XML 23 R8.htm IDEA: XBRL DOCUMENT
v3.20.2

General | 9 Months Ended
--- | ---
Sep. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
General | General Description of Business We are a global cruise company. As of September 30, 2020, we control and operate four global cruise brands: Royal Caribbean International, Celebrity Cruises, Azamara, and Silversea Cruises (collectively, our "Global Brands"). We also own a 50% joint venture interest in TUI Cruises GmbH ("TUIC"), our 50%-owned joint venture that operates the German brands TUI Cruises and Hapag-Lloyd Cruises (collectively, our "Partner Brands"). On June 30, 2020, TUIC acquired Hapag-Lloyd Cruises, a luxury and expedition brand for German-speaking guests, from TUI AG for approximately €1.2 billion, or $1.3 billion. See Note 6. Other Assets for further information on the acquisition. We account for our investments in our Partner Brands under the equity method of accounting. On June 22, 2020, Pullmantur S.A, a subsidiary of Pullmantur Holdings S.L. ("Pullmantur Holdings"), in which we own a 49% non-controlling interest, filed for reorganization under the terms of the Spanish insolvency laws (the "Pullmantur reorganization") due to the negative impact of the COVID-19 pandemic on the company. Subsequently, Pullmantur Holdings and certain of its other subsidiaries filed for reorganization in Spain. The Pullmantur brand has cancelled all of its ship operations until, at least, November 15, 2020. We suspended equity method accounting for Pullmantur Holdings during the second quarter of 2020. Refer to Note 6. Other Assets for further information regarding Pullmantur's reorganization filing and its impact to the Company. On July 9, 2020, we acquired the 33.3% interest in Silversea Cruises that we did not already own (the "noncontrolling interest") from Heritage Cruise Holding Ltd. ("Heritage"). As a result of the acquisition, Silversea Cruises is now a wholly owned cruise brand. As consideration for the noncontrolling interest, we issued to Heritage 5.2 million shares of common stock, par value $0.01 per share, of Royal Caribbean Cruises Ltd. Pursuant to the agreement governing the acquisition, among other things, the parties terminated any existing obligation to issue Heritage any contingent consideration, at fair value, in connection with our acquisition of a 66.7% interest in Silversea Cruises on July 31, 2018. The share purchase did not result in a change of control. The purchase was accounted for as an equity transaction and no gain or loss was recognized in earnings. See Note 9. Redeemable Noncontrolling Interest for further information regarding our acquisition of Silversea Cruises' noncontrolling interest. Management's Plan and Liquidity As part of the global containment effort for the COVID-19 pandemic, we implemented a voluntary suspension of our Global Brands' cruise operations effective March 13, 2020 which has been extended through at least December 31, 2020, excluding sailings from Singapore. Celebrity Cruises also suspended its full 2020/21 Winter program in Australia and Asia. Additionally, Azamara suspended its 2020/21 Winter sailings throughout Australia and New Zealand, South Africa and South America. 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, which expired on October 31, 2020. On and effective as of October 30, 2020, the CDC issued a Framework for Conditional Sailing Order (the “Conditional Order”) that will conditionally permit cruise ship passenger operations in U.S. waters under certain conditions and using a phased approach. The phases contemplated in the Conditional Order are subject to further interpretation and guidance by the CDC and to change based on public health considerations and the ability of the Company and other cruise ship operators’ to mitigate COVID-19 risks. The Conditional Order shall remain in effect until the earlier of (1) the expiration of the Secretary of Health and Human Services’ declaration that COVID-19 constitutes a public health emergency; (2) the CDC Director rescinds or modifies the Conditional Order based on specific public health or other considerations, or (3) November 1, 2021. We are currently reviewing the Conditional Order and assessing the uncertainties relating to the Conditional Order’s requirements. Based on our initial assessment of these conditions or for other reasons, we may determine it necessary to further extend our voluntary suspension of our Global Brands’ cruise sailings which currently extends through at least December 31, 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 from the issuance of these financial statements. However, there can be no assurance that our assumptions and estimates are accurate due to possible variables, including, but not limited to, the uncertainties associated with the CDC’s interpretation and application of the requirements in the Conditional Order and subsequent changes to those requirements, our ability to meet the requirements of the Conditional Order and the costs associated with compliance, some of which may be significant, and whether efforts by other countries to contain the disease will further restrict our ability to commence operations. The suspension of our operations and the impact to our global bookings resulting from the COVID-19 pandemic will continue to have a material negative impact on our results of operations and liquidity, which may be prolonged beyond containment of the disease. We have undertaken several proactive measures to mitigate the financial and operational impacts of COVID-19, including reduction of capital expenditures and operating expenses, furloughing staff and laying up of vessels. As of September 30, 2020, we had liquidity of $3.7 billion, consisting of cash and cash equivalents of $3.0 billion and a $0.7 billion one-year commitment for a 364-day term loan facility. As of September 30, 2020, our revolving credit facilities were fully utilized through a combination of amounts drawn and letters of credit issued under the facilities. Through the nine months ended September 30, 2020, we executed and amended various financing arrangements, as described in Note 7. Debt, which have resulted in $8.1 billion of incremental liquidity, including: •a $0.6 billion increase in the capacity available under our revolving credit facilities; •additional liquidity of $6.2 billion through the issuance of new debt, net of repayments, and the securing of a one-year $700 million commitment for a 364-day term loan facility; •£300.0 million, or $387.9 million, based on exchange rates as of September 30, 2020, of available and issued liquidity