What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-08-08 compared with 2023-05-05 · 223 added, 108 removed, 441 unchanged (43% of the section changed)

4 unchanged sentences

Three Months Ended

Six Months Ended

Passenger ticket

11 unchanged sentences

Operating income (loss)

( 1,085,558 )

Non-operating income (expense)

2 unchanged sentences

Total non-operating income (expense)

Net loss before income taxes

Net income (loss) before income taxes

( 1,488,509 )

Income tax benefit (expense)

Net income (loss)

( 1,492,035 )

Weighted-average shares outstanding

Loss per share

Earnings (loss) per share

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

Norwegian Cruise Line Holdings Ltd.

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

Three Months Ended

Other comprehensive income (loss):

Six Months Ended

Net income (loss)

( 1,492,035 )

Other comprehensive loss:

Shipboard Retirement Plan

Cash flow hedges:

Net unrealized gain (loss)

Net unrealized loss

Amount realized and reclassified into earnings

Total other comprehensive income (loss)

Total comprehensive loss

Total other comprehensive loss

Total comprehensive income (loss)

( 1,584,241 )

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

23 unchanged sentences

980,000,000 shares authorized;

424,158,982 shares issued and outstanding at March 31, 2023 and 421,413,565 shares issued and outstanding at December 31, 2022

425,155,523 shares issued and outstanding at June 30, 2023 and 421,413,565 shares issued and outstanding at December 31, 2022

Additional paid-in capital

3 unchanged sentences

( 7,066,315 )

Total shareholders’ equity (deficit)

Total shareholders’ equity

Total liabilities and shareholders’ equity

3 unchanged sentences

(in thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities

( 1,492,035 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization expense

(Gain) loss on derivatives

Loss on derivatives

Loss on extinguishment of debt

Provision for bad debts and inventory obsolescence

Gain on involuntary conversion of assets

Share-based compensation expense

10 unchanged sentences

Proceeds from maturities of short-term investments

Net cash provided by (used in) investing activities

Cash paid on settlement of derivatives

Net cash used in investing activities

Cash flows from financing activities

1 unchanged sentence

( 2,500,777 )

( 1,268,888 )

Proceeds from long-term debt

11 unchanged sentences

(in thousands)

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

Comprehensive

2 unchanged sentences

Equity (Deficit)

Balance, March 31, 2023

( 7,225,636 )

Share-based compensation

Issuance of shares under employee related plans

Net share settlement of restricted share units

Other comprehensive loss, net

Balance, June 30, 2023

( 7,139,520 )

Six Months Ended June 30, 2023

Comprehensive

Shareholders’

Income (Loss)

Equity (Deficit)

Balance, December 31, 2022

4 unchanged sentences

Other comprehensive loss, net

Balance, June 30, 2023

( 7,139,520 )

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, 2022

Comprehensive

Shareholders’

Income (Loss)

Equity (Deficit)

Balance, March 31, 2022

( 5,779,120 )

Three Months Ended March 31, 2022

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

7 unchanged sentences

Net share settlement of restricted share units

Other comprehensive income, net

Balance, March 31, 2022

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.

8 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, 2023, we had 29 ships with approximately 61,000 Berths and had orders for eight additional ships to be delivered through 2028.

Oceania Cruises’ Vista was delivered in April 2023.

As of June 30, 2023, we had 30 ships with approximately 62,000 Berths and had orders for seven additional ships to be delivered through 2028.

Norwegian Viva was delivered in August 2023.

We refer you to Note 13 – “Subsequent Event” for additional

We have five Prima Class Ships on order with currently scheduled delivery dates from 2023 through 2028.

We have four Prima Class Ships on order with currently scheduled delivery dates from 2025 through 2028.

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 our fleet, which was completed in early May 2022, with all ships now in operation with guests on board.

As a result of actions the Company undertook in response to the impacts of the COVID-19 pandemic, we have a substantial debt balance and we require a significant amount of our liquidity and cash flows to service our debt.

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

Our principal assumptions for future cash flow projections include:

● Expected return to and sustained historical occupancy levels;

● Expected increase in revenue per Passenger Cruise Day through a combination of both passenger ticket and onboard revenue as compared to 2019;

● Expected timing of cash collections in accordance with the terms of our credit card processing agreements (see Note 9 - “Commitments and Contingencies”);

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

We have a substantial debt balance as a result of the impacts of the COVID-19 pandemic, and we require a significant amount of our liquidity and cash flows provided by operating activities to service our debt.

In addition, as a result of conditions associated with the COVID-19 pandemic and other global events, such as Russia’s ongoing 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 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.

● Expected normalized Occupancy levels, which are expected to be between approximately 105 % to 106 % annually;

● Expected sustained increase in revenue per Passenger Cruise Day through a combination of both passenger ticket and onboard revenue as compared to 2019;

● Expected timing of cash collections for bookings;

● Expected fuel prices based on forward curves;

● Expected impact of inflation on cost items other than fuel.

Our projected liquidity requirements also reflect our principal assumptions surrounding ongoing operating costs, as well as liquidity requirements for financing costs and necessary capital expenditures and our expectation that holders of the 2024 Exchangeable Notes will exchange their 2024 Exchangeable Notes for shares.

In addition, as a result of lingering impacts associated with the COVID-19 pandemic and other global events, such as Russia’s ongoing 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 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, including our substantial debt balance, have had, and will continue to have, a significant impact on our financial results and liquidity.

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

2 unchanged sentences

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

Based on these actions and assumptions as discussed above, and considering our cash and cash equivalents of $ 700.6 million as of March 31, 2023 and the impact of our $ 591 million undrawn Revolving Loan Facility and $ 650 million undrawn commitment less related fees (see Note 6 – “Long-Term Debt”), 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 liquidity of approximately $ 2.4 billion, including cash and cash equivalents of $ 899.1 million and borrowings available under our $ 875 million undrawn Revolving Loan Facility and $ 650 million undrawn commitment less related fees (see Note 7 – “Long-Term Debt”) as of June 30, 2023, we have concluded that we have sufficient liquidity to satisfy our obligations for at least the next twelve months .

In addition, we have $ 300 million of backstop committed financing for amounts outstanding under the Senior Secured Credit Facility, which is available between October 4, 2023 and January 2, 2024 (see Note 7 – “Long-Term Debt”).

5 unchanged sentences

The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2022, which are included in our most recent Annual Report on Form 10-K filed with the SEC on February 28, 2023.

Loss Per Share

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

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing net income (loss) by the basic weighted-average number of shares outstanding during each period.

Diluted earnings (loss) per share is computed by dividing net income (loss) and assumed conversion of exchangeable notes by diluted weighted-average shares outstanding.

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

Net income (loss) - Basic EPS

( 1,492,035 )

Effect of dilutive securities - exchangeable notes

Net income (loss) and assumed conversion of exchangeable notes - Diluted EPS

( 1,492,035 )

Basic weighted-average shares outstanding

Dilutive effect of share awards

Dilutive effect of exchangeable notes

Diluted weighted-average shares outstanding

Basic loss per share

Diluted loss per share

For the three months ended March 31, 2023 and 2022, a total of 89.4 million and 86.4 million shares, respectively, have been excluded from diluted weighted-average shares outstanding because the effect of including them would have been anti-dilutive.

Each exchangeable note (see Note 7 – “Long-Term Debt”) is individually evaluated for its dilutive or anti-dilutive impact on EPS.

Only the interest expense and weighted average shares for exchangeable notes which are dilutive are included in the effect of dilutive securities above.

During the three months ended June 30, 2023, only the 2027 1.125% Exchangeable Notes were dilutive.

For the three months ended June 30, 2023 and 2022, a total of 55.7 million and 97.7 million shares, respectively, and for the six months ended June 30, 2023 and 2022, a total of 89.6 million and 92.1 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

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

We recognized a loss of $ 8.7 million and a gain of $ 8.4 million for the three months ended March 31, 2023 and 2022, respectively, related to remeasurement of assets and liabilities denominated in foreign currencies.

Remeasurements of foreign currency related to operating

activities are recognized within changes in operating assets and liabilities in the consolidated statement of cash flows.

We recognized a loss of $ 11.1 million and a gain of $ 36.4 million for the three months ended June 30, 2023 and 2022, respectively, and a loss of $ 19.8 million and a gain of $ 44.7 million for the six months ended June 30, 2023 and 2022, respectively, related to remeasurement of assets and liabilities denominated in foreign currencies.

Remeasurements of foreign currency related to operating activities are recognized within changes in operating assets and liabilities in the consolidated statement of cash flows.

Depreciation and Amortization Expense

2 unchanged sentences

Accounts Receivable, Net

Accounts receivable, net included $ 77.3 million and $ 118.4 million due from credit card processors as of March 31, 2023 and December 31, 2022, respectively.

Recently Issued Accounting Guidance

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

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.

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, 2024, as deferred by ASU No.

2022-06, Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848 .

As of March 31, 2023, we have not completed any contract amendments within the scope of ASU 2020-04 or adopted any expedients or exceptions.

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

Accounts receivable, net included $ 31.5 million and $ 118.4 million due from credit card processors as of June 30, 2023 and December 31, 2022, respectively.

Revenue Recognition

3 unchanged sentences

Three Months Ended

Six Months Ended

North America

7 unchanged sentences

Each brand, Norwegian, Oceania Cruises and Regent, constitutes a business for which discrete financial information is available and management regularly reviews the brand level operating results and, therefore, each brand is considered an operating segment.

Our operating segments have similar economic and qualitative characteristics, including similar long-term margins and similar products and services;

Our operating segments have similar economic and qualitative characteristics, including similar long-term margins, products and services;

therefore, we aggregate all of the operating segments into one reportable segment.

4 unchanged sentences

Receivables from customers are included within accounts receivable, net.

As of March 31, 2023 and December 31, 2022, our receivables from customers were $ 97.8 million and $ 94.2 million, respectively, primarily related to in-transit credit card receivables.

As of June 30, 2023 and December 31, 2022, our receivables from customers were $ 91.6 million and $ 94.2 million, respectively, primarily related to in-transit credit card receivables.

Our standard payment and cancellation penalties apply for all sailings after March 31, 2023.

Future cruise credits that have been issued as face value reimbursement for cancelled bookings due to COVID-19 are generally valid for any sailing through June 30, 2023, and we may further extend this offer.

Future cruise credits that have been issued as face value reimbursement for cancelled bookings due to COVID-19 are approximately $ 81.2 million.

The future cruise credits are not contracts, and therefore, guests who elected this option are excluded from our contract liability balance;

1 unchanged sentence

Our contract liabilities are included within advance ticket sales.

As of March 31, 2023 and December 31, 2022, our contract liabilities were $ 2.3 billion and $ 1.7 billion, respectively.

Of the amounts included within contract liabilities as of March 31, 2023, approximately 45 % were refundable in accordance with our cancellation policies.

As of June 30, 2023 and December 31, 2022, our contract liabilities were $ 2.5 billion and $ 1.7 billion, respectively.

Of the amounts included within contract liabilities as of June 30, 2023, approximately 40 % were refundable in accordance with our cancellation policies.

Of the deposits included within advance ticket sales, the 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, 2023, $ 1.4 billion of revenue recognized was included in the contract liability balance at the beginning of the period.

For the six months ended June 30, 2023, $ 1.7 billion of revenue recognized was included in the contract liability balance at the beginning of the period.

Operating lease balances were as follows (in thousands):

Balance Sheet location

March 31, 2023

June 30, 2023

December 31, 2022

7 unchanged sentences

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) for the three months ended March 31, 2023 was as follows (in thousands):

Three Months Ended March 31, 2023

Accumulated other comprehensive income (loss) for the six months ended June 30, 2023 was as follows (in thousands):

Six Months Ended June 30, 2023

Comprehensive

4 unchanged sentences

Accumulated other comprehensive income (loss) at end of period

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

3 unchanged sentences

(3) Includes $ 24.0 million of loss expected to be reclassified into earnings in the next 12 months.

Property and Equipment, Net

Property and equipment, net increased $ 538.3 million for the six months ended June 30, 2023 primarily due to the delivery of Oceania Cruises’ Vista.

We determine the weighted average useful lives of our ships based primarily on our estimates of the useful lives of the ships’ major component systems on the date of acquisition, such as cabins, main diesels, main electric, superstructure and hull, and their related proportional weighting to the ship as a whole.

We have assessed the weighted-average useful life of the components of Oceania Cruises’ Vista and assigned a useful life and residual value to the Allura Class Ships consistent with our accounting policy.

The useful life and residual value consider the historical useful lives of similar assets, manufacturer recommended lives, planned maintenance programs, anticipated changes in technological conditions and the related proportional weighting of the major components of the Allura Class Ships.

Long-Term Debt

19 unchanged sentences

Pursuant to the amended commitment letter, the Commitment Parties have agreed to purchase from NCLC an aggregate principal amount of up to $ 650 million of senior secured notes at NCLC’s option.

NCLC has the option to make up to two draws, consisting of (i) $ 250 million of senior secured notes due 2028 that, if issued, will accrue interest at a rate of 11.00 % per annum subject to a 1.00 % increase or decrease based on certain market conditions at the time drawn (the “Class B Notes”) and (ii) $ 400 million aggregate principal amount of 8.00 % senior secured notes due five years after the issue date (the “Backstop Notes”).

NCLC has the option to make up to two draws, consisting of (i) $ 250 million of senior secured notes due 2028 that, if issued, will accrue interest at a rate of 11.00 % per annum subject

to a 1.00 % increase or decrease based on certain market conditions at the time drawn (the “Class B Notes”) and (ii) $ 400 million aggregate principal amount of 8.00 % senior secured notes due five years after the issue date (the “Backstop Notes”).

The Class B Notes and the Backstop Notes are subject to a quarterly commitment fee of 0.75 % for so long as the commitments with respect to Class B Notes or the Backstop Notes, as applicable, are outstanding, which fee will be increased to 1.00 % if NCLC extends the commitments through February 2025 at its election.

1 unchanged sentence

In February 2023, in connection with the execution of the amended commitment letter, NCLC issued $ 250 million aggregate principal amount of 9.75 % senior secured notes due 2028 (the “Class A Notes” and, collectively with the Class B Notes and the Backstop Notes, the “Notes”), subject to an issue fee of 2.00 %.

NCLC will use the net proceeds from the Class A Notes for general corporate purposes.

NCLC used the net proceeds from the Class A Notes for general corporate purposes.

NCLC may redeem the Class A Notes at its option, in whole or in part, at any time and from time to time prior to February 22, 2025, at a “make-whole” redemption price, plus accrued and unpaid interest and additional amounts, if any, to, but excluding, the redemption date.

16 unchanged sentences

4 to the Senior Secured Credit Facility.

In April 2023, we took delivery of Oceania Cruises’ Vista.

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

The associated $ 632.6 million term loan bears interest at a fixed rate of 3.64 % with a maturity date of April 30, 2035.

Principal and interest payments are payable semiannually.

In May and June 2023, certain of NCLC’s export-credit backed facilities were amended to replace LIBOR with Term SOFR.

In connection with these amendments, the Company adopted Accounting Standards Update (“ASU”) No.

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

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.

As of June 30, 2023, we have applied certain optional expedients in our accounting for these amendments and the impact was immaterial.

Exchangeable Notes

The following is a summary of NCLC’s exchangeable notes as of March 31, 2023 (in thousands):

The following is a summary of NCLC’s exchangeable notes as of June 30, 2023 (in thousands):

Financing Fees

3 unchanged sentences

2027 2.5% Exchangeable Notes

(1) Classified within current portion of long-term debt as of June 30, 2023.

We expect that the holders of the 2024 Exchangeable Notes will exchange their 2024 Exchangeable Notes for shares.

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

Unamortized Debt

including Deferred

Financing Fees

5 unchanged sentences

Three Months Ended

Six Months Ended

Coupon interest

Amortization of deferred financing fees

As of March 31, 2023, the effective interest rate is 7.04 %, 5.97 %, 1.64 % and 3.06 % for the 2024 Exchangeable Notes, 2025 Exchangeable Notes, 2027 1.125% Exchangeable Notes and 2027 2.5% Exchangeable Notes, respectively.

As of June 30, 2023, the effective interest rate is 7.04 %, 5.97 %, 1.64 % and 3.06 % for the 2024 Exchangeable Notes, 2025 Exchangeable Notes, 2027 1.125% Exchangeable Notes and 2027 2.5% Exchangeable Notes, respectively.

Debt Repayments

The following are scheduled principal repayments on our long-term debt including exchangeable notes which can be settled in shares and finance lease obligations as of March 31, 2023 (in thousands):

The following are scheduled principal repayments on our long-term debt including exchangeable notes which can be settled in shares and finance lease obligations as of June 30, 2023 (in thousands):

Remainder of 2023

Debt Covenants

As of March 31, 2023, we were in compliance with all of our debt covenants.

As of June 30, 2023, 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.

14 unchanged sentences

If it is determined that the hedged forecasted transaction is no longer probable of occurring, then the amount recognized in accumulated other comprehensive income (loss) is released to earnings.

There are no amounts excluded from the assessment of hedge effectiveness, and there are no credit-risk-related contingent features in our derivative agreements.

There are no amounts excluded from the

assessment of hedge effectiveness, and there are no credit-risk-related contingent features in our derivative agreements.

We monitor concentrations of credit risk associated with financial and other institutions with which we conduct significant business.

1 unchanged sentence

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

As of March 31, 2023, we had fuel swaps, which are used to mitigate the financial impact of volatility of fuel prices pertaining to approximately 493 thousand metric tons of our projected fuel purchases, maturing through December 31, 2024 .

As of March 31, 2023, we had fuel swaps pertaining to approximately 8 thousand metric tons of our projected fuel purchases which were not designated as cash flow hedges maturing through December 31, 2023 .

As of March 31, 2023, 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.

As of June 30, 2023, we had fuel swaps, which are used to mitigate the financial impact of volatility of fuel prices pertaining to approximately 481 thousand metric tons of our projected fuel purchases, maturing through December 31, 2024 .

As of June 30, 2023, we had fuel swaps pertaining to approximately 11 thousand metric tons of our projected fuel purchases which were not designated as cash flow hedges maturing through December 31, 2023 .

As of June 30, 2023, we had foreign currency forward contracts 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 € 1.2 billion, or $ 1.3 billion based on the euro/U.S.

dollar exchange rate as of March 31, 2023.

dollar exchange rate as of June 30, 2023.

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

24 unchanged sentences

Our derivatives and financial instruments were categorized as Level 2 in the fair value hierarchy, and we had no derivatives or financial instruments categorized as Level 1 or Level 3.

Our derivative contracts include rights of offset with our counterparties.

Our derivative contracts include rights of offset

with our counterparties.

We have elected to net certain assets and liabilities within counterparties when the rights of offset exist.

1 unchanged sentence

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

March 31, 2023

June 30, 2023

December 31, 2022

13 unchanged sentences

(Loss) into Income (Expense)

March 31, 2023

March 31, 2022

March 31, 2023

March 31, 2022

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

Fuel contracts

3 unchanged sentences

Depreciation and amortization

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, 2023

June 30, 2022

June 30, 2023

June 30, 2022

Fuel contracts

Other income (expense), net

Foreign currency contracts

Depreciation and amortization

Interest rate contracts

2 unchanged sentences

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

Three Months Ended March 31, 2023

Three Months Ended March 31, 2022

Three Months Ended June 30, 2023

Three Months Ended June 30, 2022

( Expense), net

3 unchanged sentences

Foreign currency 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

Six Months Ended June 30, 2023

Six Months Ended June 30, 2022

( 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

2 unchanged sentences

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

Amount of Gain (Loss) Recognized in Income

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, 2023 and December 31, 2022, the fair value of our long-term debt, including the current portion, was $ 11.9 billion, which was $ 1.5 billion and $ 2.0 billion lower, respectively, than the carrying values, excluding deferred financing costs.

As of June 30, 2023 and December 31, 2022, the fair value of our long-term debt, including the current portion, was $ 12.2 billion and $ 11.9 billion, respectively, which was $ 1.2 billion and $ 2.0 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.

7 unchanged sentences

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, May 2021 and June 2022, the plan was amended and restated (the “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 could have been delivered pursuant to all awards granted under the plan was increased to a maximum aggregate limit of 39,375,106 shares.

In June 2023, 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 2,633,900 , resulting in an increase in the maximum aggregate limit to 42,009,006 shares.

Restricted Share Unit Awards

1 unchanged sentence

Additionally, in March 2023, NCLH granted 0.8 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 2025 and the satisfaction of an additional time-based vesting requirement that generally requires continued employment through March 1, 2026.

The following is a summary of restricted share unit activity for the three months ended March 31, 2023:

The following is a summary of restricted share unit activity for the six months ended June 30, 2023:

Average Grant

6 unchanged sentences

( 3,339,307 )

( 1,363,469 )

Forfeited or expired

Non-vested as of March 31, 2023

Non-vested as of June 30, 2023

Share Option Awards

The following table sets forth a summary of option activity under NCLH’s Restated 2013 Plan for the period presented:

Number of Share Option Awards

Weighted-Average Exercise Price

(in thousands)

Outstanding as of January 1, 2023

Forfeited and cancelled

Outstanding as of June 30, 2023

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

3 unchanged sentences

Ship Construction Contracts

For the Oceania Cruises brand, the first Allura Class Ship, Oceania Cruises’ Vista, at approximately 67,000 Gross Tons and with 1,200 Berths, was delivered in April 2023.

For the Norwegian brand, the second Prima Class Ship, Norwegian Viva, at approximately 143,500 Gross Tons and 3,100 Berths, was delivered in August 2023.

We refer you to Note 13 – “Subsequent Event” for additional information.

For the Norwegian brand, we have five Prima Class Ships on order, each ranging from approximately 143,500 to 169,000 Gross Tons with 3,100 or more Berths, with currently scheduled delivery dates from 2023 through 2028.

For the Norwegian brand, we have four Prima Class Ships on order, each ranging from approximately 156,300 to 169,000 Gross Tons with 3,450 or more Berths, with currently scheduled delivery dates from 2025 through 2028.

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.

2 unchanged sentences

These and other impacts could result in additional delays in ship deliveries in the future, which may be prolonged.

The combined contract prices of the eight ships on order for delivery, including Oceania Cruises’ Vista, as of March 31, 2023 was approximately € 7.0 billion, or $ 7.6 billion based on the euro/U.S.

dollar exchange rate as of March 31, 2023.

The combined contract prices of the seven ships on order for delivery, including Norwegian Viva, as of June 30, 2023 was approximately € 7.4 billion, or $ 8.1 billion based on the euro/U.S.

dollar exchange rate as of June 30, 2023.

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

1 unchanged sentence

However, if any such events were to occur, it could result in, among other things, the forfeiture of prior deposits or payments made by us and potential claims and impairment losses which may materially impact our business, financial condition and results of operations.

After giving effect to amendments for our ships on order subsequent to March 31, 2023, minimum annual payments for non-cancelable ship construction contracts with initial or remaining terms in excess of one year were as follows (in thousands):

Remainder of 2023

Total minimum annual payments

In connection with the increases in our ship construction contracts, our export-credit backed facilities were increased such that 80 % of the contract price and our related financing premiums are financed.

This financing includes increases in the Company’s export-credit agency backed commitments of approximately € 1.7 billion through 2028 to finance improvements, changes and modifications to certain newbuilds, owners’ supplies associated with preparing these ships to enter service and related financing premiums.

Investigations

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.

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.

The Company is cooperating with these ongoing investigations, the outcomes of which cannot be predicted at this time.

16 unchanged sentences

On April 12, 2023, the Company posted a sufficient supersedeas bond with the court to prevent any efforts by the plaintiff to collect on the judgment pending the appeal.

On June 30, 2023, the Company filed its opening appellate brief with the United States Court of Appeals for the Eleventh Circuit.

For the Havana Docks Matter, we believe that the likelihood of loss is reasonably possible but not probable at this time;

5 unchanged sentences

We are a party to a claim against a vendor which resulted in a verdict of approximately $ 159 million in favor of the Company in October 2022.

At this time, there can be no assurance that the Company will ultimately prevail in the final outcome of this claim as the vendor filed a notice of appeal and posted a bond with the court in February 2023.

No receivable has been recognized.

The court entered a final judgment of approximately that amount in February 2023.

Thereafter, the vendor posted a bond and appealed the judgment.

On July 12, 2023, the vendor filed its initial appellate brief.

At this time, there can be no assurance that the Company will ultimately prevail in the final outcome of this claim, and no receivable has been recognized by the Company.

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

1 unchanged sentence

Nonetheless, the ultimate outcome of these claims and lawsuits that are not covered by insurance cannot be determined at this time.

We have evaluated our overall exposure with respect to all of our threatened

and pending litigation and, to the extent required, we have accrued amounts for all estimable probable losses associated with our deemed exposure.

We have evaluated our overall exposure with respect to all of our threatened and pending litigation and, to the extent required, we have accrued amounts for all estimable probable losses associated with our deemed exposure.

We are currently unable to estimate any other potential losses beyond those accrued, as discovery is not complete nor is adequate information available to estimate such range of loss or potential recovery.

However, based on our current knowledge, we do not believe that the aggregate amount or range of reasonably possible losses with respect to these matters will be material to our consolidated results of operations, financial condition or cash flows.

However, based on our current knowledge, we do not believe that the aggregate amount or range of reasonably possible

losses with respect to these matters will be material to our consolidated results of operations, financial condition or cash flows.

We intend to vigorously defend our legal position on all claims and, to the extent necessary, seek recovery.

Other Contingencies

The Company also has agreements with its credit card processors that govern approximately $ 3.1 billion in advance ticket sales at March 31, 2023 that have been received by the Company relating to future voyages.

The Company also has agreements with its credit card processors that govern approximately $ 3.2 billion in advance ticket sales at June 30, 2023 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.

1 unchanged sentence

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

As of March 31, 2023, we had cash reserves of approximately $ 577.6 million with credit card processors, of which approximately $ 77.3 million is recognized in accounts receivable, net and approximately $ 500.3 million in other long-term assets.

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

As of June 30, 2023, we had cash reserves of approximately $ 31.5 million with credit card processors recognized in accounts receivable, net.

During the three months ended June 30, 2023, the Company received a return of cash collateral from one credit card processor of $ 500 million, which was previously classified as other long-term assets.

We may be required to pledge additional collateral and/or post additional cash reserves or take other actions in the future that may adversely affect our liquidity.

Other Income (Expense), Net

For the three months ended March 31, 2023, other income (expense), net consisted of expense of $ 9.0 million primarily due to losses on foreign currency remeasurements.

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

For the three and six months ended June 30, 2023, other income (expense), net consisted of expense of $ 8.0 million and $ 17.0 million, respectively, primarily due to losses on foreign currency remeasurements.

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.

Supplemental Cash Flow Information

For the three months ended March 31, 2023 and 2022, we had non-cash investing activities consisting of changes in accruals related to property and equipment of $ 53.4 million and $ 17.4 million, respectively.

For the six months ended June 30, 2023 and 2022, we had non-cash investing activities consisting of changes in accruals related to property and equipment of $ 49.4 million and $ 145.5 million, respectively.

Subsequent Event

In April 2023, we took delivery of Oceania Cruises’ Vista.

In August 2023, we took delivery of Norwegian Viva.

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

The associated $ 632.6 million term loan bears interest at a fixed rate of 3.64 % with a maturity date of April 30, 2035 .

The associated $ 1.1 billion term loan bears interest at a fixed rate of 2.77 % with a maturity date of August 3, 2035.

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