Royal Caribbean Cruises RCL · USD

Note 3. RevenueRevenue RecognitionRevenues are measured based on consideration specified in our contracts with customers and are recognized as the related performance obligations are satisfied.The majority of our revenues are derived from passenger cruise contracts which are reported within Passenger ticket revenues in our consolidated statements of comprehensive income (loss). Our performance obligation under these contracts is to provide a cruise vacation in exchange for the ticket price. We receive payment before we satisfy this performance obligation and recognize revenue over the duration of each cruise, which generally ranges from three to 14 nights.Passenger ticket revenues include charges to our guests for port costs that vary with passenger head counts. These types of port costs, along with port costs that do not vary by passenger head counts, are included in our operating expenses. The amounts of port costs charged to our guests and included within Passenger ticket revenues on a gross basis were $1.3 billion, $1.1 billion and $896 million for the years ended December 31, 2025, 2024 and 2023, 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 cruise passengers and recognize revenue over the duration of the related cruise.As a practical expedient, we have omitted disclosures on our remaining performance obligations as the duration of our contracts with customers is less than a year.Disaggregated RevenuesThe following table disaggregates our total revenues by geographic regions where we provide cruise itineraries (in millions): Year Ended December 31,202520242023Revenues by itineraryNorth America (1)$11,542 $10,594 $8,707 Asia/Pacific1,716 1,380 993 Europe2,951 2,697 2,685 Other Regions (2)862 1,025 847 Total revenues by itinerary17,071 15,696 13,232 Other revenues (3)864 788 668 Total revenues$17,935 $16,484 $13,900 (1) Includes the United States, Canada, Mexico, and the Caribbean.(2) Includes seasonality impacted itineraries primarily in South American countries, and Antarctica.(3) Includes revenues primarily related to cancellation fees, vacation protection insurance, pre- and post-cruise tours and fees for operating certain port facilities.

Note 17. Commitments and ContingenciesShip Purchase ObligationsOur future capital commitments consist primarily of new ship orders. As of December 31, 2025, we had three Icon-class ships and one Oasis-class ship on order for our Royal Caribbean brand with an aggregate capacity of approximately 22,500 berths. As of December 31, 2025, we had one Edge-class ship and four river cruise ships on order for our Celebrity brand with capacity of approximately 3,930 berths. The following provides further information on recent developments with respect to our ship orders.In November 2025, we entered into agreements in connection with the 95% Finnvera-backed financing of approximately 80% of the contract price of the fourth Icon-class ship. The maximum loan amount under the financing is not to exceed the United States dollar equivalent of €2.1 billion, or approximately $2.4 billion based on the exchange rate at December 31, 2025. The loan will amortize semi-annually and has an expected final maturity of 12 years from the delivery date. Interest on the loan will accrue at a floating rate equal to Term SOFR + 0.90%. The fourth Icon-class ship will have a capacity of approximately 5,600 berths.In October 2025, we executed definitive building contracts for the first four ships in the initial order of 10 ships for Celebrity River Cruises which was launched in January 2025. In June 2025, we entered into a credit agreement for the unsecured financing of the sixth Edge-class ship, Celebrity Xcite, for approximately 80% of the ship’s contract price and our building contract with Chantiers de l'Atlantique became effective. Bpifrance Assurance Export, has agreed to guarantee to the lenders 100% of the financing. The maximum loan amount under the facility is not to exceed the United States dollar equivalent of €1.0 billion, or approximately $1.2 billion based on the exchange rate at December 31, 2025. The loan will amortize semi-annually and will mature 12 years following delivery of the ship. Interest on the loan will accrue at a floating rate equal to Term SOFR plus 0.85% per annum. Celebrity Xcite will have a capacity of approximately 3,250 berths.In December 2019, we entered into a credit agreement for the unsecured financing of Legend of the Sea, the third Icon-class ship for up to 80% of the ship’s contract price.

Note 8. DebtDebt consists of the following (in millions): As of December 31, Weighted Average Rate(1)Maturities Through20252024Fixed rate debt:Unsecured senior notes5.56%2026 - 2036$11,197 $9,699 Unsecured term loans3.32%2026 - 20378,024 7,687 Convertible notes—%2025— 322 Total fixed rate debt19,221 17,708 Variable rate debt:Unsecured revolving credit facilities(2)—%2028 / 2030— 340 USD unsecured term loans5.36%2026 - 20372,328 2,227 Euro unsecured term loans3.46%2028 - 2042194 212 Total variable rate debt2,522 2,779 Finance lease liabilities159 117 Total debt (3)21,902 20,604 Less: unamortized debt issuance costs(557)(528)Total debt, net of unamortized debt issuance costs 21,345 20,076 Less—current portion (3,180)(1,603)Long-term portion$18,165 $18,473 (1)Weighted average interest rates are based on outstanding loan balance as of December 31, 2025, and for variable rate debt include either EURIBOR or Term SOFR plus the applicable margin. (2)Advances under our unsecured revolving credit facilities accrue interest at Term SOFR plus an interest rate margin of 1.10% as of December 31, 2025. Based on applicable Term SOFR rates, as of December 31, 2025, the interest rate under the unsecured credit facilities was 4.79%. We also pay a facility fee of 0.15% of the total commitments under such facility.(3)At December 31, 2025 and 2024, the weighted average interest rate for total debt was 4.69% and 4.76%, respectively.Unsecured Revolving Credit FacilitiesDuring the year ended December 31, 2025, we amended our two revolving credit facilities, bringing our aggregate revolving credit capacity to $6.4 billion, and extended the termination date of one of the revolving credit facilities from October 2026 to October 2030. The commitments are split evenly between the two facilities and are scheduled to mature in October 2028 and October 2030. As of December 31, 2025, our unsecured revolving credit facilities were undrawn.Convertible Notes due 2025In March 2025, we completed a privately negotiated exchange with a limited number of holders of the 6.00% Convertible Senior Notes 2025. The holders exchanged approximately $213 million in aggregate principal amount for approximately 3 million shares of common stock and $214 million in cash, including accrued interest. The convertible notes exchange resulted in immaterial induced conversion expense.In August 2025, the remaining $106 million of our 6.0% Convertible Senior Notes matured.

Note 14. Income TaxesIncome before income taxes by domestic and foreign subsidiaries (in millions):Year Ended December 31,202520242023Liberia$3,411 $2,417 $1,432 Foreign subsidiaries962524279Income before income taxes$4,373 $2,941 $1,711 For the year ended December 31, 2025, we adopted ASU No. 2023-09, Income Taxes (Topic 740), on a prospective basis.Provision for Income Taxes: Current and Deferred:For the year ended December 31, 2025, current tax expense was $64 million and deferred tax expense (benefit) was $18 million. Our income tax expense relates entirely to the operations of foreign subsidiaries For the years ending December 31, 2024 and 2023, our income tax expense was approximately $46 million and $6 million, respectively. These amounts mainly resulted from taxes on our non-US operations, certain items not qualifying under Section 883, tonnage taxes, and other subsidiary income taxes, none of which were considered significant. For the year ended December 31, 2025, there were no individual jurisdictions with material cash taxes paid.Reconciliation of income tax expense, computed by applying the Liberia statutory rate (in millions):Year Ended December 31, 2025Income before income taxes$4,373 Less: Equity investment income414 Income before income taxes, excluding equity investment income3,959 Tax at Liberia statutory rate of 25%990 25 %Nontaxable or nondeductible itemsLiberia international shipping income exemption(850)(21)%Foreign tax effects United States US source shipping income not exempt under Section 883 of the Internal Revenue Code 137 1 %United KingdomProfits exempt under tonnage tax(94)(2)%Other(1)— %Total$82 2 %(1) The tax benefit associated with US source shipping income exempt under Section 883 of the Internal Revenue Code was approximately $200 million.We are subject to corporate income taxes in countries where we have operations or subsidiaries. For the years ended December 31, 2025, 2024 and 2023, we and the majority of our ship-operating and vessel-owning subsidiaries were exempt from U.S. corporate income tax on U.S. source income from the international operation of ships pursuant to Section 883 of the Internal Revenue Code. Regulations under Section 883 have limited the activities that are considered to be the international operation of a ship or incidental thereto. Accordingly, our provision for U.S.

Note 11. Stock-Based Employee CompensationWe currently have awards outstanding under one stock-based compensation plan, our 2008 Equity Plan, which provides for awards to our officers, directors and key employees. The 2008 Equity Plan, as amended, provides for the issuance of up to 10,083,570 shares of our common stock pursuant to grants of (i) incentive and non-qualified stock options, (ii) stock appreciation rights, (iii) stock awards (including time-based and/or performance-based stock awards) and (iv) restricted stock units (including time-based and performance-based restricted stock units). During any calendar year, no one individual (other than non-employee members of our Board) may be granted awards of more than 500,000 shares and no non-employee member of our Board may be granted awards with a value, measured as of the grant date, which together with cash compensation paid to such director for such calendar year, would exceed $750,000. Restricted stock units outstanding as of December 31, 2025, generally vest in equal installments over three or four years from the date of grant. In addition, performance shares and performance share units generally vest in three years. With certain limited exceptions, awards are forfeited if the recipient ceases to be an employee before the shares vest.Our officers receive their long-term incentive awards through a combination of performance share units and restricted stock units. Each performance share unit award is expressed as a target number of performance share units based upon the fair market value of our common stock on the date the award is issued. The actual number of shares underlying each award (generally not to exceed 200% of the target number of performance share units) will be determined based upon the Company's achievement of a specified performance target range. In 2025, we issued a target number of 189,685 performance share units, which will vest approximately three years following the award issue date. The performance payout of these grants will be based on return on the Company's invested capital ("ROIC"), adjusted earnings per share ("Adjusted EPS"), and Carbon Intensity Reduction for the years ended December 31, 2025 to December 31, 2027, as may be adjusted by the Talent and Compensation Committee of our Board in early 2028 for events that are outside of management's control.

Note 9. LeasesOperating leasesOur operating leases primarily relate to preferred berthing arrangements, real estate, and shipboard equipment which 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 December 31, 2025 and 2024. 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.The company's preferred berthing agreement with Miami-Dade County ("County") includes the development plans for the County to finance the construction of a new and improved cruise Terminal G at PortMiami. The aggregate amount of the operating lease liabilities recorded for this berthing agreement was $168 million as of December 31, 2025 and December 31, 2024, respectively. There will be future remeasurements of the operating lease as the County completes several construction milestones throughout the term of the extended lease, including an expected remeasurement in 2027 or later, when the County satisfies substantial completion of Terminal G, as the minimum lease payments will increase at such time to approximately $55 million per year, with expected 3% annual increases thereafter.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 primarily range from one to 10 years and the renewal periods for berthing agreements primarily 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. 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 Term SOFR 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. In addition, we have lease agreements with lease and non-lease components, which are generally accounted for separately.

We have implemented policies, programs and controls and invested in cybersecurity technologies that focus on assessing, monitoring, and managing our cybersecurity risks. These include, but are not limited to: maintaining comprehensive cybersecurity policies and practices; augmenting our organization with a global cybersecurity operation center that monitors cyber threats 24-hours a day on a year-round basis; new surveillance technologies to proactively identify threats and improve the Company’s cyber defense capabilities; implementing enterprise-wide cybersecurity training, anti-phishing and awareness programs for our employees and crew members; and conducting cyber simulations with various teams across the Company as well as with management to evaluate our response approach. We have also implemented comprehensive processes designed to identify and oversee risks from cybersecurity threats associated with our third-party service providers, which include security assessments on our suppliers and vendors and continuous monitoring of cyber threats. Our cybersecurity program is informed by recognized best practices and standards for cybersecurity, such as the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework.We conduct regular third-party assessments of our cyber risk management program, and also conduct a periodic assessment of cybersecurity risk as part of broader enterprise risk management (ERM). This assessment includes an evaluation of the Company’s processes to identify and respond to cyber risks and the effectiveness of the Company’s lines of defense. Given the complexity and evolving nature of cybersecurity threats, we leverage both internal cyber analytics and external sources of threat intelligence to evaluate our cyber risks and to properly adjust our risk mitigation approach. We engage third parties to perform periodic assessment of our cyber program maturity against the NIST framework, to perform penetration testing, and to audit our capabilities from time to time. We also maintain controls and procedures that are designed to evaluate cyber risks on an ongoing basis. These processes include prompt communication of certain cybersecurity incidents to the Company’s executives, internal committees and the Board as needed, so that any needed disclosures can be made by management and the Board in a timely manner.Our policies require each of our employees and crew members to contribute to our data security efforts.

Note 1. GeneralDescription of BusinessWe are a global cruise company. We own and operate three global cruise brands: Royal Caribbean, Celebrity Cruises and Silversea (collectively, our "Global Brands"). We also own a 50% joint venture interest in TUI Cruises GmbH ("TUIC"), which operates the German brands TUI Cruises and Hapag-Lloyd Cruises (collectively, our "Partner Brands"). We account for our investments in our Partner Brands under the equity method of accounting. Together, our Global Brands and our Partner Brands operated a combined fleet of 69 ships as of December 31, 2025. Our ships offer a selection of worldwide itineraries that call on more than 1,000 destinations in over 120 countries on all seven continents.Basis for Preparation of Consolidated Financial Statements The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Estimates are required for the preparation of financial statements in accordance with these principles. Actual results could differ from these estimates. Refer to Note 2. Summary of Significant Accounting Policies for a discussion of our significant accounting policies.All significant intercompany accounts and transactions are eliminated in consolidation. We consolidate entities over which we have control, usually evidenced by a direct ownership interest of greater than 50%, and variable interest entities where we are determined to be the primary beneficiary. Refer to Note 7. Investments and Other Assets for further information regarding our variable interest entities. 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.