What changed in this filing

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Item 1. Financial Statements

2023-11-08 compared with 2023-08-08 · 165 added, 139 removed, 525 unchanged (37% of the section changed)

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Passenger ticket

28 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Net income (loss)

( 1,787,429 )

Other comprehensive loss:

Other comprehensive income (loss):

Shipboard Retirement Plan

Cash flow hedges:

Net unrealized loss

Net unrealized gain (loss)

Amount realized and reclassified into earnings

Total other comprehensive loss

Total other comprehensive income (loss)

Total comprehensive income (loss)

4 unchanged sentences

(in thousands, except share data)

September 30,

Current assets:

19 unchanged sentences

980,000,000 shares authorized;

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

425,424,934 shares issued and outstanding at September 30, 2023 and 421,413,565 shares issued and outstanding at December 31, 2022

Additional paid-in capital

9 unchanged sentences

(in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities

Net income (loss)

( 1,787,429 )

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

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

Depreciation and amortization expense

Loss on derivatives

(Gain) loss on derivatives

Loss on extinguishment of debt

12 unchanged sentences

Additions to property and equipment, net

( 2,102,698 )

( 1,628,442 )

Proceeds from maturities of short-term investments

1 unchanged sentence

Net cash used in investing activities

( 2,206,630 )

( 1,591,486 )

Cash flows from financing activities

7 unchanged sentences

Deferred financing fees

Net cash provided by (used in) financing activities

Net increase (decrease) in cash and cash equivalents

Net cash provided by financing activities

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of period

4 unchanged sentences

(in thousands)

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Comprehensive

1 unchanged sentence

Income (Loss)

Equity (Deficit)

Balance, March 31, 2023

Balance, June 30, 2023

( 7,139,520 )

1 unchanged sentence

Issuance of shares under employee related plans

Common share issuance for NCLC exchangeable notes

Net share settlement of restricted share units

Other comprehensive loss, net

Balance, June 30, 2023

Other comprehensive income, net

Balance, September 30, 2023

( 6,793,652 )

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Comprehensive

1 unchanged sentence

Income (Loss)

Equity (Deficit)

Balance, December 31, 2022

2 unchanged sentences

Issuance of shares under employee related plans

Common share issuance for NCLC exchangeable notes

Net share settlement of restricted share units

Other comprehensive loss, net

Balance, June 30, 2023

Other comprehensive income, net

Balance, September 30, 2023

( 6,793,652 )

3 unchanged sentences

(in thousands)

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Comprehensive

1 unchanged sentence

Income (Loss)

Equity (Deficit)

Balance, March 31, 2022

Balance, June 30, 2022

( 6,288,441 )

Share-based compensation

Issuance of shares under employee related plans

Net share settlement of restricted share units

Other comprehensive loss, net

Balance, June 30, 2022

Balance, September 30, 2022

( 6,583,835 )

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Comprehensive

1 unchanged sentence

Income (Loss)

Equity (Deficit)

Balance, December 31, 2021

6 unchanged sentences

( 1,787,429 )

Balance, June 30, 2022

Balance, September 30, 2022

( 6,583,835 )

9 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, 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

As of September 30, 2023, we had 31 ships with approximately 66,000 Berths and had orders for six additional ships to be delivered through 2028.

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

3 unchanged sentences

Summary of Significant Accounting Policies

Liquidity and Management’s Plan

Due to the impact of COVID-19, in March 2020, the Company implemented a voluntary suspension of all cruise voyages across its three brands.

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 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.

We have made reasonable estimates and judgments of the impact of these events within our financial statements;

however, there may be material changes to those estimates in future periods.

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 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”).

As of September 30, 2023, we had liquidity of approximately $ 2.2 billion, including cash and cash equivalents of $ 681.6 million and borrowings available under our $ 875 million undrawn Revolving Loan Facility and $ 650 million undrawn commitment of Class B Notes and Backstop Notes issuable by NCLC less related fees (see Note 7 – “Long-Term Debt”).

Additionally, in October 2023, we increased our Revolving Loan Facility to $ 1.2 billion (see Note 7 – “Long-Term Debt”).

We believe that we have sufficient liquidity to fund our obligations and expect to remain in compliance with our financial covenants for at least the next twelve months from the issuance of these financial statements.

We will continue to pursue various opportunities to refinance future debt maturities to reduce interest expense and/or to extend the maturity dates associated with our existing indebtedness and obtain relevant financial covenant amendments or waivers, if needed.

Basis of Presentation

9 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Net income (loss) - Basic EPS

8 unchanged sentences

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.

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

During the three months ended September 30, 2023, each of the exchangeable notes was dilutive.

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

For the three months ended September 30, 2023 and 2022, a total of 3.8 million and 96.3 million shares, respectively, and for the nine months ended September 30, 2023 and 2022, a total of 54.4 million and 93.5 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 $ 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.

We recognized gains of $ 15.7 million and $ 34.7 million for the three months ended September 30, 2023 and 2022, respectively, and a loss of $ 4.2 million and a gain of $ 79.4 million for the nine months ended September 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.

3 unchanged sentences

Accounts Receivable, Net

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.

Accounts receivable, net included $ 42.0 million and $ 118.4 million due from credit card processors as of September 30, 2023 and December 31, 2022, respectively.

Revenue Recognition

3 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

North America

14 unchanged sentences

Receivables from customers are included within accounts receivable, net.

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.

As of September 30, 2023 and December 31, 2022, our receivables from customers were $ 91.0 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.

3 unchanged sentences

Our contract liabilities are included within advance ticket sales.

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.

As of September 30, 2023 and December 31, 2022, our contract liabilities were $ 2.1 billion and $ 1.7 billion, respectively.

Of the amounts included within contract liabilities as of September 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 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.

For the nine months ended September 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

June 30, 2023

September 30, 2023

December 31, 2022

7 unchanged sentences

Accumulated Other Comprehensive Income (Loss)

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

Six Months Ended June 30, 2023

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

Nine Months Ended September 30, 2023

Comprehensive

1 unchanged sentence

Accumulated other comprehensive income (loss) at beginning of period

Current period other comprehensive loss before reclassifications

Current period other comprehensive income before reclassifications

Amounts reclassified into earnings

Accumulated other comprehensive income (loss) at end of period

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

Six Months Ended June 30, 2022

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

Nine Months Ended September 30, 2022

Comprehensive

6 unchanged sentences

(2) Amortization of prior-service cost and actuarial loss reclassified to other income (expense), net.

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

(3) Includes $ 24.3 million of gains 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.

Property and equipment, net increased $ 1.5 billion for the nine months ended September 30, 2023 primarily due to the delivery of Norwegian Viva, a Prima Class Ship, and Oceania Cruises’ Vista, an Allura Class Ship.

We determine the weighted average useful lives of each class of 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 of 35 years and residual value of 10 % to the Allura Class Ships.

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.

We refer you to our Annual Report on Form 10-K for a discussion of the useful life and residual value assigned to Prima Class Ships.

Long-Term Debt

In February 2023, NCLC issued $ 600.0 million aggregate principal amount of 8.375 % senior secured notes due 2028 (the “2028 Senior Secured Notes”).

The 2028 Senior Secured Notes and related guarantees are secured by first-priority interests in, among other things and subject to certain agreed security principles, thirteen of our vessels that also secure the Senior Secured Credit Facility.

The 2028 Senior Secured Notes and related guarantees are secured by first-priority interests in, among other things and subject to certain agreed security principles, fourteen of our vessels that also secure the Sixth ARCA and 2029 Senior Secured Notes (each as defined below).

The 2028 Senior Secured Notes are guaranteed by our subsidiaries that own the vessels that secure the 2028 Senior Secured Notes.

4 unchanged sentences

The proceeds from the 2028 Senior Secured Notes were used to repay the loans outstanding under our Term Loan A Facility that otherwise would have become due in January 2024, including to pay any accrued and unpaid interest thereon, as well as related premiums, fees and expenses.

As a result, all of the remaining term loans outstanding under our Term Loan A Facility will mature in January 2025, subject to, if a one-time minimum liquidity threshold is not satisfied on September 16, 2024, a springing maturity date of September 16, 2024.

The indenture governing the 2028 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;

8 unchanged sentences

In February 2023, the Commitment Parties further amended the commitment letter (the “amended commitment letter”) to extend certain commitments thereunder through February 2024, with an option for NCLC to further extend such commitments through February 2025 at its election.

We may extend or replace the commitments in or before February 2024.

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.

15 unchanged sentences

In February 2023, NCLC entered into a Backstop Agreement with Morgan Stanley & Co.

LLC (“MS”), pursuant to which MS has agreed to provide backstop committed financing to refinance and/or repay in whole or in part amounts outstanding under the Senior Secured Credit Facility.

Pursuant to the Backstop Agreement, we may, at our sole option, issue and sell to MS (subject to the satisfaction of certain conditions) five-year senior unsecured notes up to an aggregate principal amount sufficient to generate gross proceeds of $ 300 million at any time between October 4, 2023 and January 2, 2024.

LLC (“MS”), pursuant to which MS agreed to provide backstop committed financing to refinance and/or repay in whole or in part amounts outstanding under the Senior Secured Credit Facility.

Pursuant to the Backstop Agreement, we could, at our sole option, issue and sell to MS (subject to the satisfaction of certain conditions) five-year senior unsecured notes up to an aggregate principal amount sufficient to generate gross proceeds of $ 300 million at any time between October 4, 2023 and January 2, 2024.

As a result of the refinancing of the Senior Secured Credit Facility in October 2023 (discussed below), the backstop committed financing is no longer applicable.

In April 2023, $ 82.5 million in aggregate principal amount of the Revolving Loan Facility due January 2024 was assigned to a new lender, and the maturity date was extended by one year to January 2025.

The terms of the assigned principal are the same as the existing lenders who extended commitments in December 2022 under Amendment No.

The terms of the assigned principal were the same as the existing lenders who extended commitments in December 2022 under Amendment No.

4 to the Senior Secured Credit Facility.

10 unchanged sentences

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

In August 2023, we took delivery of Norwegian Viva.

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 2.77 % with a maturity date of August 3, 2035.

Principal and interest payments are payable semiannually.

In October 2023, NCLC issued $ 790.0 million aggregate principal amount of senior secured notes due 2029 (the “2029 Senior Secured Notes”).

The 2029 Senior Secured Notes and related guarantees are secured by first-priority interests in, among other things and subject to certain agreed security principles, fourteen of our vessels that also secure the Sixth ARCA (as defined below) and the 2028 Senior Secured Notes.

The 2029 Senior Secured Notes are guaranteed by our subsidiaries that own the vessels that secure the 2029 Senior Secured Notes.

NCLC may redeem the 2029 Senior Secured Notes at its option, in whole or in part, at any time and from time to time prior to January 15, 2026, at a “make-whole” redemption price, plus accrued and unpaid interest and additional amounts, if any, to, but excluding, the redemption date.

NCLC may redeem the 2029 Senior Secured Notes at its option, in whole or in part, at any time and from time to time on or after January 15, 2026, at the redemption prices set forth in the indenture governing the 2029 Senior Secured Notes 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 January 15, 2026, NCLC may choose to redeem up to 40 % of the aggregate principal amount of the 2029 Senior Secured Notes with the net proceeds of certain equity offerings, subject to certain restrictions, at a redemption price equal to 108.125 % of the principal amount of the 2029 Senior Secured 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 Senior Secured Notes issued remains outstanding following such redemption.

The 2029 Senior Secured Notes pay interest at 8.125 % per annum, semiannually on January 15 and July 15 of each year, commencing on July 15, 2024, to holders of record at the close of business on the immediately preceding January 1 and July 1, respectively.

NCLC used the net proceeds from the 2029 Senior Secured Notes offering, together with cash on hand, to repay the Term Loan A Facility, which would have matured in January 2025, including to pay any accrued and unpaid interest thereon, as well as related premiums, fees and expenses.

The indenture governing the 2029 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.

In October 2023, NCLC amended and restated the Senior Secured Credit Facility (the “Sixth ARCA”).

The Sixth ARCA, among other things, increased the aggregate amount of the Revolving Loan Facility from $ 875 million to $ 1.2 billion.

The Sixth ARCA and related guarantees are secured by first-priority interests in, among other things and subject to certain agreed security principles, fourteen of our vessels that also secure the 2028 Senior Secured Notes and 2029 Senior Secured Notes.

The commitments and any loans under the Revolving Loan Facility mature on October 18, 2026, provided that (a) if, on September 16, 2024, NCLC’s 3.625 % senior notes due 2024 have not been repaid or refinanced with indebtedness maturing after January 16, 2027 and a liquidity test is not satisfied, the maturity date will be September 16, 2024, (b) if, on May 2, 2025, NCLC’s 2025 Exchangeable Notes have not been repaid or refinanced with indebtedness maturing after January 16, 2027 and a liquidity test is not satisfied, the maturity date will be May 2, 2025, and (c) if, on December 15, 2025, more than $ 300 million of NCLC’s 5.875 % senior notes due 2026 remain outstanding and the remainder has not been repaid or refinanced with indebtedness maturing after January 16, 2027, the maturity date will be December 15, 2025.

The Revolving Loan Facility will accrue interest (x) in the case of alternate base rate loans, at a per annum rate based on an alternate base rate plus a margin of between 0.00 % and 1.25 % and (y) in the case of term benchmark loans, at a per annum rate based on the adjusted term Secured Overnight Financing Rate plus a margin of between 1.00 % and 2.25 %.

The Revolving Loan Facility commitments will accrue an unused commitment fee

on the amount of available unused commitments at a rate of between 0.15 % and 0.30 %.

The applicable margin and unused commitment fee will depend on the total leverage ratio as of the applicable date.

The Sixth ARCA also (a) increased the basket for Permitted Additional Debt (as defined in the Sixth ARCA) and increased the amount of such additional debt that may be secured on assets that are not collateral and (b) extended certain financial covenants through the amended maturity date.

As described above, NCLC used the net proceeds from the 2029 Senior Secured Notes offering, together with cash on hand, to repay all of the Term Loan A Facility, including to pay any accrued and unpaid interest thereon, as well as related premiums, fees and expenses.

No term loans are outstanding under the Sixth ARCA.

Exchangeable Notes

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

The following is a summary of NCLC’s exchangeable notes as of September 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.

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

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

7 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Coupon interest

Amortization of deferred financing fees

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.

As of September 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 June 30, 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 September 30, 2023 (in thousands):

Remainder of 2023

Debt Covenants

As of June 30, 2023, we were in compliance with all of our debt covenants.

As of September 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.

19 unchanged sentences

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

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 June 30, 2023.

As of September 30, 2023, we had fuel swaps, which are used to mitigate the financial impact of volatility of fuel prices pertaining to approximately 345 thousand metric tons of our projected fuel purchases, maturing through December 31, 2024 .

As of September 30, 2023, we had fuel swaps pertaining to approximately 10 thousand metric tons of our projected fuel purchases which were not designated as cash flow hedges maturing through March 31, 2024 .

As of September 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 € 438.8 million, or $ 463.9 million based on the euro/U.S.

dollar exchange rate as of September 30, 2023.

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

3 unchanged sentences

Other long-term assets

Accrued expenses and other liabilities

Other long-term liabilities

Foreign currency contracts

6 unchanged sentences

Other long-term assets

Accrued expenses and other liabilities

Total derivatives not designated as hedging instruments

7 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):

June 30, 2023

September 30, 2023

December 31, 2022

13 unchanged sentences

(Loss) into Income (Expense)

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

September 30, 2023

September 30, 2022

September 30, 2023

September 30, 2022

Fuel contracts

17 unchanged sentences

(Loss) into Income (Expense)

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

September 30, 2023

September 30, 2022

September 30, 2023

September 30, 2022

Fuel contracts

7 unchanged sentences

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

Three Months Ended June 30, 2023

Three Months Ended June 30, 2022

Three Months Ended September 30, 2023

Three Months Ended September 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

4 unchanged sentences

Fuel contracts

Six Months Ended June 30, 2023

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2023

Nine Months Ended September 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

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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, 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.

As of September 30, 2023 and December 31, 2022, the fair value of our long-term debt, including the current portion, was $ 12.7 billion and $ 11.9 billion, respectively, which was $ 1.5 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.

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In March 2023, NCLH granted 5.8 million time-based restricted share unit awards to our employees, which primarily vest in substantially equal installments over three years .

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 six months ended June 30, 2023:

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 nine months ended September 30, 2023:

Average Grant

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Forfeited or expired

Non-vested as of June 30, 2023

Non-vested as of September 30, 2023

Share Option Awards

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Forfeited and cancelled

Outstanding as of June 30, 2023

Outstanding as of September 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

Nine Months Ended

September 30,

Payroll and related expense

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Ship Construction Contracts

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 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.

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For the Oceania Cruises brand, we have an order for one additional Allura Class Ship to be delivered in 2025, which 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), Russia’s ongoing invasion of Ukraine, initiatives to improve environmental sustainability and modifications the Company plans to make to its newbuilds and/or other macroeconomic events have resulted in delays in expected ship deliveries.

The impacts of initiatives to improve environmental sustainability and modifications the Company plans to make to its newbuilds and/or other macroeconomic conditions and events have resulted in delays in expected ship deliveries.

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 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.

The combined contract prices, including amendments and change orders, of the six ships on order for delivery as of September 30, 2023 was approximately € 6.3 billion, or $ 6.7 billion based on the euro/U.S.

dollar exchange rate as of September 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.

We do not anticipate any contractual breaches or cancellations to occur.

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.

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.

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.

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

On September 29, 2023, the plaintiff filed its answering brief responding to the Company’s opening brief in the Eleventh Circuit.

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

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

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

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

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.

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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 $ 3.2 billion in advance ticket sales at June 30, 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 $ 2.8 billion in advance ticket sales at September 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 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.

As of September 30, 2023, we had cash reserves of approximately $ 42.0 million with credit card processors recognized in accounts receivable, net.

During the nine months ended September 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 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.

For the three and nine months ended September 30, 2023, other income (expense), net consisted of income of $ 12.1 million and losses of $ 4.9 million, respectively, primarily due to net gains and losses on foreign currency remeasurements.

For the three and nine months ended September 30, 2022, other income (expense), net consisted of income of $ 31.5 million and $ 100.6 million, respectively, primarily due to gains on foreign currency remeasurements.

Supplemental Cash Flow Information

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 August 2023, we took delivery of Norwegian Viva.

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 2.77 % with a maturity date of August 3, 2035.

Principal and interest payments are payable semiannually.

For the nine months ended September 30, 2023 and 2022, we had non-cash investing activities consisting of changes in accruals related to property and equipment of $ 57.0 million and $ 101.7 million, respectively.

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