under an unsecured government commercial paper program with the Bank of England; and •the deferral of $0.9 billion of existing debt amortization under our export-credit backed ship debt facilities through April 2021. In October 2020, we issued $575 million of 2.875% senior convertible notes due 2023. See Note 7. Debt for further information on the debt issuance. Concurrently, we issued 9.6 million shares of common stock at a price of $60.00 per share, for approximately $575 million. See Note 11. Shareholders' Equity for further information on the common stock issuance. Additionally, as of June 30, 2020, we amended our export credit facilities and our non-export credit facilities, totaling an outstanding principal amount of $11.0 billion, and certain of our credit card processing agreements to suspend the testing of financial covenants through and including the first quarter of 2021. As of September 30, 2020, we further extended the financial covenant waiver on our export credit facilities, certain of our non-export credit facilities and our credit card processor agreements through and including the fourth quarter of 2021. Certain of these amended agreements impose a monthly-tested liquidity covenant. The minimum liquidity requirement was $500.0 million as of September 30, 2020; however, this amount was subsequently reduced to $350.0 million upon completion of our capital raising activities in October. Pursuant to these amendments, we have also agreed that we will not pay cash dividends or effectuate share repurchases during the waiver period unless we are in compliance with the fixed charge coverage covenant as of the end of the most recently completed quarter for the duration of the waiver period. As of September 30, 2020, we were in compliance with the applicable minimum liquidity covenant and we estimate that we will be in compliance for at least the next twelve months. Refer to Note 7. Debt for further information regarding our debt covenants. Certain of our credit card processing agreements that govern the terms to advance passenger ticket deposits require under certain circumstances, including existence of a material adverse change, excessive chargebacks and other triggering events, that we maintain a reserve which could be satisfied by posting collateral. We have executed amendments to these agreements, such that certain covenant and collateral requirements are waived for a period through December 2021. Based on the triggers in the various agreements, we do not believe any incremental collateral will be required, although the maximum additional collateral or reserves we could potentially need to provide under these agreements in the next twelve months is approximately $75 million. Any further covenant waivers may lead to increased costs, increased interest rates, additional restrictive covenants and other available lender protections as may be agreed with our lenders. There can be no assurance that we would be able to obtain additional waivers in a timely manner, or on acceptable terms. If we require additional waivers and are not able to obtain them or repay the debt facilities, this would lead to an event of default and potential acceleration of amounts due under all of our outstanding debt and derivative contracts. If we require additional waivers on the credit card processing agreements and are not able to obtain them, this could lead to the termination of these agreements or the trigger of reserve requirements. Certain of our surety agreements with third party providers for the benefit of certain agencies and associations that provide travel related bonds allow the surety to request collateral in the form of cash or letters of credit. Several of these agreements are currently up for renewal. We expect that our current and/or new providers will request collateral in the amount of approximately $80 million based on the exchange rate at September 30, 2020. Basis for Preparation of Consolidated Financial Statements The unaudited consolidated financial statements are presented pursuant to the rules and regulations of the Securities and Exchange Commission. In our opinion, these statements include all adjustments necessary for a fair statement of the results of the interim periods reported herein. Adjustments consist only of normal recurring items, except for any items discussed in the notes below. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted as permitted by such rules and regulations. Estimates are required for the preparation of financial statements in accordance with these principles. Actual results could differ from these estimates. Refer to Note 2. Summary of Significant Accounting Policies in this Quarterly Report on Form 10-Q and 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, for a discussion of our significant accounting policies. All significant intercompany accounts and transactions are eliminated in consolidation. We consolidate entities over which we have control, usually evidenced by a direct ownership interest of greater than 50%, and variable interest entities where we are determined to be the primary beneficiary. Refer to Note 6. Other Assets for further information regarding our variable interest entities. We consolidate the operating results of Silversea Cruises on a three-month reporting lag to allow for more timely preparation of our consolidated financial statements. No material events or other transactions involving Silversea Cruises have occurred from July 1, 2020 through September 30, 2020 that would require further disclosure or adjustment to our consolidated financial statements as of and for the quarter ended September 30, 2020, with the exception of our July 2020 acquisition of the noncontrolling interest, which was accounted for in our consolidated financial statements as of September 30, 2020. For affiliates we do not control but over which we have significant influence on financial and operating policies, usually evidenced by a direct ownership interest from 20% to 50%, the investment is accounted for using the equity method.

X
- References No definition available. + Details
Name: | us-gaap_OrganizationConsolidationAndPresentationOfFinancialStatementsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for organization, consolidation and basis of presentation of financial statements disclosure. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -URI http://asc.fasb.org/topic&trid=2122149 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -URI http://asc.fasb.org/topic&trid=2197479 + Details
Name: | us-gaap_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration