What changed in this filing

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Item 1. Financial Statements

2020-11-09 compared with 2020-08-10 · 206 added, 165 removed, 626 unchanged (37% of the section changed)

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Passenger ticket

29 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Net income (loss)

12 unchanged sentences

(in thousands, except share data)

September 30,

Current assets:

19 unchanged sentences

490,000,000 shares authorized;

280,798,331 shares issued and 256,347,472 shares outstanding at June 30, 2020 and 237,533,270 shares issued and 213,082,411 shares outstanding at December 31, 2019

300,070,311 shares issued and 275,619,452 shares outstanding at September 30, 2020 and 237,533,270 shares issued and 213,082,411 shares outstanding at December 31, 2019

Additional paid-in capital

1 unchanged sentence

Retained earnings

Treasury shares ( 24,450,859 at June 30, 2020 and December 31, 2019, at cost)

Treasury shares ( 24,450,859 at September 30, 2020 and December 31, 2019, at cost)

( 1,253,926 )

6 unchanged sentences

(in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities

43 unchanged sentences

(in thousands)

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Comprehensive

1 unchanged sentence

Income (Loss)

Balance, March 31, 2020

Balance, June 30, 2020

( 1,253,926 )

Share-based compensation

Issuance of shares under employee related plans

Common share issuance proceeds, net

Net share settlement of restricted share units

Beneficial conversion feature

Other comprehensive income, net

Balance, June 30, 2020

Balance, September 30, 2020

( 1,253,926 )

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Comprehensive

12 unchanged sentences

( 3,273,581 )

Balance, June 30, 2020

Balance, September 30, 2020

( 1,253,926 )

3 unchanged sentences

(in thousands)

Three Months Ended June 30, 2019

Three Months Ended September 30, 2019

Comprehensive

1 unchanged sentence

Income (Loss)

Balance, March 31, 2019

Balance, June 30, 2019

( 1,104,137 )

4 unchanged sentences

Other comprehensive loss, net

Balance, June 30, 2019

Balance, September 30, 2019

( 1,253,926 )

Six Months Ended June 30, 2019

Nine Months Ended September 30, 2019

Comprehensive

7 unchanged sentences

Other comprehensive loss, net

Balance, June 30, 2019

Balance, September 30, 2019

( 1,253,926 )

13 unchanged sentences

We are a leading global cruise company which operates the Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises brands.

As of June 30, 2020, we had 28 ships with approximately 59,150 Berths and had orders for nine additional ships to be delivered through 2027, subject to certain conditions.

Due to the novel coronavirus (“COVID-19”), we have temporarily suspended global cruise voyages through October 31, 2020.

As of September 30, 2020, we had 28 ships with approximately 59,150 Berths and had orders for nine additional ships to be delivered through 2027.

Due to the novel coronavirus (“COVID-19”), we have temporarily suspended global cruise voyages through December 31, 2020.

We refer you to Note 2 – “Summary of Significant Accounting Policies” for further information.

2 unchanged sentences

Project Leonardo will introduce an additional six ships with expected delivery dates from 2022 through 2027.

These additions to our fleet will increase our total Berths to approximately 82,000 .

These additions to our fleet will increase our total Berths to approximately 83,000 , which includes additional Berths we plan to add to our Project Leonardo ships, subject to certain conditions.

The impacts of COVID-19 on the shipyards where our ships are under construction (or will be constructed) have resulted in some delays in expected ship deliveries, and the impacts of COVID-19 could result in additional delays in ship deliveries in the future, which may be prolonged.

1 unchanged sentence

Liquidity and Management’s Plan

Due to the continued spread of COVID-19, growing travel restrictions and limited access to ports around the world, in March 2020, the Company implemented a voluntary suspension of all cruise voyages across its three brands, which has subsequently been extended through October 31, 2020.

Additionally, Regent has suspended its 2021 World Cruise along with voyages departing through April 2021 on one ship and voyages in Australia through February 2021, Oceania Cruises has cancelled its World Cruise through May 18, 2021 and voyages in Australia through February 2021, and Norwegian has cancelled all voyages aboard three of its ships through March 30, 2021.

On March 14, 2020, concurrent with our and the broader cruise industry’s original suspension, the U.S.

Centers for Disease Control and Prevention (“CDC”) issued a No Sail Order through April 13, 2020, which was subsequently extended through July 24, 2020.

On July 16, 2020, the CDC extended its No Sail Order 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 based on specific public health or other considerations or (c) September 30, 2020.

In addition, the duration of any voluntary suspensions we have implemented and the resumption of operations outside of the United States will be dependent, in part, on the severity and duration of the COVID-19 pandemic, the status of the CDC’s No Sail Order, the lifting of various travel restrictions and travel bans issued by various countries around the world, as well as the availability of ports around the world.

Significant events affecting travel, including COVID-19, typically have an impact on the demand for cruise vacations, with the full extent of the impact generally determined by the length of time the event influences travel decisions.

We believe the ongoing effects of COVID-19 on our operations and global bookings have had, and will continue to have, a significant impact on our financial results and liquidity, and such negative impact

may continue well beyond the containment of such an outbreak.

Due to the unknown duration and extent of the COVID-19 pandemic, travel restrictions and advisories, the potential unavailability of ports and/or destinations, unknown cancellations and timing of redeployments and a general impact on consumer sentiment regarding cruise travel, the full effect on our financial performance and financial condition cannot be quantified at this time, but we expect to report a net loss for the year ending December 31, 2020.

Centers for Disease Control and Prevention (“CDC”) issued a No Sail Order through April 13, 2020, which was subsequently extended through October 31, 2020.

On October 30, 2020, the CDC issued a Framework for Conditional Sailing Order (the “Conditional Order”) that introduces a phased approach for the resumption of passenger cruises.

These phases include:

● the establishment of laboratory testing of crew onboard cruise ships in U.S.

● simulated voyages designed to test a cruise ship operator’s ability to mitigate COVID-19 on cruise ships;

● a certification process;

● a return to passenger voyages in a manner that mitigates the risk of COVID-19 introduction, transmission or spread among passenger and crew onboard ships and ashore to communities.

The Conditional Order replaces the CDC’s No Sail Order that expired on October 31, 2020 and will remain in effect until the earlier of a) the expiration of the Secretary of Health and Human Services’ declaration that COVID-19 constitutes a public health emergency, b) the CDC Director rescinds or modifies the Conditional Order based on specific public health or other considerations, or c) November 1, 2021.

