What changed in this filing

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Item 1. Financial Statements

2022-08-09 compared with 2022-05-10 · 206 added, 94 removed, 458 unchanged (40% of the section changed)

4 unchanged sentences

Three Months Ended

Six Months Ended

Passenger ticket

11 unchanged sentences

Operating loss

( 1,085,558 )

( 1,176,370 )

Non-operating income (expense)

4 unchanged sentences

( 1,488,509 )

Income tax expense

( 2,085,326 )

Income tax benefit (expense)

( 1,492,035 )

( 2,087,981 )

Weighted-average shares outstanding

5 unchanged sentences

Three Months Ended

Six Months Ended

( 1,492,035 )

( 2,087,981 )

Other comprehensive income (loss):

6 unchanged sentences

( 1,584,241 )

( 2,080,767 )

The accompanying notes are an integral part of these consolidated financial statements.

24 unchanged sentences

980,000,000 shares authorized;

419,100,690 shares issued and outstanding at March 31, 2022 and 416,891,915 shares issued and outstanding at December 31, 2021

419,116,812 shares issued and outstanding at June 30, 2022 and 416,891,915 shares issued and outstanding at December 31, 2021

Additional paid-in capital

9 unchanged sentences

(in thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities

( 1,492,035 )

( 2,087,981 )

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization expense

Gain on derivatives

(Gain) loss on derivatives

Loss on extinguishment of debt

10 unchanged sentences

Net cash used in operating activities

( 1,482,055 )

Cash flows from investing activities

3 unchanged sentences

Cash paid on settlement of derivatives

Net cash provided by (used in) investing activities

Net cash used in investing activities

Cash flows from financing activities

Repayments of long-term debt

( 1,268,888 )

Proceeds from long-term debt

5 unchanged sentences

Net cash provided by financing activities

Net increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

4 unchanged sentences

(in thousands)

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Comprehensive

1 unchanged sentence

Income (Loss)

Balance, March 31, 2022

( 5,779,120 )

Share-based compensation

Net share settlement of restricted share units

Other comprehensive loss, net

Balance, June 30, 2022

( 6,288,441 )

Six Months Ended June 30, 2022

Comprehensive

Shareholders’

Income (Loss)

Balance, December 31, 2021

3 unchanged sentences

Net share settlement of restricted share units

Other comprehensive income, net

Other comprehensive loss, net

( 1,492,035 )

Balance, June 30, 2022

( 6,288,441 )

The accompanying notes are an integral part of these consolidated financial statements.

Norwegian Cruise Line Holdings Ltd.

Consolidated Statements of Changes in Shareholders’ Equity - Continued

(in thousands)

Three Months Ended June 30, 2021

Comprehensive

Shareholders’

Income (Loss)

Balance, March 31, 2021

( 1,660,011 )

Three Months Ended March 31, 2021

Share-based compensation

Common share issuance proceeds, net

Net share settlement of restricted share units

Other comprehensive income, net

Balance, June 30, 2021

( 2,377,800 )

Six Months Ended June 30, 2021

Comprehensive

7 unchanged sentences

Cumulative change in accounting policy

Other comprehensive loss, net

Other comprehensive income, net

( 2,087,981 )

Balance, March 31, 2021

Balance, June 30, 2021

( 2,377,800 )

2 unchanged sentences

Notes to Consolidated Financial Statements

Unless otherwise indicated or the context otherwise requires, references in this report to (i) the “Company,” “we,” “our” and “us” refer to NCLH (as defined below) and its subsidiaries (including Prestige (as defined below), (ii) “NCLC” refers to NCL Corporation Ltd., (iii) “NCLH” refers to Norwegian Cruise Line Holdings Ltd., (iv) “Norwegian Cruise Line” or “Norwegian” refers to the Norwegian Cruise Line brand and its predecessors, and (v) “Prestige” refers to Prestige Cruises International S.

(formerly Prestige Cruises International, Inc.), together with its consolidated subsidiaries, including Prestige Cruise Holdings S.

(formerly Prestige Cruise Holdings, Inc.), Prestige’s direct wholly-owned subsidiary, which in turn is the parent of Oceania Cruises S.

(formerly Oceania Cruises, Inc.) (“Oceania Cruises”) and Seven Seas Cruises S.

(“Regent”) (Oceania Cruises also refers to the brand by the same name and Regent also refers to the brand Regent Seven Seas Cruises).

Unless otherwise indicated or the context otherwise requires, references in this report to (i) the “Company,” “we,” “our” and “us” refer to NCLH (as defined below) and its subsidiaries, (ii) “NCLC” refers to NCL Corporation Ltd., (iii) “NCLH” refers to Norwegian Cruise Line Holdings Ltd., (iv) “Norwegian Cruise Line” or “Norwegian” refers to the Norwegian Cruise Line brand and its predecessors, (v) “Oceania Cruises” refers to the Oceania Cruises brand and (vi) “Regent” refers to the Regent Seven Seas Cruises brand.

References to the “U.S.” are to the United States of America, and “dollar(s)” or “$” are to U.S.

4 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 March 31, 2022, we had 28 ships with approximately 59,150 Berths and had orders for nine additional ships to be delivered through 2027.

As of June 30, 2022, we had 28 ships with approximately 59,150 Berths and had orders for nine additional ships to be delivered through 2027.

Due to COVID-19, we temporarily suspended all global cruise voyages from March 2020 until July 2021, when we resumed cruise voyages on a limited basis.

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

We have six Prima Class Ships on order with expected delivery dates from 2022 through 2027.

Norwegian Prima was delivered in July 2022.

We refer you to Note 14 – “Subsequent Event” for additional

We have five additional Prima Class Ships on order with expected delivery dates from 2023 through 2027.

We have one Explorer Class Ship on order for delivery in 2023.

5 unchanged sentences

In the third quarter of 2021, we began a phased relaunch of certain cruise voyages with our ships initially operating at reduced occupancy levels.

As of May 7, 2022, all of our ships were operating with guests on board.

In early May 2022, the Company completed the phased relaunch of its entire fleet with all ships now in operation with guests on board.

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

The level of occupancy on our ships and the percentage of our fleet in service will depend on a number of factors including, but not limited to, the duration and extent of the COVID-19 pandemic, further resurgences and new more contagious and/or vaccine-resistant variants of COVID-19, the availability, distribution, rate of public acceptance and efficacy of vaccines and therapeutics for COVID-19, our ability to comply with governmental regulations and implement new health and safety protocols, port availability, travel restrictions, bans and advisories, our ability to staff our ships, and the impact of other events impacting travel or consumer discretionary spending, such as inflation, the price of fuel, or Russia’s recent invasion of Ukraine and the actions taken by the United States and other governments in response to the invasion.

We believe the ongoing effects of these events on our operations and global bookings have had, and will continue to have, a significant impact on our financial results and liquidity.

The level of occupancy on our ships and the percentage of our fleet in service will depend on a number of factors including, but not limited to, the duration and extent of the COVID-19 pandemic, further resurgences of COVID-19 or the emergence of other public health crises, our ability to comply with governmental regulations and implement new health and safety protocols, port availability, travel restrictions, bans and advisories, and our ability to staff our ships.

In addition, as a result of conditions associated with the COVID-19 pandemic and other global events, such as Russia’s invasion of Ukraine and actions taken by the United States and other governments in response to the invasion, the global economy, including the financial and credit markets, has recently experienced significant volatility and disruptions, including increases in inflation rates, fuel prices, and interest rates.

These conditions have resulted, and may continue to result, in increased expenses and may also impact travel or consumer discretionary spending.

We believe the ongoing effects of the foregoing factors and events on our operations and global bookings have had, and will continue to have, a significant impact on our financial results and liquidity.

The estimation of our future cash flow projections includes numerous assumptions that are subject to various risks and uncertainties.

3 unchanged sentences

● Forecasted cash collections in accordance with the terms of our credit card processing agreements (see Note 10 - “Commitments and Contingencies”);

● Expected continued expenses to maintain and comply with additional health and safety protocols;

● Expected increases in fuel prices and the impact of inflation.

We cannot make assurances that our assumptions used to estimate our liquidity requirements will not change due to the unique and ongoing unpredictable nature of the events, including the magnitude and duration.

Accordingly, the full effect of the COVID-19 pandemic and other events impacting travel and consumer discretionary spending, including Russia’s recent invasion of Ukraine, on our financial performance and financial condition cannot be quantified at this time.

● Expected continued expenses to maintain and comply with evolving health and safety protocols;

● Expected continued higher fuel prices and the impact of inflation.

We cannot make assurances that our assumptions used to estimate our liquidity requirements will not change due to the dynamic nature of the current economic landscape.

Accordingly, the full effect of the COVID-19 pandemic and other global events impacting macroeconomic conditions and travel and consumer discretionary spending, including Russia’s invasion of Ukraine, on our financial performance and financial condition cannot be quantified at this time.

We have made reasonable estimates and judgments of the impact of these events within our financial statements and there may be material changes to those estimates in future periods.

We have taken actions to improve our liquidity, including completing various capital market transactions and making capital expenditure and operating expense reductions, and we expect to continue to pursue other opportunities to improve our liquidity.

Based on these actions and assumptions regarding the impact of COVID-19 and other events impacting travel and consumer discretionary spending, including Russia’s recent invasion of Ukraine, and considering our available liquidity of $ 3.1 billion as of March 31, 2022, including cash and cash equivalents and our $ 1 billion undrawn commitment, we have concluded that we have sufficient liquidity to satisfy our obligations for at least the next twelve months .

Based on these actions and assumptions as discussed above, and considering our cash and cash equivalents of $ 1.9 billion as of June 30, 2022 and the net impact of our $ 1 billion undrawn commitment less related fees (see Note 7 – “Long-Term Debt”), we have concluded that we have sufficient liquidity to satisfy our obligations for at least the next twelve months .

Basis of Presentation

5 unchanged sentences

Revisions to Previously Reported Quarterly Financial Statements

During the fourth quarter of 2021, the Company identified an error in its Consolidated Balance Sheet as of March 31, 2021 and Consolidated Statement of Cash Flows for the three months ended March 31, 2021.

During the fourth quarter of 2021, the Company identified an error in its consolidated balance sheet as of June 30, 2021 and consolidated statement of cash flows for the six months ended June 30, 2021.

Based on their nature, certain amounts shown as cash and cash equivalents should have been classified as short-term investments.

We have determined that these errors were not material to the previously issued interim financial statements for the period ended March 31, 2021.

As a result of the error, the amounts previously reported as cash and cash equivalents have been reclassified to cash flows from investing activities in the Consolidated Statement of Cash Flows for the three months ended March 31, 2021 as follows (in thousands):

Three months ended March 31, 2021

We have determined that these errors were not material to the previously issued interim financial statements for the period ended June 30, 2021.

As a result of the error, the amounts previously reported as cash and cash equivalents have been reclassified to cash flows from investing activities in the consolidated statement of cash flows for the six months ended June 30, 2021 as follows (in thousands):

Six months ended June 30, 2021

Cash flows from investing activities

6 unchanged sentences

Three Months Ended

Six Months Ended

( 1,492,035 )

( 2,087,981 )

Basic weighted-average shares outstanding

3 unchanged sentences

Diluted loss per share

For the three months ended March 31, 2022 and 2021, a total of 86.4 million and 120.8 million, respectively, shares 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 June 30, 2022 and 2021, a total of 97.7 million and 99.2 million, respectively, and for the six months ended June 30, 2022 and 2021, a total of 92.1 million and 110.0 million, respectively, shares have been excluded from diluted weighted-average shares outstanding because the effect of including them would have been anti-dilutive.

Foreign Currency

1 unchanged sentence

We remeasure assets and liabilities denominated in foreign currencies at exchange rates in effect at the balance sheet date.

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

We recognized a gain of $ 8.4 million and $ 4.8 million for the three months ended March 31, 2022 and 2021, respectively, related to transactions denominated in other currencies.

The resulting gains or losses are recognized in our consolidated statements of operations within other income (expense), net.

We recognized gains of $ 36.4 million and $ 0.2 million for the three months ended June 30, 2022 and 2021, respectively, and gains of $ 44.7 million and $ 5.0 million for the six months ended June 30, 2022 and 2021, respectively, related to remeasurement of assets and liabilities denominated in foreign currencies.

Depreciation and Amortization Expense

2 unchanged sentences

Accounts Receivable, Net

Accounts receivable, net included $ 426.2 million and $ 1.1 billion due from credit card processors as of March 31, 2022 and December 31, 2021, respectively.

Accounts receivable, net included $ 455.4 million and $ 1.1 billion due from credit card processors as of June 30, 2022 and December 31, 2021, respectively.

Recently Issued Accounting Guidance

1 unchanged sentence

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

Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provided guidance to alleviate the burden in accounting for reference rate reform by allowing certain expedients and exceptions in applying GAAP to contracts, hedging relationships and other transactions

impacted by reference rate reform.

Facilitation of the Effects of Reference Rate Reform on Financial

Reporting (“ASU 2020-04”), which provided guidance to alleviate the burden in accounting for reference rate reform by allowing certain expedients and exceptions in applying GAAP to contracts, hedging relationships and other transactions impacted by reference rate reform.

The provisions apply only to those transactions that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform.

Adoption of the provisions of ASU 2020-04 are optional and are effective from March 12, 2020 through December 31, 2022.

As of March 31, 2022, we have not adopted any expedients and exceptions under ASU 2020-04.

As of June 30, 2022, we have not adopted any expedients and exceptions under ASU 2020-04.

We will continue to evaluate the impact of ASU 2020-04 on our consolidated financial statements.

4 unchanged sentences

Three Months Ended

Six Months Ended

North America

1 unchanged sentence

Total revenue

Amounts for the comparative three months ended March 31, 2021 are excluded as the information is not meaningful.

Amounts for the comparative three and six months ended June 30, 2021 are excluded as the information is not meaningful.

North America includes the U.S., the Caribbean, Canada and Mexico.

1 unchanged sentence

Asia-Pacific includes Australia, New Zealand and Asia.

Other includes all other international territories.

Segment Reporting

8 unchanged sentences

Receivables from customers are included within accounts receivable, net.

As of March 31, 2022, our receivables from customers were $ 53.3 million.

Our cancellation policies permit guests to cancel cruises booked within certain windows for specified time periods up to 15 days prior to departure, and the guests will receive future cruise credits.

As of June 30, 2022, our receivables from customers were $ 62.5 million.

Our cancellation policies permit certain guests to cancel cruises booked within certain windows for specified time periods up to 15 days prior to departure or in the event of a positive COVID-19 test, and the guests will receive future cruise credits.

Certain cruises booked for certain periods will be permitted a 60-day or 75-day cancellation window for refunds.

3 unchanged sentences

Our contract liabilities are included within advance ticket sales.

As of March 31, 2022 and December 31, 2021, our contract liabilities were $ 1.0 billion and $ 161.8 million, respectively.

Of the amounts included within contract liabilities,

approximately 40 % were refundable in accordance with our cancellation policies.

As of June 30, 2022 and December 31, 2021, our contract liabilities were $ 1.4 billion and $ 161.8 million, respectively.

Of the amounts included within contract liabilities as of June 30, 2022, approximately 40 % were refundable in accordance with our cancellation policies.

Of the deposits included within advance ticket sales, the vast majority are refundable in accordance with our cancellation policies and it is uncertain to what extent guests may request refunds.

Refunds payable to guests are included in accounts payable.

For the three months ended March 31, 2022, $ 97.0 million 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, during the three months ended March 31, 2022 and 2021, approximately $ 0.3 million and $ 14.8 million, respectively, in costs to obtain these contracts, consisting of protected commissions, including those paid to employees, and credit card fees, were recognized in earnings.

For the six months ended June 30, 2022, $ 120.2 million 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, during the three months ended June 30, 2021, approximately $ 11.2 million, and during the six months ended June 30, 2022 and 2021, approximately $ 0.3 million and $ 26.0 million, respectively, in costs to obtain these contracts, consisting of protected commissions, including those paid to employees, and credit card fees, were recognized in earnings.

Operating lease balances were as follows (in thousands):

Balance Sheet location

March 31, 2022

June 30, 2022

December 31, 2021

7 unchanged sentences

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) for the three months ended March 31, 2022 was as follows (in thousands):

Three Months Ended March 31, 2022

Accumulated other comprehensive income (loss) for the six months ended June 30, 2022 was as follows (in thousands):

Six Months Ended June 30, 2022

Comprehensive

1 unchanged sentence

Accumulated other comprehensive income (loss) at beginning of period

Current period other comprehensive income before reclassifications

Current period other comprehensive income (loss) before reclassifications

Amounts reclassified into earnings

Accumulated other comprehensive income (loss) at end of period

Accumulated other comprehensive income (loss) for the three months ended March 31, 2021 was as follows (in thousands):

Three Months Ended March 31, 2021

Accumulated other comprehensive income (loss) for the six months ended June 30, 2021 was as follows (in thousands):

Six Months Ended June 30, 2021

Comprehensive

7 unchanged sentences

(3) Includes $ 87.9 million of gain expected to be reclassified into earnings in the next 12 months.

Property and Equipment, net

Property and equipment, net increased $ 112.5 million for the six months ended June 30, 2022 primarily due to ships under construction.

Long-Term Debt

8 unchanged sentences

NCLC may redeem the 2029 Unsecured Notes at its option, in whole or in part, at any time and from time to time on or after November 15, 2028, at a redemption price equal to 100 % of the principal amount of 2029 Unsecured Notes redeemed, plus accrued and unpaid interest and additional amounts, if any, to, but excluding, the redemption date.

At any time and from time to time prior to February 15, 2025, NCLC may choose to redeem up to 40 % of the aggregate principal amount of the 2029 Unsecured Notes with the net proceeds of certain equity offerings, subject to certain restrictions, at a redemption price equal to 107.750 % of the principal amount of the 2029 Unsecured Notes redeemed plus accrued and unpaid interest to, but excluding, the redemption date, so long as at least 60 % of the aggregate principal amount of the 2029 Unsecured Notes issued remains outstanding following such redemption.

At any time and from time to time prior to February 15, 2025, NCLC may choose to redeem up to 40 % of the aggregate principal amount of the 2029 Unsecured Notes with the net proceeds of certain

equity offerings, subject to certain restrictions, at a redemption price equal to 107.750 % of the principal amount of the 2029 Unsecured Notes redeemed plus accrued and unpaid interest to, but excluding, the redemption date, so long as at least 60 % of the aggregate principal amount of the 2029 Unsecured Notes issued remains outstanding following such redemption.

The indentures governing the 2027 Secured Notes and the 2029 Unsecured 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;

5 unchanged sentences

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

In February 2022, NCLC also conducted a private offering (the “Exchangeable Notes Offering”) of $ 473.2 million in aggregate principal amount of 2.5 % exchangeable senior notes due 2027 (the “2027 2.5% Exchangeable Notes”).

The 2027 2.5% Exchangeable Notes are guaranteed by NCLH on a senior basis.

Holders may exchange their 2027 2.5% 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 2027 2.5% Exchangeable Notes, into a number of NCLH’s ordinary shares based on the exchange rate.

At their option, holders may exchange their 2027 2.5% Exchangeable Notes for, at the election of NCLC, cash, ordinary shares of NCLH or a combination of cash and ordinary shares of NCLH, at any time prior to the close of business on the business day immediately preceding August 15, 2026, subject to the satisfaction of certain conditions and during certain periods, and on or after August 15, 2026 until the close of business on the business day immediately preceding the maturity date, regardless of whether such conditions have been met.

If NCLC elects to satisfy its exchange obligation solely in ordinary shares or in a combination of ordinary shares and cash, upon exchange, the 2027 2.5% Exchangeable Notes will convert into redeemable preference shares of NCLC, which will be immediately and automatically exchanged, for each $ 1,000 principal amount of exchanged 2027 2.5% Exchangeable Notes, into a number of NCLH’s ordinary shares based on the exchange rate.

The exchange rate will initially be 28.9765 ordinary shares per $ 1,000 principal amount of 2027 2.5% Exchangeable Notes (equivalent to an initial exchange price of approximately $ 34.51 per ordinary share).

4 unchanged sentences

Simultaneously with the Redemption, and pursuant to certain provisions contained in the indentures governing the 2026 Senior Unsecured Notes and the 2028 Senior Unsecured Notes, each of the guarantors party to such indentures were released from their obligations thereunder.

The resulting losses on extinguishments, which are recognized in interest expense, net, were $ 188.4 million for the three months ended March 31, 2022.

The resulting losses on extinguishments, which are recognized in interest expense, net, were $ 188.4 million for the six months ended June 30, 2022.

In July 2022, NCLC entered into a $ 1 billion amended and restated commitment letter with the purchasers named therein (collectively, the “Commitment Parties”), which supersedes a $ 1 billion commitment letter previously executed in November 2021.

The amended commitment has been extended through March 31, 2023.

Under the amended commitment, the Commitment Parties have agreed to purchase an aggregate of $ 1 billion of notes at NCLC’s option.

NCLC has the option to make up to two draws, in which case NCLC will issue an aggregate of (i) $ 450 million principal amount of 8.0 % senior secured notes due 2025 (the “Secured Notes”) and (ii) $ 550 million principal amount of 8.0 % senior notes due three years after the issue date (the “Unsecured Notes” and, together with the Secured Notes, the “Notes”).

The Secured Notes must be issued prior to the Unsecured Notes, and the principal amount of Secured Notes issuable will be increased to the extent that NCLC obtains an increase in obligations that may be secured by liens on collateral pursuant to the terms and conditions of NCLC’s debt agreements (with the principal amount of Unsecured Notes decreased commensurately).

If drawn, the Secured Notes will be secured by first-priority interests in, among other things and subject to certain agreed security principles, shares of capital stock in certain guarantors, our material intellectual property and two islands that we use in the operations of our cruise business.

The Secured Notes will also be guaranteed by our subsidiaries that own the property that secures the Secured Notes as well as certain additional

subsidiaries whose assets do not secure the Secured Notes if drawn.

If drawn, the Notes will be subject to a quarterly duration fee of 1.5 % with respect to the Secured Notes and a semi-annual duration fee of 3.0 % with respect to the Unsecured Notes, as well as draw fees of 3.0 % with respect to the Secured Notes and 5.0 % with respect to the Unsecured Notes.

As of August 9, 2022, the Company has not drawn under this commitment.

Exchangeable Notes

The following is a summary of NCLC’s exchangeable notes as of March 31, 2022 (in thousands):

The following is a summary of NCLC’s exchangeable notes as of June 30, 2022 (in thousands):

Financing Fees

12 unchanged sentences

Three Months Ended

Six Months Ended

Coupon interest

2 unchanged sentences

Debt Repayments

The following are scheduled principal repayments on our long-term debt including finance lease obligations as of March 31, 2022 for each of the following periods (in thousands):

The following are scheduled principal repayments on our long-term debt including finance lease obligations as of June 30, 2022 for each of the following periods (in thousands):

Remainder of 2022

Debt Covenants

During the year ended December 31, 2021, we received certain financial and other debt covenant waivers, added new free liquidity requirements and modified other financial covenants.

As of March 31, 2022, taking into account such waivers, we were in compliance with all of our debt covenants.

If we do not continue to remain in compliance with our covenants, including following the expiration of any current waivers, we would have to seek additional amendments to our covenants.

However, no assurances can be made that such amendments would be approved by our lenders.

During the year ended December 31, 2021, we amended certain financial and other debt covenants and added new free liquidity requirements.

As of June 30, 2022, taking into account such amendments, we were in compliance with all of our debt covenants.

If we do not continue to remain in compliance with our covenants, we would have to seek additional amendments to or waivers of our covenants.

However, no assurances can be made that such amendments or waivers would be approved by our lenders.

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 would have a material adverse impact on our operations and liquidity.

16 unchanged sentences

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

As of March 31, 2022, we had fuel swaps, which are used to mitigate the financial impact of volatility of fuel prices pertaining to approximately 347 thousand metric tons of our projected fuel purchases, maturing through December 31, 2023 .

As of March 31, 2022, we had approximately 164 thousand metric tons which were not designated as cash flow hedges maturing through December 31, 2023 .

As of March 31, 2022, 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 € 2.4 billion, or $ 2.7 billion based on the euro/U.S.

dollar exchange rate as of March 31, 2022.

As of June 30, 2022, we had fuel swaps, which are used to mitigate the financial impact of volatility of fuel prices pertaining to approximately 286 thousand metric tons of our projected fuel purchases, maturing through December 31, 2023 .

As of June 30, 2022, we had approximately 173 thousand metric tons which were not designated as cash flow hedges maturing through December 31, 2023 .

As of June 30, 2022, 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 hedged foreign currency forward contracts was € 2.5 billion, or $ 2.6 billion based on the euro/U.S.

dollar exchange rate as of June 30, 2022.

During the three months ended June 30, 2022, we entered into foreign currency forward contracts used as economic hedges to mitigate the financial impact of volatility in foreign currency exchange rates related to our accrued ship construction payments denominated in euros.

As of June 30, 2022, the notional amount of these foreign currency forward contracts was € 0.3 billion, or $ 0.3 billion based on the euro/U.S.

dollar exchange rate as of June 30, 2022.

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

15 unchanged sentences

Other long-term assets

Foreign currency contracts

Accrued expenses and other liabilities

Total derivatives not designated as hedging instruments

11 unchanged sentences

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

March 31, 2022

June 30, 2022

December 31, 2021

13 unchanged sentences

(Loss) into Income (Expense)

March 31, 2022

March 31, 2021

March 31, 2022

March 31, 2021

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

Fuel contracts

6 unchanged sentences

Total gain (loss) recognized in other comprehensive loss

Location of Gain

(Loss) Reclassified

from Accumulated

Amount of Gain (Loss) Reclassified

Amount of Gain (Loss)

Other Comprehensive

from Accumulated Other

Recognized in Other

Income (Loss) into

Comprehensive Income

Comprehensive Loss

Income (Expense)

(Loss) into Income (Expense)

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

Fuel contracts

Other income (expense), net

Foreign currency contracts

Depreciation and amortization

Interest rate contracts

Interest expense, net

Total gain (loss) recognized in other comprehensive loss

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

Three Months Ended March 31, 2022

Three Months Ended March 31, 2021

Three Months Ended June 30, 2022

Three Months Ended June 30, 2021

( Expense), net

6 unchanged sentences

Fuel contracts

Six Months Ended June 30, 2022

Six Months Ended June 30, 2021

( Expense), net

Total amounts of income and expense line items presented in the consolidated statements of operations in which the effects of cash flow hedges are recorded

Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income (expense)

Fuel contracts

Foreign currency contracts

Interest rate contracts

Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income (expense) as a result that a forecasted transaction is no longer probable of occurring

Fuel contracts

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

1 unchanged sentence

Three Months Ended

Six Months Ended

Location of Gain (Loss)

2 unchanged sentences

Other income (expense), net

Foreign currency contracts

Other income (expense), net

Long-Term Debt

As of March 31, 2022 and December 31, 2021, the fair value of our long-term debt, including the current portion, was $ 13.1 billion and $ 12.5 billion, respectively, which was $ 0.7 billion and $ 0.1 billion lower, respectively, than the carrying values, excluding deferred financing costs.

As of June 30, 2022 and December 31, 2021, the fair value of our long-term debt, including the current portion, was $ 11.6 billion and $ 12.5 billion, respectively, which was $ 1.8 billion and $ 0.1 billion lower, 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.

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Employee Benefits and Compensation Plans

In January 2013, NCLH adopted the 2013 Performance Incentive Plan, which provided for the issuance of up to 15,035,106 of NCLH’s ordinary shares pursuant to awards granted under the plan.

In May 2016 and May 2021, the plan was amended and restated (“Restated 2013 Plan”) pursuant to approval from the Board of Directors and NCLH’s shareholders.

Among other things, under the Restated 2013 Plan, the number of NCLH’s ordinary shares that may be delivered pursuant to all awards granted under the plan was increased to a maximum aggregate limit of 32,375,106 shares.

In June 2022, NCLH’s shareholders approved a further amendment and restatement of the Restated 2013 Plan to increase the number of NCLH ordinary shares that may be delivered by 7,000,000 , resulting in an increase in the maximum aggregate limit to 39,375,106 shares.

Restricted Share Unit Awards

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Additionally, in March 2022, NCLH granted 1.9 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 through 2024 and the satisfaction of an additional time-based vesting requirement that generally requires continued employment through March 1, 2025.

The following is a summary of restricted share unit activity for the three months ended March 31, 2022:

The following is a summary of restricted share unit activity for the six months ended June 30, 2022:

Average Grant

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Forfeited or expired

Non-vested as of March 31, 2022

Non-vested as of June 30, 2022

The compensation expense recognized for share-based compensation for the periods presented include the following (in thousands):

Three Months Ended

Six Months Ended

Payroll and related expense

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Ship Construction Contracts

For the Norwegian brand, we have six Prima Class Ships on order, each ranging from approximately 140,000 to 156,300 Gross Tons with approximately 3,215 to 3,550 Berths, with expected delivery dates from 2022 through 2027.

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 Norwegian brand, the first Prima Class Ship, Norwegian Prima, at approximately 143,500 Gross Tons and with 3,100 Berths, was delivered in July 2022.

We refer you to Note 14 – “Subsequent Event” for additional information.

We have five additional Prima Class Ships on order, each ranging from approximately 143,500 to 156,300 Gross Tons with approximately 3,100 to 3,550 Berths, with expected delivery dates from 2023 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.

Each of the Allura Class Ships will be approximately 67,000 Gross Tons and 1,200 Berths.

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 and/or Russia’s recent invasion of Ukraine could result in additional delays in ship deliveries in the future, which may be prolonged.

The combined contract prices of the nine ships on order for delivery as of March 31, 2022 was approximately € 7.7 billion, or $ 8.5 billion based on the euro/U.S.

dollar exchange rate as of March 31, 2022.

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, Russia’s invasion of Ukraine and/or other macroeconomic events are expected to result in additional delays in ship deliveries in the future, which may be prolonged.

The combined contract prices of the nine ships on order for delivery, including Norwegian Prima, as of June 30, 2022 was approximately € 7.7 billion, or $ 8.1 billion based on the euro/U.S.

dollar exchange rate as of June 30, 2022.

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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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.

Discovery in the Havana Docks Matter has now concluded and appropriate motions for summary judgment have been filed.

On March 21, 2022, the court in the Havana Docks Matter issued an order granting the plaintiff’s motion for summary judgment on the issue of liability and scheduled a trial on damages only for September 2022.

The Company has filed a motion for interlocutory appeal seeking to have the appellate court review the district court’s order granting summary judgment and that motion remains pending.

Discovery in the Havana Docks Matter has now concluded and appropriate motions for summary judgment were filed.

The Company filed a motion for interlocutory appeal seeking to have the appellate court review the district court’s order granting summary judgment which was subsequently denied.

On September 1, 2020, the court in the Garcia-Bengochea Matter entered an order staying all case deadlines and administratively closed the case pending the outcome of an 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 March 31, 2022, we are unable to reasonably estimate any potential loss or range of losses from these matters.

As of June 30, 2022, we are unable to reasonably estimate any potential loss or range of losses from these matters.

The ability to make such estimates and judgments can be affected by various factors including, among other things:

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Other Contingencies

The Company also has agreements with its credit card processors that govern approximately $ 1.7 billion in advance ticket sales at March 31, 2022 that have been received by the Company relating to future voyages.

The Company also has agreements with its credit card processors that govern approximately $ 2.1 billion in advance ticket sales at June 30, 2022 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 would be satisfied by posting collateral.

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Any cash reserve or collateral requested could be increased or decreased.

As of March 31, 2022, we had cash reserves of approximately $ 1.1 billion with credit card processors, of which approximately $ 426.2 million is recognized in accounts receivable, net and approximately $ 665.3 million in other long-term assets.

As of March 31, 2022, a portion of the cash reserves is classified as long-term due to a change in terms to a static reserve, as currently required by a credit card processor, subject to periodic review.

As of June 30, 2022, we had cash reserves of approximately $ 1.0 billion with credit card processors, of which approximately $ 455.4 million is recognized in accounts receivable, net and approximately $ 508.2 million in other long-term assets.

As of June 30, 2022, a portion of the cash reserves is classified as long-term due to a change in terms to a static reserve, as currently required by a credit card processor, subject to periodic review.

We may be required to pledge additional collateral and/or post additional cash reserves or take other actions that may further reduce our liquidity.

Other Income (Expense), Net

For the three months ended March 31, 2022 and 2021 other income (expense), net consisted of income of $ 38.1 million and $ 27.2 million, respectively, primarily due to gains on fuel swaps not designated as hedges and foreign currency exchange.

For the three and six months ended June 30, 2022 other income (expense), net consisted of income of $ 31.0 million and $ 69.1 million, respectively, primarily due to gains on foreign currency remeasurements.

For the three and six months ended June 30, 2021, other income (expense), net consisted of income of $ 25.5 million and $ 52.7 million, respectively, primarily due to gains on fuel swaps not designated as hedges.

Supplemental Cash Flow Information

For the three months ended March 31, 2022 and 2021, we had non-cash investing activities consisting of changes in accruals related to property and equipment of $ 17.4 million and $ 20.8 million, respectively.

For the six months ended June 30, 2022 and 2021, we had non-cash investing activities consisting of changes in accruals related to property and equipment of $ 145.5 million and $ 49.1 million, respectively.

Related Party Disclosures

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Notwithstanding the termination, we and the Private Investor agreed that certain provisions related to indemnification and expense reimbursement would survive in accordance with their terms.

Subsequent Event

In July 2022, we took delivery of Norwegian Prima.

We had export credit financing in place for 80 % of the contract price.

The associated $ 1.1 billion term loan bears interest at a fixed rate of 2.68 % with a maturity date of July 31, 2034.

Principal and interest payments are payable semiannually.

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