What changed in this filing

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Item 1. Financial Statements

2024-05-07 compared with 2023-11-08 · 118 added, 316 removed, 374 unchanged (54% of the section changed)

4 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Passenger ticket

10 unchanged sentences

Total other operating expense

Operating income (loss)

( 1,270,788 )

Operating income

Non-operating income (expense)

3 unchanged sentences

Net income (loss) before income taxes

( 1,794,608 )

Income tax benefit (expense)

Net income (loss)

( 1,787,429 )

Weighted-average shares outstanding

5 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Net income (loss)

( 1,787,429 )

Other comprehensive income (loss):

5 unchanged sentences

Total comprehensive income (loss)

( 2,106,845 )

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

2 unchanged sentences

(in thousands, except share data)

September 30,

Current assets:

19 unchanged sentences

980,000,000 shares authorized;

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

429,025,827 shares issued and outstanding at March 31, 2024 and 425,546,570 shares issued and outstanding at December 31, 2023

Additional paid-in capital

9 unchanged sentences

(in thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities

Net income (loss)

( 1,787,429 )

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

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

Depreciation and amortization expense

11 unchanged sentences

Advance ticket sales

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Cash flows from investing activities

Additions to property and equipment, net

( 2,102,698 )

( 1,628,442 )

Proceeds from maturities of short-term investments

Cash paid on settlement of derivatives

Net cash used in investing activities

( 2,206,630 )

( 1,591,486 )

Cash flows from financing activities

1 unchanged sentence

( 1,821,412 )

( 1,465,439 )

Proceeds from long-term debt

3 unchanged sentences

Deferred financing fees

Net cash provided by financing activities

Net decrease in cash and cash equivalents

Net cash used in financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

2 unchanged sentences

Norwegian Cruise Line Holdings Ltd.

Consolidated Statements of Changes in Shareholders’ Equity

Consolidated Statements of Changes in Shareholders’ Equity (Deficit)

(in thousands)

Three Months Ended September 30, 2023

Comprehensive

Shareholders’

Income (Loss)

Balance, June 30, 2023

( 7,139,520 )

Share-based compensation

Issuance of shares under employee related plans

Common share issuance for NCLC exchangeable notes

Net share settlement of restricted share units

Other comprehensive income, net

Balance, September 30, 2023

( 6,793,652 )

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Comprehensive

1 unchanged sentence

Income (Loss)

Equity (Deficit)

Balance, December 31, 2023

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 income, net

Balance, September 30, 2023

( 6,793,652 )

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 September 30, 2022

Comprehensive

Shareholders’

Income (Loss)

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, September 30, 2022

Balance, March 31, 2024

( 6,882,784 )

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Comprehensive

1 unchanged sentence

Income (Loss)

Equity (Deficit)

Balance, December 31, 2022

4 unchanged sentences

Other comprehensive loss, net

( 1,787,429 )

Balance, September 30, 2022

Balance, March 31, 2023

( 7,225,636 )

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 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.

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

We have one Allura Class Ship on order for delivery in 2025.

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

As of March 31, 2024, we had 32 ships with approximately 66,400 Berths and had orders for five additional ships to be delivered through 2028.

As of March 31, 2024, we had four Prima Class Ships on order with currently scheduled delivery dates from 2025 through 2028, and we had one Allura Class Ship on order for delivery in 2025.

Subsequent to March 31, 2024, we announced anticipated additional newbuilds for our fleet.

Summary of Significant Accounting Policies

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”).

As of March 31, 2024, we had liquidity of approximately $ 2.4 billion, including cash and cash equivalents of $ 559.8 million and borrowings available under our $ 1.2 billion undrawn Revolving Loan Facility and $ 650 million undrawn commitment of senior unsecured notes issuable by NCLC less related fees (see Note 6 – “Long-Term Debt”).

Additionally, in April 2024, a € 200 million commitment became available that can be used for future newbuild payments (see Note 6 – “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.

4 unchanged sentences

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

however, our cruise voyages were completely suspended from March 2020 until July 2021 due to the COVID-19 pandemic and our resumption of cruise voyages was phased in gradually through May 2022.

The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2023, which are included in our most recent Annual Report on Form 10-K filed with the SEC on February 28, 2024.

4 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Net income (loss) - Basic EPS

( 1,787,429 )

Effect of dilutive securities - exchangeable notes

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

( 1,787,429 )

Basic weighted-average shares outstanding

Dilutive effect of share awards

Dilutive effect of exchangeable notes

Diluted weighted-average shares outstanding

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

Each exchangeable note (see Note 6 – “Long-Term Debt”) is individually evaluated for its dilutive or anti-dilutive impact on EPS as determined under the if-converted method.

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.

During the three months ended March 31, 2024 and 2023, each of the exchangeable notes was anti-dilutive.

Share awards are evaluated for a dilutive or anti-dilutive impact on EPS using the treasury stock method.

For the three months ended March 31, 2024 and 2023, a total of 91.1 million and 89.4 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 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.

We recognized a gain of $ 13.3 million and a loss of $ 8.7 million for the three months ended March 31, 2024 and 2023, 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 $ 42.0 million and $ 118.4 million due from credit card processors as of September 30, 2023 and December 31, 2022, respectively.

Accounts receivable, net included $ 19.8 million and $ 20.1 million due from credit card processors as of March 31, 2024 and December 31, 2023, respectively.

Recently Issued Accounting Guidance

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which aims to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

ASU 2023-07 includes additional disclosures on an interim and annual basis and requires that the disclosures be applied to public entities that have a single reportable segment.

These provisions are effective for fiscal years beginning after December 15, 2023 and interim periods after December 15, 2024.

ASU 2023-07 shall be applied retrospectively unless it

is impracticable to do so.

We are evaluating the impact of ASU 2023-07 on our notes to the consolidated financial statements.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which requires improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information as well as certain other amendments to improve the effectiveness of income tax disclosures.

The amendments in this update are effective for annual periods beginning after December 15, 2024 and should be applied on a prospective basis.

We are evaluating the impact of ASU 2023-09 on our notes to the consolidated financial statements.

Revenue Recognition

3 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

North America

14 unchanged sentences

Receivables from customers are included within accounts receivable, net.

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.

As of March 31, 2024 and December 31, 2023, our receivables from customers were $ 131.8 million and $ 126.4 million, respectively, primarily related to in-transit credit card receivables.

Future cruise credits that have been issued as face value reimbursement for cancelled bookings due to COVID-19 are approximately $ 66.0 million.

2 unchanged sentences

Our contract liabilities are included within advance ticket sales.

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.

As of March 31, 2024 and December 31, 2023, our contract liabilities were $ 2.7 billion and $ 2.2 billion, respectively.

Of the amounts included within contract liabilities as of March 31, 2024, approximately 45 % 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.

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.

For the three months ended March 31, 2024, $ 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

September 30, 2023

March 31, 2024

December 31, 2023

7 unchanged sentences

Accumulated Other Comprehensive Income (Loss)

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

Nine Months Ended September 30, 2023

Accumulated other comprehensive income (loss) for the three months ended March 31, 2024 was as follows (in thousands):

Three Months Ended March 31, 2024

Comprehensive

4 unchanged sentences

Accumulated other comprehensive income (loss) at end of period

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

Nine Months Ended September 30, 2022

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

Three Months Ended March 31, 2023

Comprehensive

1 unchanged sentence

Accumulated other comprehensive income (loss) at beginning of period

Current period other comprehensive income (loss) before reclassifications

Current period other comprehensive loss before reclassifications

Amounts reclassified into earnings

3 unchanged sentences

(3) Includes $ 6.6 million of gains expected to be reclassified into earnings in the next 12 months.

Property and Equipment, Net

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, 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.

NCLC may redeem the 2028 Senior Secured Notes at its option, in whole or in part, at any time and from time to time prior to February 1, 2025, 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 2028 Senior Secured Notes at its option, in whole or in part, at any time and from time to time on or after February 1, 2025, at the redemption prices set forth in the indenture governing the 2028 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 February 1, 2025, NCLC may choose to redeem up to 40 % of the aggregate principal amount of the 2028 Senior Secured Notes with the net proceeds of certain equity offerings, subject to certain restrictions, at a redemption price equal to 108.375 % of the principal amount of the 2028 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 2028 Senior Secured Notes issued remains outstanding following such redemption.

The 2028 Senior Secured Notes pay interest at 8.375 % per annum, semiannually on February 1 and August 1 of each year, to holders of record at the close of business on the immediately preceding January 15 and July 15, respectively.

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.

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;

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

The commitment letter, among other things, extended the commitments thereunder through March 31, 2023.

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”).

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.

If drawn, the Class B Notes will be subject to an issue fee of 2.00 %, and the Backstop Notes will be subject to a quarterly duration fee of 1.50 %, as well as an issue fee of 3.00 % .

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 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.

NCLC may redeem the Class A Notes at its option, in whole or in part, at any time and from time to time on or after February 22, 2025, at the redemption prices set forth in the indenture governing the Class A Notes, plus accrued and unpaid interest and additional amounts, if any, to, but excluding, the redemption date.

The Class A Notes pay interest at 9.75 % per annum, quarterly on February 15, May 15, August 15 and November 15 of each year, to holders of record at the close of business on the immediately preceding February 1, May 1, August 1 and November 1, respectively.

The Class A Notes are, and the Class B Notes and the Backstop Notes, if issued, 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 Class A Notes are, and the Class B Notes and the Backstop Notes, if issued, will be, guaranteed by our subsidiaries that own the property that secures the Notes as well as certain additional subsidiaries whose assets do not secure the Notes.

The indenture governing the Class A 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 February 2023, NCLC entered into a Backstop Agreement with Morgan Stanley & Co.

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 were the same as the existing lenders who extended commitments in December 2022 under Amendment No.

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):

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.

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.

In February 2024, NCLC and the purchasers named therein (collectively, the “Commitment Parties”) entered into a third amended and restated commitment letter (the “third amended commitment letter”), which became effective in March 2024.

The third amended commitment letter amended and restated the commitment letter dated February 22, 2023 and extended the commitments thereunder through March 2025.

Pursuant to the third amended commitment letter, the Commitment Parties have agreed to purchase from NCLC an aggregate principal amount of $ 650 million of senior unsecured notes due five years after the issue date (the “Commitment Notes”) at NCLC’s option.

If issued, the Commitment Notes will be subject to an issue fee of 0.50 % and will bear interest at a rate per annum equal to (A) the greater of (i) the interest rate of the 7.75 % senior notes due 2029 (“2029 Unsecured Notes”) and (ii) the then-current secondary trading yield applicable to the 2029 Unsecured Notes plus (B) 200 basis points.

The Commitment Notes are subject to a one-time structuring fee of 0.50 % and a quarterly commitment fee of 0.75 % for so long as the commitments with respect to the Commitment Notes are outstanding.

In connection with the execution of the third amended commitment letter, NCLC agreed to repurchase all of the outstanding $ 250 million aggregate principal amount of 9.75 % senior secured notes due 2028 (the “2028 Secured Notes”) at a negotiated premium plus accrued and unpaid interest thereon.

In March 2024, in connection with the settlement of the repurchase, the aggregate principal amount outstanding under the 2028 Secured Notes was cancelled while also releasing the related collateral.

The loss on extinguishment was $ 29.0 million, recognized in interest expense, net.

In November 2023, we executed an agreement for a commitment of € 200 million in connection with financial support for our newbuilds, which became available in April 2024.

The commitment if drawn will pay interest quarterly at a rate per annum based on an applicable margin plus Euribor 3-months.

The commitment may be drawn at any time and is payable within 364 days , but no later than July 15, 2025.

Any amount repaid prior to July 15, 2025 may be drawn again.

Exchangeable Notes

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

The following is a summary of NCLC’s exchangeable notes as of March 31, 2024 (in thousands):

Financing Fees

3 unchanged sentences

2027 2.5% Exchangeable Notes

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

(1) Classified within current portion of long-term debt as of March 31, 2024.

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

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2027 2.5% Exchangeable Notes

(1) Classified within current portion of long-term debt as of December 31, 2023.

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

The following provides a summary of the interest expense of NCLC’s exchangeable notes (in thousands):

Three Months Ended

Nine Months Ended

September 30,

Coupon interest

Amortization of deferred financing fees

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.

As of March 31, 2024, 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 September 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 March 31, 2024 (in thousands):

Remainder of 2024

Debt Covenants

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

As of March 31, 2024, 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.

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Fair value is defined as the price at which an orderly transaction to sell an asset or to transfer a liability would take place between market participants at the measurement date under current market conditions (that is, an exit price at the measurement date from the perspective of a market participant that holds the asset or owes the liability).

Derivatives are generally recorded at fair value.

Contracts that are designated as normal purchases and normal sales are not recorded at fair value.

The normal purchases and normal sales exception requires, among other things, physical delivery in quantities expected to be used or sold over a reasonable period in the normal course of business.

All of our allowance purchase agreements related to the European Union’s Emissions Trading System meet the criteria specified for this exception.

Fair Value Hierarchy

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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.

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

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.

As of March 31, 2024, we had fuel swaps, which are used to mitigate the financial impact of volatility of fuel prices pertaining to approximately 630 thousand metric tons of our projected fuel purchases, maturing through December 31, 2025 .

As of March 31, 2024, we had fuel swaps pertaining to approximately 4 thousand metric tons of our projected fuel purchases which were not designated as cash flow hedges maturing through December 31, 2024 .

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

September 30,

Balance Sheet Location

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Other long-term assets

Foreign currency contracts

Prepaid expenses and other assets

Accrued expenses and other liabilities

Other long-term liabilities

Total derivatives designated as hedging instruments

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Prepaid expenses and other assets

Other long-term assets

Accrued expenses and other liabilities

Other long-term liabilities

Total derivatives not designated as hedging instruments

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

September 30, 2023

March 31, 2024

December 31, 2023

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(Loss) into Income (Expense)

September 30, 2023

September 30, 2022

September 30, 2023

September 30, 2022

Fuel contracts

Other income (expense), net

Foreign currency contracts

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)

September 30, 2023

September 30, 2022

September 30, 2023

September 30, 2022

March 31, 2024

March 31, 2023

March 31, 2024

March 31, 2023

Fuel contracts

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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 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

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

Fuel contracts

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

Nine Months Ended September 30, 2023

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2024

Three Months Ended March 31, 2023

( Expense), net

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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

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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

Nine Months Ended

September 30,

Location of Gain (Loss)

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Other income (expense), net

Foreign currency contracts

Other income (expense), net

Long-Term Debt

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.

As of March 31, 2024 and December 31, 2023, the fair value of our long-term debt, including the current portion, was $ 13.3 billion and $ 13.5 billion, respectively, which was $ 0.8 billion and $ 0.9 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, 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

In March 2024, NCLH granted 4.5 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 nine months ended September 30, 2023:

Average Grant

Additionally, in March 2024, NCLH granted 0.9 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 2026 and the satisfaction of an additional time-based vesting requirement that generally requires continued employment through March 1, 2027.

The following is a summary of restricted share unit activity for the three months ended March 31, 2024:

Average Grant

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Date Fair Value

Non-vested as of January 1, 2024

( 4,288,932 )

( 1,363,469 )

Forfeited or expired

Non-vested as of September 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 September 30, 2023

Non-vested as of March 31, 2024

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

Three Months Ended

Nine Months Ended

September 30,

Payroll and related expense

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Ship Construction Contracts

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.

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.

As of March 31, 2024, for the Norwegian brand, we had four Prima Class Ships on order, each ranging from approximately 156,000 to 169,000 Gross Tons with 3,550 to 3,850 Berths, with currently scheduled delivery dates from 2025 through 2028.

As of March 31, 2024, for the Oceania Cruises brand, we had an order for one additional Allura Class Ship to be delivered in 2025, which will be approximately 68,000 Gross Tons and 1,250 Berths.

Subsequent to March 31, 2024, we announced anticipated additional newbuilds for our fleet.

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, 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.

The combined contract prices, including amendments and change orders, of the five ships on order for delivery as of March 31, 2024 was approximately € 5.8 billion, or $ 6.3 billion based on the euro/U.S.

dollar exchange rate as of March 31, 2024.

The combined contract prices of the six new ships with contracts that became effective subsequent to March 31, 2024 (which includes two ships on order for Oceania Cruises, which were scheduled for delivery in 2030 and 2031, respectively, but are expected to be cancelled, and excludes orders for four Norwegian Cruise Line ships, which are not yet effective) was approximately € 5.3 billion, or $ 5.7 billion based on the euro/U.S.

dollar exchange rate as of March 31, 2024.

If the two ships on order for Oceania Cruises are cancelled, there will be incremental corresponding adjustments to the purchase price of other applicable newbuilds not to exceed € 51 million.

For ships on order as of March 31, 2024 and for four of the six ships effective subsequent to March 31, 2024, we have obtained export credit financing which is expected to fund approximately 80 % of the contract price of each ship as well as related financing premiums, subject to certain conditions.

We do not anticipate any contractual breaches or cancellations to occur, except

as noted above.

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.

Taking into account the six new ship orders with contracts that became effective subsequent to March 31, 2024 (which includes two ships on order for Oceania Cruises that are expected to be cancelled, and excludes orders for four Norwegian Cruise Line ships, which are not yet effective), our minimum annual payments for ship construction contracts, which include non-cancelable contracts or contracts that are cancelable when a replacement agreement is signed with the same party, are as follows (in thousands):

Remainder of 2024

Total minimum annual payments

The above presentation reflects the contractual delivery date in the fourth quarter of 2028 of the second Oceania Cruises ship announced subsequent to March 31, 2024.

However, it is expected that this delivery date may be moved to early 2029.

Investigations

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Helms-Burton Act

On August 27, 2019, two lawsuits were filed against Norwegian Cruise Line Holdings Ltd.

On August 27, 2019, a lawsuit was filed against Norwegian Cruise Line Holdings Ltd.

in the United States District Court for the Southern District of Florida under Title III of the Cuban Liberty and Solidarity (Libertad) Act of 1996, also known as the Helms-Burton Act.

The complaint filed by Javier Garcia-Bengochea (the “Garcia-Bengochea Matter”) alleges that he holds an interest in the Port of Santiago, Cuba, and the complaint filed by Havana Docks Corporation (the “Havana Docks Matter”) alleges it holds an interest in the Havana Cruise Port Terminal, both of which were expropriated by the Cuban Government.

The complaints further allege that the Company “trafficked” in those properties by embarking and disembarking passengers at these facilities, as well as profiting from the Cuban Government’s possession of the property.

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

On September 1, 2020, the district 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, in which the district court granted another cruise line defendant judgment on the pleadings.

As to the appeal in the related case, in November 2022, the Eleventh Circuit issued an opinion affirming the dismissal and, on February 8, 2023, issued its mandate to the district court.

After the April 10, 2023 deadline for filing a petition for certiorari with the U.S.

Supreme Court passed in the related appeals with the plaintiff taking no action there, on April 19, 2023, the plaintiff voluntarily dismissed with prejudice the action against the Company.

In the Havana Docks Matter, after various motions challenging the sufficiency of plaintiff’s complaint were resolved and voluminous discovery was completed, both sides filed motions for summary judgment.

The complaint, filed by Havana Docks Corporation (the “Havana Docks Matter”), alleges it holds an interest in the Havana Cruise Port Terminal, which was expropriated by the Cuban Government.

The complaint further alleges that the Company “trafficked” in the property by embarking and disembarking passengers at the facility, as well as profiting from the Cuban Government’s possession of the property.

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

After various motions challenging the sufficiency of plaintiff’s complaint were resolved and voluminous discovery was completed, both sides filed motions for summary judgment.

On March 21, 2022, the court issued an order granting plaintiff’s motion for summary judgment on the issue of liability and denying the Company’s cross-motion for summary judgment.

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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;

The Court has scheduled oral argument on the matter for May 17,

We believe that the likelihood of loss related to this matter is reasonably possible but not probable at this time;

therefore, no liability has been recorded.

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

lack of legal precedent, stage of the proceedings, legal uncertainties inherent within the litigation process, availment of appellate remedies, and involvement of numerous parties.

lack of legal precedent, stage of the proceedings, legal uncertainties inherent within the litigation process, the availability of appellate remedies, and involvement of numerous parties.

We continue to believe we have meritorious defenses to the Havana Docks Matter.

However, if the plaintiff prevails in the final outcome of this matter, there may be a material adverse impact on the Company’s financial condition, results of operations and/or cash flows.

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.

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

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.

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Other Contingencies

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.

The Company also has agreements with its credit card processors that govern approximately $ 3.4 billion in advance ticket sales at March 31, 2024 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 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.

As of March 31, 2024, we had cash reserves of approximately $ 51.3 million with credit card processors, which includes approximately $ 19.8 million recognized in accounts receivable, net and approximately $ 31.5 million recognized in 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 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.

For the three months ended March 31, 2024 and 2023, other income (expense), net consisted of income of $ 18.1 million and expense of $ 9.0 million, respectively, primarily due to net gains and losses on foreign currency remeasurements.

Supplemental Cash Flow Information

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.

For the three months ended March 31, 2024 and 2023, we had non-cash investing activities consisting of changes in accruals related to property and equipment of $ 11.3 million and $ 53.4 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