While the Conditional Order is an important step on the path to the safer and healthier resumption of cruising in the U.S., many uncertainties remain as to the specifics and timing of implementation, administration and costs of the requirements of the Conditional Order, some of which may be significant.

Additionally, pursuant to the Conditional Order, the CDC may issue additional requirements through technical instructions or orders as needed and the phases described above may be subject to change based on public health considerations, including the trajectory of the pandemic and the ability of cruise ship operators to successfully employ measures that mitigate the risk of COVID-19.

The duration of any voluntary suspensions we have implemented and the resumption of operations both inside and outside of the United States will be dependent, in part, on our ability to comply with the Conditional Order, the severity and duration of the COVID-19 pandemic, the lifting of various travel restrictions and travel bans issued by various countries and communities around the world, as well as the availability of ports.

We continue to expect a gradual phased relaunch of our ships after the voyage suspension period, with our ships initially operating at reduced occupancy levels.

The timing for bringing our ships back to service and percentage of fleet in service will depend on a number of factors including, but not limited to, the duration and extent of the COVID-19 pandemic, including further resurgences of COVID-19, our ability to comply with the Conditional Order, port availability, travel restrictions and advisories and our ability to re-staff our ships and implement new health and safety protocols.

Significant events affecting travel, including COVID-19, typically have an impact on demand for cruise vacations, with the full extent of the impact generally determined by the length of time the event influences travel decisions.

Due to the unknown duration and extent of the COVID-19 pandemic, travel restrictions and advisories, uncertainties around our ability to comply with the Conditional Order, the potential unavailability of ports and/or destinations, unknown cancellations and timing of redeployments and a general impact on consumer sentiment regarding cruise travel, we cannot predict when our full fleet will be back in service at historical occupancy levels and, accordingly, the full effect on our financial performance and financial condition cannot be quantified at this time;

however, we will report a net loss for the year ending December 31, 2020.

Since March 2020, we have taken several actions to bolster our financial condition while our global cruise voyages are suspended.

In March 2020, NCLC borrowed the full amount of $ 1.55 billion under its $ 875 million Revolving Loan Facility and its $ 675 million Epic Credit Facility, dated as of March 5, 2020.

In March 2020, NCLC borrowed the full amount of $ 1.55 billion under its $ 875 million Revolving Loan Facility and its then existing $ 675 million Epic Credit Facility, dated as of March 5, 2020.

We have taken additional measures to improve our liquidity by refinancing existing debt amortization, including under our agreements with export credit agencies and related governments, and by extending the maturities and refinancing amortization under other agreements, which has resulted in approximately $ 1.6 billion of payment deferrals.

See Note 8 – “Long-Term Debt” for further information.

Through June 30, 2020, the Company received additional financing through various debt financings and an equity offering totaling $ 2.4 billion in gross proceeds.

The equity offering resulted in 41,818,181 shares being issued in exchange for gross proceeds of $ 460 million.

Through September 30, 2020, the Company received additional financing through various debt financings and equity offerings in May and July 2020 totaling $ 3.9 billion in gross proceeds.

See Note 8 – “Long-Term Debt” for further information on the debt financings.

Subsequent to June 30, 2020, the Company received another $ 1.5 billion in gross proceeds from additional debt financings and an additional equity offering, of which approximately $ 675 million was used to repay in full and terminate the Epic Credit Facility.

Refer to Note 8 – “Long-Term Debt” for further information on the debt financings and Note 16 – “Subsequent Events” for further information on the equity financing.

The equity offerings resulted in 60,984,848 shares being issued in exchange for gross proceeds of $ 747.5 million.

The Company has also undertaken several proactive cost reduction and cash conservation measures to mitigate the financial and operational impacts of COVID-19, through the reduction of capital expenditures and operating expenses, including food, fuel, insurance, port charges and reduced crew manning of vessels during the suspension, resulting in lower crew payroll expense.

1 unchanged sentence

2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40):

Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern , the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.

about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.

The quantitative liquidity analysis reflects management’s principal assumptions related to (i) the Company’s ability to operate and redeployment of the fleet not currently in service, (ii) forecasted cash collections for future voyages and (iii) forecasted liquidity requirements for ongoing operations.

Based on the actions the Company has taken as described above and our resulting current resources, the Company has alleviated the substantial doubt previously disclosed and has sufficient liquidity to satisfy our obligations over the next twelve months and maintain minimum levels of liquidity as required by certain of our debt agreements.

3 unchanged sentences

Historically, demand for cruises has been strongest during the Northern Hemisphere’s summer months;

however, demand for cruises during the summer months of 2020 has been materially adversely impacted by the COVID-19 pandemic.

however, our cruise voyages were completely suspended during the summer months of 2020 due to the COVID-19 pandemic.

The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2019, which are included in our most recent Annual Report on Form 10-K filed with the SEC, as updated by our Current Report on Form 8-K filed on July 8, 2020.

2 unchanged sentences

Earnings (Loss) Per Share

A reconciliation between basic and diluted earnings per share was as follows (in thousands, except share and per share data):

A reconciliation between basic and diluted earnings (loss) per share was as follows (in thousands, except share and per share data):

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Net income (loss)

5 unchanged sentences

Diluted earnings (loss) per share

For the three months ended June 30, 2020 and 2019, a total of 59.2 million and 3.6 million shares, respectively, and for the six months ended June 30, 2020 and 2019, a total of 33.1 million and 4.5 million shares, respectively, have been excluded from diluted weighted-average shares outstanding because the effect of including them would have been anti-dilutive.

For the three months ended September 30, 2020 and 2019, a total of 124.0 million and 3.5 million shares, respectively, and for the nine months ended September 30, 2020 and 2019, a total of 63.4 million and 4.2 million shares, respectively, have been excluded from diluted weighted-average shares outstanding because the effect of including them would have been anti-dilutive.

Foreign Currency

2 unchanged sentences

Gains or losses resulting from transactions denominated in other currencies are recognized in our consolidated statements of operations within other income, net.

We recognized a loss of $ 10.2 million and $ 3.3 million for the three months ended June 30, 2020 and 2019, respectively, and a gain of $ 9.7 million and a loss of $ 4.3 million for the six months ended June 30, 2020 and 2019, respectively, related to transactions denominated in other currencies.

We recognized a loss of $ 12.3 million and a gain of $ 9.9 million for the three months ended September 30, 2020 and 2019, respectively, and a loss of $ 2.6 million and a gain of $ 5.6 million for the nine months ended September 30, 2020 and 2019, respectively, related to transactions denominated in other currencies.

Depreciation and Amortization Expense

2 unchanged sentences

Recently Issued Accounting Guidance

In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No.

In August 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”),- which reduces the number of accounting models for convertible debt instruments and enhances transparency in disclosures.

One model which is being eliminated is the bifurcation of embedded conversion features that are not accounted for separately as derivatives.

A convertible debt instrument previously accounted for under this model will be accounted for as a single liability measured at its amortized cost.

Adoption of the provisions of ASU 2020-06 are required for fiscal years beginning after December 15, 2021;

however, early adoption is permitted.

We will early adopt this guidance on January 1, 2021 on a modified retrospective basis.

As a result of the adoption, the beneficial conversion feature on the Private Exchangeable Notes (as defined and discussed in Note 8 – “Long-Term Debt”) which is included in additional paid-in-capital will be reclassified to long-term debt.

Any related interest which has been recognized will be adjusted through retained earnings.

Additional disclosures will be added as necessary.

In March 2020, the FASB issued ASU No.

2020-04, Reference Rate Reform (Topic 848):

8 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

North America

15 unchanged sentences

Receivables from customers are included within accounts receivable, net.

As of June 30, 2020 and December 31, 2019, our receivables from customers were $ 4.5 million and $ 15.3 million, respectively.

As of September 30, 2020 and December 31, 2019, our receivables from customers were $ 4.1 million and $ 15.3 million, respectively.

Beginning in March 2020, our brands launched new cancellation policies to permit our guests to cancel cruises which are not part of the Company’s temporary suspension of voyages up to 48 hours or 15 days, depending on the brand, prior to embarkation and receive a refund in the form of a credit to be applied toward a future cruise.

4 unchanged sentences

Our contract liabilities are included within advance ticket sales.

As of June 30, 2020 and December 31, 2019, our contract liabilities were $ 66.1 million and $ 1.4 billion, respectively.

Of the amounts included within contract liabilities as of June 30, 2020, approximately 40 % were refundable in accordance with our cancellation policies.

For the six months ended June 30, 2020, $ 0.9 billion of revenue recognized was included in the contract liability balance at the beginning of the period.

For cruise vacations that had been cancelled by us due to COVID-19, approximately $ 38.6 million and $ 130.6 million in costs to obtain these contracts, consisting of protected commissions and credit card fees, were recognized in earnings during the three and six months ended June 30, 2020, respectively.

As of September 30, 2020 and December 31, 2019, our contract liabilities were $ 33.4 million and $ 1.4 billion, respectively.

Of the amounts included within contract liabilities as of September 30, 2020, approximately 20 % were refundable in accordance with our cancellation policies.

For the nine months ended September 30, 2020, $ 0.9 billion of revenue recognized was included in the contract liability balance at the beginning of the period.

For cruise vacations that had been cancelled by us due to COVID-19, approximately $ 15.5 million and $ 160.4 million in costs to obtain these contracts, consisting of protected commissions, including those paid to employees, and credit card fees, were recognized in earnings during the three and nine months ended September 30, 2020, respectively.

Intangible Assets

We evaluate goodwill and tradenames for impairment annually or more frequently when an event occurs or circumstances change that indicates the carrying value of a reporting unit may not be recoverable.

In March 2020, the Company announced a voluntary suspension of all cruise voyages for its three brands, which has subsequently been extended through October 31, 2020.

Due to the temporary suspension of operations and decline in our stock price, we performed interim goodwill and tradename impairment tests as of March 31, 2020.

We evaluate goodwill and trade names for impairment annually or more frequently when an event occurs or circumstances change that indicates the carrying value of a reporting unit may not be recoverable.

In March 2020, the Company announced a voluntary suspension of all cruise voyages for its three brands, which has subsequently been extended through December 31, 2020.

Due to the temporary suspension of operations and decline in our stock price, we performed interim goodwill and trade name impairment tests as of March 31, 2020.

We refer you to Note 9 – “Fair Value Measurements and Derivatives” for information on our valuation assumptions.

The changes in the carrying amount of goodwill for each reporting unit for the six months ended June 30, 2020 are as follows (in thousands):

The changes in the carrying amount of goodwill for each reporting unit for the nine months ended September 30, 2020 are as follows (in thousands):

Reporting Unit

2 unchanged sentences

( 1,290,797 )

Balance, June 30, 2020

We also impaired our tradenames for Oceania Cruises and Regent Seven Seas Cruises by $ 170.0 million and $ 147.0 million, respectively.

Following these impairments, the carrying value of our tradenames was $ 500.5 million.

Balance, September 30, 2020

We also impaired our trade names for Oceania Cruises and Regent Seven Seas Cruises by $ 170.0 million and $ 147.0 million, respectively.

Following these impairments, the carrying value of our trade names was $ 500.5 million.

The carrying amounts of intangible assets subject to amortization are included within other long-term assets.

The gross carrying amounts of intangible assets, the related accumulated amortization, the net carrying amounts and the weighted-average amortization periods of the Company’s intangible assets are listed in the following tables (in thousands, except amortization period):

June 30, 2020

September 30, 2020

Gross Carrying

9 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Amortization expense

5 unchanged sentences

In relation to our rights to use port facilities, we have elected the approach consistent with resolving a contingency, which allows us to remeasure the lease liability and recognize the amount of change in the lease liability as an adjustment to the carrying amount of the associated right-of-use asset.

As the full amount of the concession will not be determinable until the force majeure period under the related arrangements have ended, the

contingency has not been resolved as of June 30, 2020.

As of September 30, 2020, our port facilities were remeasured with a downward adjustment of $ 9.4 million to both other long-term assets and accrued expenses and other liabilities.

As the full amount of the concession will not be determinable until the force majeure period under the related arrangements have ended, further remeasurements will be required.

During the contingency period, we are recognizing lease expense for these port facilities as incurred.

1 unchanged sentence

Balance Sheet location

June 30, 2020

September 30, 2020

December 31, 2019

14 unchanged sentences

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) for the six months ended June 30, 2020 was as follows (in thousands):

Six Months Ended June 30, 2020

Accumulated other comprehensive income (loss) for the nine months ended September 30, 2020 was as follows (in thousands):

Nine Months Ended September 30, 2020

Comprehensive

4 unchanged sentences

Accumulated other comprehensive income (loss) at end of period

Accumulated other comprehensive income (loss) for the six months ended June 30, 2019 was as follows (in thousands):

Six Months Ended June 30, 2019

Accumulated other comprehensive income (loss) for the nine months ended September 30, 2019 was as follows (in thousands):

Nine Months Ended September 30, 2019

Comprehensive

8 unchanged sentences

Property and Equipment, net

Property and equipment, net increased $ 353.2 million for the six months ended June 30, 2020 primarily due to the delivery of Seven Seas Splendor in January 2020 and ship improvement projects slightly offset by a $ 25.5 million impairment of projects that will not be completed, which has been recognized in depreciation and amortization expense.

Property and equipment, net increased $ 318.1 million for the nine months ended September 30, 2020 primarily due to the delivery of Seven Seas Splendor in January 2020 and ship improvement projects slightly offset by a $ 25.5 million impairment of projects that will not be completed, which has been recognized in depreciation and amortization expense for the nine months ended September 30, 2020.

Long-Term Debt

Revolving Credit Facilities

Credit Facilities

In March 2020, NCLC had borrowed the full amount of $ 875 million under its existing Revolving Loan Facility maturing on January 2, 2024.

As of June 30, 2020 borrowings under the Revolving Loan Facility bear interest at LIBOR plus a margin of 1.50 %.

As of September 30, 2020 borrowings under the Revolving Loan Facility bear interest at LIBOR plus a margin of 1.75 %.

In March 2020, NCLC entered into a $ 675 million revolving credit facility maturing on March 4, 2021, with JPMorgan Chase Bank, N.A., as administrative agent and as collateral agent, and certain other lenders party thereto.

4 unchanged sentences

The Epic Credit Facility was repaid in July 2020 and terminated as discussed below.

In July 2020, NCLC entered into a EUR 31.2 million loan facility for newbuild related payments.

The facility bears interest at a rate of 2.5 % per annum.

As of September 30, 2020, EUR 21.6 million was drawn under this facility, which matures on April 30, 2021.

Modifications

14 unchanged sentences

In May 2020, NCLC amended its $ 260 million credit agreement, dated as of May 15, 2019, with Bank of America, N.A., as administrative agent and collateral agent, and certain other lenders.

The amendment provides that (a) amortization payments due through May 1, 2021 will be deferred following the consummation of certain debt and equity financings,

which resulted in aggregate gross proceeds greater than the amount required for the extension and (b) the principal amount so deferred will constitute a separate tranche of loans under the facility (the “Deferred Jewel Loans”).

The amendment provides that (a) amortization payments due through May 1, 2021 will be deferred following the consummation of certain debt and equity financings, which resulted in aggregate gross proceeds greater than the amount required for the extension and (b) the principal amount so deferred will constitute a separate tranche of loans under the facility (the “Deferred Jewel Loans”).

The Deferred Jewel Loans will accrue interest at a per annum rate based on LIBOR plus a margin of 2.50 % in the case of Eurocurrency loans or at a per annum rate based on the base rate plus a margin of 1.50 % in the case of base rate loans.

After the end of the deferral period, the deferred loan payments will amortize in an aggregate principal amount equal to 25 % per annum in semiannual installments, and in the case of such payment due on the maturity date, an amount equal to the then unpaid principal amount of the Deferred Jewel Loans outstanding.

NCLC entered into a Fifth Amended and Restated Credit Agreement, dated as of May 8, 2020, with a subsidiary of NCLC, as co-borrower and JPMorgan Chase Bank, N.A., as administrative agent, and lenders holding 87.57 % of the term loans outstanding (the “Term A Deferring Lenders”).

term loans outstanding (the “Term A Deferring Lenders”).

This revised facility provides that, among other things, (a) amortization payments due within the first year after effectiveness on the loans under the term A loans (the “Term A Loans”) held by the Term A Deferring Lenders will be deferred and (b) the principal amount so deferred will constitute a separate tranche of loans (the “Deferred Term A Loans”).

12 unchanged sentences

After the end of the Deferral Period, the Deferred Loans will amortize in an aggregate principal amount equal to 25 % per annum of the Deferred Loans, in semiannual installments.

Any breach of financial covenants under each respective facility during the Deferral Period under the Supplemental Agreements will not constitute an event of default.

In addition, consistent with our amendments to our Hermes-backed credit facilities described above, additional restrictions on restricted payments and certain other covenants were added.

The above noted amendments resulted in aggregate modification costs of $ 16.2 million and a loss on extinguishment of debt of $ 5.0 million, which are recognized in interest expense, net.

Consistent with our amendments to our Hermes-backed credit facilities described above, the Supplemental Agreements provide financial covenant relief and additional restrictions on restricted payments and certain other covenants were added.

The above modifications resulted in aggregate modification costs of $ 17.3 million and a loss on extinguishment of debt of $ 5.0 million, which are recognized in interest expense, net for the nine months ended September 30, 2020.

Secured Notes

2 unchanged sentences

NCLC may redeem the 2024 Senior Secured Notes, in whole or part, at any time prior to February 15, 2024, at a price equal to 100 % of the principal amount of the notes redeemed plus accrued and unpaid interest to, but excluding, the redemption date and a “make-whole premium.” NCLC may redeem the 2024 Senior Secured Notes, in whole or in part, on or after February 15, 2024, at a price equal to 100 % of the principal amount of the notes redeemed plus accrued and unpaid interest to, but excluding, the redemption date.

At any time prior to February 15, 2022, NCLC may choose to redeem up to 35 % of the aggregate principal amount of the 2024 Senior Secured Notes, with the net proceeds of certain equity offerings, subject to certain restrictions, at a redemption price equal to 112.25 % of the principal amount of the 2024 Senior Secured Notes redeemed plus accrued and unpaid interest to, but excluding, the redemption date, so long as at least 65 % of the aggregate principal amount of the 2024 Senior Secured Notes issued remains outstanding following such redemption.

redemption date, so long as at least 65 % of the aggregate principal amount of the 2024 Senior Secured Notes issued remains outstanding following such redemption.

The 2024 Senior Secured Notes are secured by first-priority interests in, among other things and subject to certain agreed security principles, shares of capital stock in certain subsidiary guarantors, two of our vessels, our material intellectual property and two islands that we use in the operations of our cruise business.

The 2024 Senior Secured Notes are also guaranteed by our subsidiaries that own the property that secures the 2024 Senior Secured Notes as well as certain additional subsidiaries whose assets will not secure the 2024 Senior Secured Notes.

The indenture governing the 2024 Senior Secured Notes includes requirements that, among other things and subject to a number of qualifications and exceptions, restrict the ability of NCLC and its restricted subsidiaries, as applicable, to (i) incur or guarantee additional indebtedness;

In July 2020, NCLC conducted a private offering of $ 750.0 million aggregate principal amount of 10.25 % senior secured notes due February 1, 2026 (the “2026 Senior Secured Notes”).

The 2026 Senior Secured Notes pay interest at 10.25 % per annum, semiannually on February 1 and August 1 of each year, commencing on February 1, 2021, to holders of record at the close of business on the immediately preceding January 15 and July 15, respectively.

NCLC may redeem the 2026 Senior Secured Notes, in whole or part, at any time prior to August 1, 2023, at a price equal to 100 % of the principal amount of the notes redeemed plus accrued and unpaid interest to, but excluding, the redemption date and a “make-whole premium.” NCLC may redeem the 2026 Senior Secured Notes, in whole or in part, on or after August 1, 2023, at the redemption prices set forth in the indenture for the 2026 Senior Secures Notes plus accrued and unpaid interest to, but excluding, the redemption date.

At any time prior to August 1, 2023, NCLC may choose to redeem up to 35 % of the aggregate principal amount of the 2026 Senior Secured Notes with the net proceeds of certain equity offerings, subject to certain restrictions, at a redemption price equal to 110.25 % of the principal amount of the 2026 Senior Secured Notes redeemed plus accrued and unpaid interest to, but excluding, the redemption date, so long as at least 65 % of the aggregate principal amount of the 2026 Senior Secured Notes issued remains outstanding following such redemption.

NCLC used a portion of the proceeds from the 2026 Senior Secured Notes to repay the $ 675 million plus accrued and unpaid interest outstanding under the Epic Credit Facility, which was secured by the Norwegian Epic.

Following the termination of the Epic Credit Facility, the vessel owned and operated by Norwegian Epic, Ltd.

was released as collateral, thereby enabling the 2026 Senior Secured Notes and certain of the related guarantees to be secured by a first-priority security interest in, among other things and subject to certain agreed security principles, the Norwegian Epic.

The repayment and termination of the Epic Credit Facility resulted in a loss on extinguishment of $ 5.5 million, which was recognized in interest expense, net for the three and nine months ended September 30, 2020.

The indentures governing the 2024 Senior Secured Notes and 2026 Senior Secured Notes include requirements that, among other things and subject to a number of qualifications and exceptions, restrict the ability of NCLC and its restricted subsidiaries, as applicable, to (i) incur or guarantee additional indebtedness;

(ii) pay dividends or distributions on, or redeem or repurchase, equity interests and make other restricted payments;

13 unchanged sentences

The 2024 Exchangeable Notes pay interest at 6.00 % per annum, semiannually on May 15 and November 15 of each year, commencing on November 15, 2020, to holders of record at the close of business on the immediately preceding May 1 and November 1, respectively.

In May 2020, NCLH and NCLC entered into an investment agreement with an affiliate of L Catterton (the “Private Investor”), pursuant to which NCLC agreed to sell and issue to the Private Investor (the “Private Exchangeable Notes Transaction”) up to $ 400 million in aggregate principal amount of exchangeable senior notes due June 1, 2026 (the “Private Exchangeable Notes”).

Also in May 2020, NCLH and NCLC entered into an investment agreement with an affiliate of L Catterton (the “Private Investor”), pursuant to which NCLC agreed to sell and issue to the Private Investor (the “Private Exchangeable Notes Transaction”) up to $ 400 million in aggregate principal amount of exchangeable senior notes due June 1, 2026 (the “Private Exchangeable Notes”).

The Private Exchangeable Notes Transaction closed on May 28, 2020.

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The beneficial conversion feature for the Private Exchangeable Notes is $ 131.2 million and is recognized within additional paid-in capital.

In July 2020, NCLC conducted a private offering of $ 450.0 million aggregate principal amount of 5.375 % exchangeable senior notes due August 1, 2025 (the “2025 Exchangeable Notes”).

The 2025 Exchangeable Notes are guaranteed by NCLH on a senior basis.

Holders may exchange their 2025 Exchangeable Notes at their option into redeemable preference shares of NCLC.

Upon exchange, the preference shares will be immediately and automatically exchanged, for each $ 1,000 principal amount of exchanged 2025 Exchangeable Notes, into a number of NCLH’s ordinary shares based on the exchange rate.

The exchange rate will initially be 53.3333 ordinary shares per $ 1,000 principal amount of 2025 Exchangeable Notes (equivalent to an initial exchange price of approximately $ 18.75 per ordinary share).

The maximum exchange rate is 66.6666 and reflects potential adjustments to the initial exchange rate, which would only be made in the event of certain make-whole fundamental changes or tax redemption events.

The maximum exchange rate referred to above is also subject to adjustment for any stock split, stock dividend or similar transaction.

The 2025 Exchangeable Notes pay interest at 5.375 % per annum, semiannually on February 1 and August 1 of each year, commencing on February 1, 2021, to holders of record at the close of business on the immediately preceding January 15 and July 15, respectively.

The net carrying amounts of the liability components of our exchangeable notes consist of the following (in thousands):

September 30,

Principal amount

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Net carrying value

The remaining period over which the unamortized debt discount will be recognized as non-cash interest expense is 3.9 years and 5.9 years for the 2024 Exchangeable Notes and Private Exchangeable Notes, respectively.

The remaining period over which the unamortized debt discount will be recognized as non-cash interest expense is 3.6 years, 4.8 years and 5.7 years for the 2024 Exchangeable Notes, 2025 Exchangeable Notes and Private Exchangeable Notes, respectively.

The following table presents the interest expense recognized related to the exchangeable notes (in thousands):

Three and Six Months

Ended June 30, 2020

Ended September 30, 2020

Interest expense, including amortization of debt discounts and coupon interest

The effective interest rate is 7.09 % and 17.45 % for the 2024 Exchangeable Notes and the Private Exchangeable Notes, respectively.

As of June 30, 2020, the if-converted value above par was $ 143.1 million on available shares of 33.1 million and $ 168.1 million on available shares of 62.7 million for the Private Exchangeable Notes and 2024 Exchangeable Notes, respectively.

The effective interest rate is 7.07 %, 5.97 % and 15.54 % for the 2024 Exchangeable Notes, 2025 Exchangeable Notes and the Private Exchangeable Notes, respectively.

As of September 30, 2020, the if-converted value above par was $ 210.8 million on available shares of 62.7 million and $ 165.6 million on available shares of 33.1 million for the 2024 Exchangeable Notes and the Private Exchangeable Notes, respectively.

Debt Repayments

The following are scheduled principal repayments on our long-term debt including finance lease obligations as of June 30, 2020 for each of the next five years (in thousands):

July 1, 2020 - June 30, 2021

July 1, 2021 - June 30, 2022

July 1, 2022 - June 30, 2023

July 1, 2023 - June 30, 2024

July 1, 2024 - June 30, 2025

The following are scheduled principal repayments on our long-term debt including finance lease obligations as of September 30, 2020 for each of the following periods (in thousands):

Remainder of 2020

Debt Covenants

At June 30, 2020, we were in compliance with all of our debt covenants.

At September 30, 2020, we were in compliance with all of our debt covenants.

As part of the Hermes debt holiday and the Supplemental Agreements, we have obtained lender consents to waive compliance with financial covenants for the Deferral Period.

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Generally, if an event of default under any debt agreement occurs, then pursuant to cross default and/or cross acceleration clauses, substantially all of our outstanding debt and derivative contract payables could become due, and all debt and derivative contracts could be terminated, which could have a material adverse impact to our operations and liquidity.

July Offerings

In July 2020, NCLC conducted a private offering of $ 750.0 million aggregate principal amount of 10.25 % senior secured notes due February 1, 2026 (the “2026 Senior Secured Notes”).

Following the termination of the Epic Credit Facility, the vessel owned and operated by Norwegian Epic, Ltd.

The indenture governing the 2026 Senior Secured Notes includes requirements that, among other things and subject to a number of qualifications and exceptions, restrict the ability of NCLC and its restricted subsidiaries, as applicable, to (i) incur or guarantee additional indebtedness;

(ii) pay dividends or distributions on, or redeem or repurchase, equity interests and make other restricted payments;

(iii) make investments;

(iv) consummate certain asset sales;

(v) engage in certain transactions with affiliates;

(vi) grant or assume certain liens;

and (vii) consolidate, merge or transfer all or substantially all of their assets.

Also in July 2020, NCLC conducted a private offering of $ 450.0 million aggregate principal amount of 5.375 % exchangeable senior notes due August 1, 2025 (the “2025 Exchangeable Notes”).

The 2025 Exchangeable Notes are guaranteed by NCLH on a senior basis.

Holders may exchange their 2025 Exchangeable Notes at their option into redeemable preference shares of NCLC.

The maximum exchange rate referred to above is also subject to adjustment for any stock split, stock dividend or similar transaction.

Fair Value Measurements and Derivatives

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We do not anticipate non-performance by any of our significant counterparties.

As of June 30, 2020, we had fuel swaps which are used to mitigate the financial impact of volatility of fuel prices pertaining to approximately 1.1 million metric tons of our projected fuel purchases, maturing through December 31, 2023 .

As of June 30, 2020, we had fuel swaps which were not designated as cash flow hedges.

As of September 30, 2020, we had fuel swaps which are used to mitigate the financial impact of volatility of fuel prices pertaining to approximately 895 thousand metric tons of our projected fuel purchases, maturing through December 31, 2023 .

Beginning in July 2020, our fuel swaps designated as hedges for heavy fuel oil failed the effectiveness tests required for recognition within accumulated other comprehensive income (loss).

As a result, the change in fair value related to these fuel swaps have been recognized in other income (expense), net for the three months ended September 30, 2020.

As of September 30, 2020, we had fuel swaps which were not designated as cash flow hedges.

Due to a decrease in forecasted fuel consumption resulting from voyage cancellations due to COVID-19, we released into earnings fuel hedges of approximately 111 thousand metric tons of fuel as these forecasted transactions were no longer probable of occurring.

The agreements mature through December 31, 2020 .

As of June 30, 2020, we had foreign currency forward contracts, matured foreign currency options and matured foreign currency collars which are used to mitigate the financial impact of volatility in foreign currency exchange rates related to our ship construction contracts denominated in euros.

The agreements mature through September 30, 2021 .

As of September 30, 2020, we had foreign currency forward contracts, matured foreign currency options and matured foreign currency collars which are used to mitigate the financial impact of volatility in foreign currency exchange rates related to our ship construction contracts denominated in euros.

The notional amount of our foreign currency forward contracts was € 1.9 billion, or $ 2.2 billion based on the euro/U.S.

dollar exchange rate as of June 30, 2020.

As of June 30, 2020, we had interest rate swaps and collars, which are used to hedge our exposure to interest rate movements and manage our interest expense.

The notional amount of our outstanding debt associated with the interest rate swaps and collars was $ 0.7 billion as of June 30, 2020.

dollar exchange rate as of September 30, 2020.

As of September 30, 2020, we had interest rate swaps and collars, which are used to hedge our exposure to interest rate movements and manage our interest expense.

The notional amount of our outstanding debt associated with the interest rate swaps and collars was $ 0.7 billion as of September 30, 2020.

The derivatives measured at fair value and the respective location in the consolidated balance sheets include the following (in thousands):

September 30,

Balance Sheet Location

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Accrued expenses and other liabilities

Other long-term liabilities

Total derivatives not designated as hedging instruments

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The following table discloses the gross and net amounts recognized within assets and liabilities (in thousands):

June 30, 2020

September 30, 2020

December 31, 2019

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Income (Loss) into Income

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

September 30, 2020

September 30, 2019

September 30, 2020

September 30, 2019

Fuel contracts

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Income (Loss) into Income

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

September 30, 2020

September 30, 2019

September 30, 2020

September 30, 2019

Fuel contracts

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The effects of cash flow hedge accounting on the consolidated statements of operations include the following (in thousands):

Three Months Ended June 30, 2020

Three Months Ended June 30, 2019

Three Months Ended September 30, 2020

Three Months Ended September 30, 2019

( Expense), net

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Fuel contracts

Six Months Ended June 30, 2020

Six Months Ended June 30, 2019

Amount of gain recognized in income as a result of failing effectiveness tests

Fuel contracts

Nine Months Ended September 30, 2020

Nine Months Ended September 30, 2019

( Expense), net

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Fuel contracts

Amount of gain recognized in income as a result of failing effectiveness tests

Fuel contracts

The effects of derivatives not designated as hedging instruments on the consolidated statements of operations include the following (in thousands):

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Location of Gain (Loss)

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Long-Term Debt

As of June 30, 2020 and December 31, 2019, the fair value of our long-term debt, including the current portion, was $ 11,142.8 million and $ 6,957.8 million, respectively, which was $ 590.2 million higher and $ 31.3 million higher, respectively, than the carrying values, excluding deferred financing costs.

The difference between the fair value and carrying value of our long-term debt is due to our fixed and variable rate debt obligations carrying interest rates that are above or below market rates at the measurement dates.

As of September 30, 2020 and December 31, 2019, the fair value of our long-term debt, including the current portion, was $ 12,022.1 million and $ 6,957.8 million, respectively, which was $ 869.5 million higher and $ 31.3 million higher, respectively, than the carrying values, excluding deferred financing costs.

The fair value of our long-term revolving and term loan facilities was calculated based on estimated rates for the same or similar instruments with similar terms and remaining maturities.

The fair value of our exchangeable notes considers observable risk-free rates;

credit spreads of the same of similar instruments;

credit spreads of the same or similar instruments;

and share prices, tenors, and historical and implied volatilities which are sourced from observable market data.

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Market risk associated with our long-term variable rate debt is the potential increase in interest expense from an increase in interest rates or from an increase in share values.

Goodwill and Tradenames

Goodwill and tradenames are nonfinancial instruments that are measured at fair value on a non-recurring basis.

Goodwill and Trade Names

Goodwill and trade names are nonfinancial instruments that are measured at fair value on a non-recurring basis.

In January 2017, the FASB issued ASU No.

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We believe that this approach is the most representative method to assess fair value as it utilizes expectations of long-term growth as well as current market conditions.

For the tradenames, we used the relief from royalty method, which uses the same forecasts and discount rates from the discounted cash flow valuation in the goodwill assessment along with a tradename royalty rate assumption.

For the trade names, we used the relief from royalty method, which uses the same forecasts and discount rates from the discounted cash flow valuation in the goodwill assessment along with a trade name royalty rate assumption.

We believe that we made reasonable estimates and judgments.

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Share Option Awards

The following is a summary of option activity under NCLH’s Amended and Restated 2013 Performance Incentive Plan for the six months ended June 30, 2020:

The following is a summary of option activity under NCLH’s Amended and Restated 2013 Performance Incentive Plan for the nine months ended September 30, 2020:

Number of Share Option Awards

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Forfeited and cancelled

Outstanding as of June 30, 2020

Outstanding as of September 30, 2020

Restricted Share Unit Awards

On July 27, 2020, NCLH granted 2.5 million time-based restricted share unit awards to our employees, which vest on July 27, 2022.

Additionally, on July 27, 2020, NCLH granted 0.3 million performance-based restricted share units to certain members of our management team, which vest upon the achievement of certain non-financial performance hurdles and generally require continued employment through July 27, 2022.

On March 2, 2020, NCLH granted 2.4 million time-based restricted share unit awards to our employees, which vest in substantially equal annual installments over three years .

Additionally, on March 2, 2020, NCLH granted 0.6 million performance-based restricted share units to certain members of our management team, which vest upon the achievement of certain pre-established performance targets established for the 2020 and 2021 calendar years and the satisfaction of an additional time-based vesting requirement that generally requires continued employment through March 1, 2023.

The following is a summary of restricted share unit activity for the six months ended June 30, 2020:

The following is a summary of restricted share unit activity for the nine months ended September 30, 2020:

Average Grant

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Forfeited or expired

Non-vested as of June 30, 2020

Non-vested as of September 30, 2020

(1) Number of performance-based restricted share units included assumes maximum achievement of performance targets.

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Payroll and related expense

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Ship Construction Contracts

Project Leonardo will introduce an additional six ships, each approximately 140,000 Gross Tons with approximately 3,300 Berths, with expected delivery dates from 2022 through 2027, subject to certain conditions.

For the Regent brand, we have an order for one Explorer Class Ship to be delivered in 2023, which will be approximately 55,000 Gross Tons

and 750 Berths.

Project Leonardo will introduce an additional six ships, each ranging from approximately 140,000 to 156,300 Gross Tons with approximately 3,300 to 3,550 Berths, with expected delivery dates from 2022 through 2027.

For the Regent brand, we have an order for one Explorer Class Ship to be delivered in 2023, which will be approximately 55,000 Gross Tons and 750 Berths.

For the Oceania Cruises brand, we have orders for two Allura Class Ships to be delivered in 2023 and 2025.

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The combined contract prices of the nine ships on order for delivery as of June 30, 2020 was approximately € 7.1 billion, or $ 8.0 billion based on the euro/U.S.

dollar exchange rate as of June 30, 2020.

The combined contract prices of the nine ships on order for delivery as of September 30, 2020 was approximately € 7.1 billion, or $ 8.3 billion based on the euro/U.S.

dollar exchange rate as of September 30, 2020.

We have obtained export credit financing which is expected to fund approximately 80 % of the contract price of each ship, subject to certain conditions.

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We cannot predict at this point the length of time that this action will be ongoing or the liability, if any, which may arise therefrom.

In addition, in March 2020 the Florida Attorney General announced an investigation related to the Company’s marketing during the COVID-19 outbreak.

In addition, in March 2020 the Florida Attorney General announced an investigation related to the Company’s marketing during the COVID-19 pandemic.

Following the announcement of the investigation by the Florida Attorney General, we received notifications from other attorneys general and governmental agencies that they are conducting similar investigations.

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The plaintiffs seek all available statutory remedies, including the value of the expropriated property, plus interest, treble damages, attorneys’ fees and costs.

On January 7, 2020, the United States District Court for the Southern District of Florida dismissed the claim by Havana Docks Corporation.

On January 7, 2020, the United States District Court for the Southern District of

Florida dismissed the claim by Havana Docks Corporation.

On April 14, 2020, the district court granted Havana Docks Corporation’s motion to reconsider and vacated its order dismissing the claim, allowing Havana Docks Corporation to file an amended complaint on April 16, 2020.

On April 24, 2020, we filed a motion seeking permission to appeal the district court’s order which was subsequently denied.

On September 1, 2020, the Court entered an order staying all case deadlines and administratively closed the Garcia-Bengochea matter pending the outcome of the appeal in a related case brought by the same plaintiff.

We believe we have meritorious defenses to the claims and intend to vigorously defend these matters.

As of June 30, 2020, we are unable to reasonably estimate any potential contingent loss from these matters due to a lack of legal precedence.

As of September 30, 2020, we are unable to reasonably estimate any potential contingent loss from these matters due to a lack of legal precedence.

In the normal course of our business, various other claims and lawsuits have been filed or are pending against us.

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Other Contingencies

The Company also has agreements with its credit card processors that govern approximately $ 0.9 billion at June 30, 2020 in advance ticket sales that have been received by the Company relating to future voyages.

The Company also has agreements with its credit card processors that govern approximately $ 1.0 billion at September 30, 2020 in advance ticket sales that have been received by the Company relating to future 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 the Company maintain a reserve which could be satisfied by posting collateral.

Currently, we have agreed to provide a reserve consisting of $ 70 million of cash and preliminarily agreed to provide second priority liens on certain ships with a collective equity value of approximately $ 700 million based on appraisals as of December 31, 2019, which could be increased or decreased based on certain conditions.

Currently, we have had approximately $ 40 million of advanced ticket deposits withheld to satisfy these requirements and have provided a reserve consisting of $ 70 million of cash.

We have also discussed providing second priority liens on certain ships with a collective equity value of approximately $ 700 million based on appraisals as of December 31, 2019.

Until these discussions are finalized, a significant portion of incoming advance ticket deposits are being withheld and will be released upon satisfactory perfection of the liens.

These discussions are ongoing, and any cash reserve or collateral requested could be increased or decreased.

If we do not meet an agreed upon minimum liquidity in the future, we may be required to pledge additional collateral and/or post cash reserves or take other actions that may reduce our liquidity.

Collateral may be released upon satisfaction of certain financial metrics.

Other Income (Expense), Net

For the three months ended June 30, 2020, other income (expense), net consisted of an expense of $ 14.4 million primarily due to losses from foreign currency exchange and losses on fuel hedges released into earnings as a result of the forecasted transactions no longer being probable.

For the six months ended June 30, 2020, other income (expense), net consisted of expense of $ 8.6 million primarily due to losses on fuel hedges released into earnings as a result of the forecasted transactions no longer being probable offset by gains from foreign currency exchange.

For the three and six months ended June 30, 2019, other income (expense), net was income of $ 3.6 million and $ 3.2 million, respectively, primarily due to gains from insurance proceeds and a litigation settlement partially offset by foreign currency exchange losses.

Income Tax Benefit

For the three and six months ended June 30, 2020, we had an income tax benefit of $ 9.1 million and $ 15.3 million, respectively.

For the three and six months ended June 30, 2019, we had income tax expense of $ 6.1 million and an income tax benefit of $ 27.7 million, respectively.

For the three and six months ended June 30, 2020, the tax benefit is due to operating losses and the reversal of a valuation allowance.

For the three and nine months ended September 30, 2020, other income (expense), net consisted of an expense of $ 23.7 million and $ 32.3 million, respectively, primarily due to losses from foreign currency exchange and losses on fuel hedges released into earnings as a result of the forecasted transactions no longer being probable.

For the three months ended September 30, 2019, other income (expense), net was income of $ 10.3 million primarily due to foreign currency exchange gains.

For the nine months ended September 30, 2019, other income (expense), net was income of $ 13.4 million primarily due to gains from insurance proceeds and a litigation settlement and foreign currency exchange gains.

Income Tax Benefit (Expense)

For the three and nine months ended September 30, 2020, we had an income tax benefit of $ 3.8 million and $ 19.1 million, respectively.

For the three and nine months ended September 30, 2019, we had income tax expense of $ 11.2 million and an income tax benefit of $ 16.5 million, respectively.

For the three months ended September 30, 2020, the tax benefit is due to operating losses.

For the nine months ended September 30, 2020, the tax benefit is due to operating losses and the reversal of a valuation allowance.

During 2018, we implemented certain tax restructuring strategies that created our ability to utilize the net operating loss carryforwards of Prestige, for which we had previously provided a full valuation allowance.

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Supplemental Cash Flow Information

For the six months ended June 30, 2020 and 2019, we had non-cash investing activities in connection with property and equipment of $ 7.2 million and $ 33.6 million, respectively.

For the nine months ended September 30, 2020 and 2019, we had non-cash investing activities consisting of changes in accruals related to property and equipment of $( 29.1 ) million and $ 17.4 million, respectively.

Additionally, during the nine months ended September 30, 2020, we received seller financing related to the acquisition of property and equipment resulting in both non-cash investing and financing activities of $ 11.9 million.

Related Party Disclosures

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The terms of the Indenture are more fully described under Note 8 — “Long-Term Debt”.

Based on the initial exchange rate, the Private Investor beneficially owned approximately 11 % of NCLH’s outstanding ordinary shares as of June 30, 2020.

Based on the initial exchange rate, the Private Investor beneficially owned over 10 % of NCLH’s outstanding ordinary shares as of September 30, 2020.

The initial exchange rate in the Private Exchangeable Notes may be adjusted in the event of certain make-whole fundamental changes or tax redemption events (each, as described in the Indenture), but the maximum number of NCLH ordinary shares issuable upon an exchange in the event of such an adjustment would not exceed 46,577,947 .

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The Investor Rights Agreement also provides for customary registration rights for the Private Investor and its affiliates, including demand and piggyback registration rights, contains customary transfer restrictions and provides that the Private Investor and its affiliates are subject to a voting agreement with respect to certain matters during a specified period of time.

Subsequent Events

In July 2020, NCLH offered 19,166,667 ordinary shares, par value $ 0.001 per share to the public at a price of $ 15.00 per share, which includes 2,500,000 ordinary shares issued in connection with the underwriters’ full exercise of their option to acquire additional ordinary shares.

Underwriting discounts and commissions were $ 0.525 per share.

The net proceeds from the offering were $ 277.4 million after deducting the underwriters’ discounts and commissions, but before other fees and expenses.

Both NCLH and NCLC undertook actions related to debt financing and equity-linked financing in July 2020, which are described in Note 8 — “Long-Term Debt”.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements