UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. - PDF document

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ý ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2017 OR o o 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) 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 ý No o Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes ý No o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 x Accelerated filer o Non-accelerated filer o Smaller reporting company o Emerging growth company o (Do not check if a smaller reporting 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. o Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý There were 214,088,950 shares of common stock outstanding as of October 30, 2017.

Table of Contents ROYAL CARIBBEAN CRUISES LTD. TABLE OF CONTENTS Page PART I. FINANCIAL INFORMATION Item 1. Financial Statements 1 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 21 Item 3. Quantitative and Qualitative Disclosures About Market Risk 39 Item 4. Controls and Procedures 39 PART II. OTHER INFORMATION Item 1. Legal Proceedings 40 Item 1A. Risk Factors 40 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 48 Item 6. Exhibits 49 SIGNATURES 50

Table of Contents PART I. FINANCIAL INFORMATION Item 1. Financial Statements ROYAL CARIBBEAN CRUISES LTD. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited; in thousands, except per share data) Quarter Ended September 30, 2017 2016 Passenger ticket revenues $ 1,893,152 $ 1,899,956 Onboard and other revenues 676,392 663,785 Total revenues 2,569,544 2,563,741 Cruise operating expenses: Commissions, transportation and other 409,597 400,933 Onboard and other 157,041 159,887 Payroll and related 210,764 214,081 Food 126,223 125,732 Fuel 160,752 178,772 Other operating 253,892 260,718 Total cruise operating expenses 1,318,269 1,340,123 Marketing, selling and administrative expenses 273,637 259,327 Depreciation and amortization expenses 240,150 229,328 Operating Income 737,488 734,963 Other income (expense): Interest income 4,693 6,472 Interest expense, net of interest capitalized (73,233) (82,610) Equity investment income 85,120 46,539 Other expense (1,226) (12,107) 15,354 (41,706) $ 752,842 $ 693,257 Net Income Earnings per Share: $ 3.51 $ 3.23 Basic $ 3.49 $ 3.21 Diluted Weighted-Average Shares Outstanding: Basic 214,694 214,819 Diluted 215,824 215,667 Comprehensive Income Net Income $ 752,842 $ 693,257 Other comprehensive income (loss): Foreign currency translation adjustments 5,889 4,043 Change in defined benefit plans (1,990) (5,051) Gain on cash flow derivative hedges 230,245 95,536 Total other comprehensive income 234,144 94,528 Comprehensive Income $ 986,986 $ 787,785 The accompanying notes are an integral part of these consolidated financial statements. 1

Table of Contents ROYAL CARIBBEAN CRUISES LTD. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited; in thousands, except per share data) Nine Months Ended September 30, 2017 2016 Passenger ticket revenues $ 4,892,760 $ 4,794,653 Onboard and other revenues 1,880,618 1,792,145 Total revenues 6,773,378 6,586,798 Cruise operating expenses: Commissions, transportation and other 1,060,176 1,060,391 Onboard and other 395,472 399,739 Payroll and related 636,861 671,955 Food 369,198 371,759 Fuel 508,914 531,283 Other operating 780,257 857,161 Total cruise operating expenses 3,750,878 3,892,288 Marketing, selling and administrative expenses 874,957 852,435 Depreciation and amortization expenses 710,836 661,712 Operating Income 1,436,707 1,180,363 Other income (expense): Interest income 16,756 14,875 Interest expense, net of interest capitalized (230,182) (226,803) Equity investment income 120,359 94,832 Other expense (including a $21.7 million loss related to the first quarter 2016 elimination of the Pullmantur reporting lag) (6,546) (40,965) (99,613) (158,061) $ 1,337,094 $ 1,022,302 Net Income Earnings per Share: $ 6.22 $ 4.74 Basic $ 6.19 $ 4.72 Diluted Weighted-Average Shares Outstanding: Basic 214,882 215,663 Diluted 215,905 216,575 Comprehensive Income Net Income $ 1,337,094 $ 1,022,302 Other comprehensive income (loss): Foreign currency translation adjustments 14,210 8,423 Change in defined benefit plans (6,280) (12,148) Gain on cash flow derivative hedges 381,660 254,624 Total other comprehensive income 389,590 250,899 Comprehensive Income $ 1,726,684 $ 1,273,201 The accompanying notes are an integral part of these consolidated financial statements. 2

Table of Contents ROYAL CARIBBEAN CRUISES LTD. CONSOLIDATED BALANCE SHEETS (in thousands, except share data) As of September 30, December 31, 2017 2016 (unaudited) Assets Current assets Cash and cash equivalents $ 139,950 $ 132,603 Trade and other receivables, net 285,332 291,899 Inventories 119,949 114,087 Prepaid expenses and other assets 200,125 209,716 Derivative financial instruments 52,796 — Total current assets 798,152 748,305 Property and equipment, net 19,688,872 20,161,427 Goodwill 288,517 288,386 Other assets 1,323,773 1,112,206 $ 22,099,314 $ 22,310,324 Liabilities and Shareholders’ Equity Current liabilities Current portion of long-term debt $ 1,515,708 $ 1,285,735 Accounts payable 384,536 305,313 Accrued interest 92,914 46,166 Accrued expenses and other liabilities 748,442 692,322 Derivative financial instruments 89,333 146,592 Customer deposits 2,226,179 1,965,473 Total current liabilities 5,057,112 4,441,601 Long-term debt 6,076,499 8,101,701 Other long-term liabilities 530,215 645,610 Commitments and contingencies (Note 7) 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; 235,134,180 and 234,613,486 shares issued, September 30, 2017 and December 31, 2016, respectively) 2,351 2,346 Paid-in capital 3,375,969 3,328,517 Retained earnings 8,862,369 7,860,341 Accumulated other comprehensive loss (526,894) (916,484) Treasury stock (21,059,191 and 20,019,237 common shares at cost, September 30, 2017 and December 31, 2016, respectively) (1,278,307) (1,153,308) Total shareholders’ equity 10,435,488 9,121,412 $ 22,099,314 $ 22,310,324 The accompanying notes are an integral part of these consolidated financial statements. 3