margin) or (2) at a floating rate equal to LIBOR plus 0.79% and 0.83%, respectively. The first and second Evolution-class ships will each have a capacity of approximately 600 berths and are currently scheduled for delivery in the first quarters of 2022 and 2023, respectively.
In December 2019, we entered into a credit agreement for the unsecured financing of the sixth Oasis-class ship for up to 80% of the ship’s contract price through a facility to be guaranteed 100% by Bpifrance Assurance Export, the official export credit agency of France. Under the financing arrangement, we have the right, but not the obligation, to satisfy the obligations to be incurred upon delivery and acceptance of the ship under the shipbuilding contract by assuming, at delivery and acceptance, the debt indirectly incurred by the shipbuilder during the construction of the ship. The maximum loan amount under the facility is not to exceed the United States dollar equivalent of €1.3 billion, or approximately $1.4 billion based on the exchange rate at March 31, 2020. The loan will amortize semi-annually and will mature 12 years following delivery of the ship. Interest on the loan will accrue at a fixed rate of 3.00% (inclusive of margin). The sixth Oasis-class ship will have a capacity of approximately 5,700 berths and is currently scheduled for delivery in the fall of 2023.
In December 2019, we entered into a credit agreement for the unsecured financing of the third Icon-class ship for up to 80% of the ship’s contract price. Finnvera plc, the official export credit agency of Finland, has agreed to guarantee 95% of the substantial majority of the financing, with a smaller portion of the financing to be 95% guaranteed by Euler Hermes, the official German export credit agency. The maximum loan amount under the facility is not to exceed the United States dollar equivalent of €1.4 billion, or approximately $1.6 billion based on the exchange rate at March 31, 2020. The loan, once funded, will amortize semi-annually and will mature 12 years following the delivery of the ship. Approximately 60% of the loan will accrue interest at a fixed rate of 3.29%. The balance of the loan will accrue interest at a floating rate of LIBOR plus 0.85%. The third Icon-class ship will have a capacity of approximately 5,600 berths and is currently scheduled for delivery in the second quarter of 2025.




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Our future capital commitments consist primarily of new ship orders. As of March 31, 2020, our Global Brands and Partner Brands have the following ships on order. COVID-19 has impacted shipyard operations and we expect that this will result in delivery delays of ships on order and will adjust the timing of our contractual ship deliveries:
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Ship Shipyard Contractual Delivery Dates Approximate
Berths
Royal Caribbean International —
Oasis-class:
Wonder of the Seas Chantiers de l'Atlantique 2nd Quarter 2021 5,700
Unnamed Chantiers de l'Atlantique 4nd Quarter 2023 5,700
Quantum-class:
Odyssey of the Seas Meyer Werft 4th Quarter 2020 4,200
Icon-class:
Unnamed Meyer Turku Oy 2nd Quarter 2022 5,600
Unnamed Meyer Turku Oy 2nd Quarter 2024 5,600
Unnamed Meyer Turku Oy 2nd Quarter 2025 5,600
Celebrity Cruises —
Edge-class:
Celebrity Beyond Chantiers de l'Atlantique 4th Quarter 2021 3,250
Unnamed Chantiers de l'Atlantique 4th Quarter 2022 3,250
Silversea Cruises —
Silver Origin De Hoop 2nd Quarter 2020 100
Muse-Class:
Silver Moon Fincantieri 3rd Quarter 2020 550
Silver Dawn Fincantieri 3rd Quarter 2021 550
Evolution Class:
Unnamed Meyer Werft 1st Quarter 2022 600
Unnamed Meyer Werft 1st Quarter 2023 600
TUI Cruises (50% joint venture) (2)—
Mein Schiff 7 Meyer Turku Oy 2nd Quarter 2023 2,900
Unnamed Fincantieri 3rd Quarter 2024 4,100
Unnamed Fincantieri 1st Quarter 2026 4,100
Total Berths 52,400
As of March 31, 2020, the aggregate cost of our ships on order presented in the table above, excluding any ships on order by our Partner Brands, was approximately $13.8 billion, of which we had deposited $810.9 million as of such date. Approximately 63.6% of the aggregate cost was exposed to fluctuations in the Euro exchange rate at March 31, 2020. Refer to Note 13. Fair Value Measurements and Derivative Instruments for further information.
In addition, as of March 31, 2020, we have an agreement in place with Chantiers de l'Atlantique to build an additional Edge-class ship for delivery in the 4th quarter of 2024, which is contingent upon completion of conditions precedent and financing.
Litigation
As previously reported in our Annual Report on Form 10-K for the year ended December 31, 2019, as updated by our Current Report on Form 8-K dated May 13, 2020, two lawsuits were filed against Royal Caribbean Cruises Ltd. in August 2019 in the U.S. District Court for the Southern District of Florida under Title III of the Cuban Liberty and Democratic Solidarity Act, also known as the Helms-Burton Act. The complaint filed by Havana Docks Corporation alleges it holds an interest in the Havana Cruise Port Terminal and the complaint filed by Javier Garcia-Bengochea alleges that he holds an interest in the Port of Santiago, Cuba, both of which were expropriated by the Cuban Government. The complaints further allege that Royal Caribbean Cruises Ltd. trafficked in those properties by embarking and disembarking passengers at these facilities. The plaintiffs seek all available statutory remedies, including the value of the expropriated property, plus interest, treble damages, attorneys’ fees and costs. Royal Caribbean Cruises Ltd. filed its answer to each complaint in October 2019. We believe we have meritorious defenses to the claims, and we intend to vigorously defend ourselves against them. We believe that it is unlikely that the outcome of these matters will have a material adverse impact to our financial condition, results of operations or cash
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flows. However, the outcome of litigation is inherently unpredictable and subject to significant uncertainties, and there can be no assurances that the final outcome of this case will not be material.
We are also routinely involved in claims typical within the cruise vacation industry. The majority of these claims are covered by insurance. We believe the outcome of such claims, net of expected insurance recoveries, will not have a material adverse impact on our financial condition or results of operations and cash flows.
Other
If any person acquires ownership of more than 50% of our common stock or, subject to certain exceptions, during any 24-month period, a majority of our board of directors is no longer comprised of individuals who were members of our board of directors on the first day of such period, we may be obligated to prepay indebtedness outstanding under our credit facilities, which we may be unable to replace on similar terms. Our public debt securities also contain change of control provisions that would be triggered by a third-party acquisition of greater than 50% of our common stock coupled with a ratings downgrade. If this were to occur, it would have an adverse impact on our liquidity and operations.

Note 11. Shareholders’ Equity
During the first quarter of 2020, we declared a cash dividend on our common stock of $0.78 per share, which was paid in April 2020. During the first quarter of 2020, we also paid a cash dividend on our common stock of $0.78 per share, which was declared during the fourth quarter of 2019.
During the first quarter of 2019, we declared a cash dividend on our common stock of $0.70 per share, which was paid in April 2019. During the first quarter of 2019, we also paid a cash dividend on our common stock of $0.70 per share, which was declared during the fourth quarter of 2018.
Subsequent to March 31, 2020, we agreed with certain of our our lenders not to pay dividends or engage in common stock repurchases for so long as our debt covenant waivers are in effect.
Note 12. Changes in Accumulated Other Comprehensive Income (Loss) 
The following table presents the changes in accumulated other comprehensive income (loss) by component for the quarters ended March 31, 2020 and 2019 (in thousands):
Accumulated Other Comprehensive Income (Loss) for the Quarter Ended March 31, 2020 Accumulated Other Comprehensive Income (Loss) for the Quarter Ended March 31, 2019
  Changes related to cash flow derivative hedges Changes in defined benefit plans Foreign currency translation adjustments Accumulated other comprehensive loss Changes related to cash flow derivative hedges Changes in defined benefit plans Foreign currency translation adjustments Accumulated other comprehensive loss
Accumulated comprehensive loss at beginning of the year $ (688,529)   $ (45,558)   $ (63,626)   $ (797,713)   $ (537,216)   $ (26,023)   $ (64,495)   $ (627,734)  
Other comprehensive income (loss) before reclassifications (322,985)   (8,094)   10,290    (320,789)   61,565    (841)   564    61,288   
Amounts reclassified from accumulated other comprehensive loss 22,380    505    —    22,885    (12,722)   188    —    (12,534)  
Net current-period other comprehensive income (loss) (300,605)   (7,589)   10,290    (297,904)   48,843    (653)   564    48,754   
Ending balance $ (989,134)   $ (53,147)   $ (53,336)   $ (1,095,617)   $ (488,373)   $ (26,676)   $ (63,931)   $ (578,980)  

The following table presents reclassifications out of accumulated other comprehensive income (loss) for the quarters ended March 31, 2020 and 2019 (in thousands):
  Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income  
Details About Accumulated Other Comprehensive Income (Loss) Components Quarter Ended March 31, 2020 Quarter Ended March 31, 2019 Affected Line Item in Statements of
Comprehensive Income (Loss)
Gain (loss) on cash flow derivative hedges:    
Interest rate swaps $ (3,391)   $ (391)   Interest expense, net of interest capitalized
Foreign currency forward contracts (3,337)   (3,334)   Depreciation and amortization expenses
Foreign currency forward contracts (1,763)   (1,315)   Other income (expense)
Fuel swaps 344    (256)   Other income (expense)
Fuel swaps (14,233)   18,018    Fuel
  (22,380)   12,722     
Amortization of defined benefit plans:    
Actuarial loss (505)   (188)   Payroll and related
  (505)   (188)    
Total reclassifications for the period $ (22,885)   $ 12,534     

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Note 13. Fair Value Measurements and Derivative Instruments 
Fair Value Measurements
The estimated fair value of our financial instruments that are not measured at fair value, categorized based upon the fair value hierarchy, are as follows (in thousands): 
Fair Value Measurements at March 31, 2020 Using Fair Value Measurements at December 31, 2019 Using
Description Total Carrying Amount Total Fair Value
Level 1(1)
Level 2(2)
Level 3(3)
Total Carrying Amount Total Fair Value
Level 1(1)
Level 2(2)
Level 3(3)
Assets:
Cash and cash equivalents(4)
$ 3,890,811    $ 3,890,811    $ 3,890,811    $ —    $ —    $ 243,738    $ 243,738    $ 243,738    $ —    $ —   
Total Assets $ 3,890,811    $ 3,890,811    $ 3,890,811    $ —    $ —    $ 243,738    $ 243,738    $ 243,738    $ —    $ —   
Liabilities: