10-Q 1 nclh-20240630x10q.htm 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

OR

    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 001-35784

NORWEGIAN CRUISE LINE HOLDINGS LTD.

(Exact name of registrant as specified in its charter)

Bermuda

    

98-0691007

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

7665 Corporate Center Drive, Miami, Florida 33126

33126

(Address of principal executive offices)

(zip code)

(305) 436-4000

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

    

Trading Symbol(s)

    

Name of each exchange on which registered

Ordinary shares, par value $0.001 per share

 

NCLH

 

The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer 

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes      No  

There were 439,691,329 ordinary shares outstanding as of July 31, 2024.

TABLE OF CONTENTS

  

    

Page

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

3

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

23

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

38

Item 4.

Controls and Procedures

39

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

39

Item 1A.

Risk Factors

39

Item 5.

Other Information

40

Item 6.

Exhibits

40

SIGNATURES

42

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Norwegian Cruise Line Holdings Ltd.

Consolidated Statements of Operations

(Unaudited)

(in thousands, except share and per share data)

Three Months Ended

Six Months Ended

June 30, 

June 30, 

    

2024

    

2023

    

2024

    

2023

Revenue

 

  

 

  

 

  

 

  

Passenger ticket

$

1,602,076

$

1,478,474

$

3,061,890

$

2,687,315

Onboard and other

 

770,416

 

727,018

 

1,501,817

 

1,340,116

Total revenue

 

2,372,492

 

2,205,492

 

4,563,707

 

4,027,431

Cruise operating expense

 

  

 

  

 

  

 

  

Commissions, transportation and other

 

501,039

 

506,855

 

937,249

 

916,539

Onboard and other

 

171,707

 

161,880

 

303,743

 

281,577

Payroll and related

 

330,578

 

308,220

 

674,859

 

612,375

Fuel

 

174,964

 

164,242

 

372,698

 

359,110

Food

 

77,046

 

87,770

 

161,754

 

183,736

Other

 

199,421

 

154,643

 

391,875

 

310,691

Total cruise operating expense

 

1,454,755

 

1,383,610

 

2,842,178

 

2,664,028

Other operating expense

 

  

 

  

 

  

 

  

Marketing, general and administrative

 

353,771

 

352,222

 

716,240

 

688,235

Depreciation and amortization

 

222,405

 

197,115

 

445,334

 

391,905

Total other operating expense

 

576,176

 

549,337

 

1,161,574

 

1,080,140

Operating income

 

341,561

 

272,545

 

559,955

 

283,263

Non-operating income (expense)

 

 

 

 

Interest expense, net

 

(178,472)

 

(177,692)

 

(396,649)

 

(348,949)

Other income (expense), net

 

1,896

 

(8,043)

 

20,033

 

(16,998)

Total non-operating income (expense)

 

(176,576)

 

(185,735)

 

(376,616)

 

(365,947)

Net income (loss) before income taxes

 

164,985

 

86,810

 

183,339

 

(82,684)

Income tax benefit (expense)

 

(1,549)

 

(694)

 

(2,550)

 

9,479

Net income (loss)

$

163,436

$

86,116

$

180,789

$

(73,205)

Weighted-average shares outstanding

 

  

 

  

 

  

 

  

Basic

 

434,807,434

 

424,178,775

 

430,805,477

 

423,421,203

Diluted

 

513,589,734

 

461,075,240

 

468,078,473

 

423,421,203

Earnings (loss) per share

 

  

 

  

 

  

 

  

Basic

$

0.38

$

0.20

$

0.42

$

(0.17)

Diluted

$

0.35

$

0.20

$

0.41

$

(0.17)

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

3

Norwegian Cruise Line Holdings Ltd.

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(in thousands)

Three Months Ended

Six Months Ended

June 30, 

June 30, 

    

2024

    

2023

    

2024

    

2023

Net income (loss)

$

163,436

$

86,116

$

180,789

$

(73,205)

Other comprehensive income (loss):

 

  

 

  

 

  

 

  

Shipboard Retirement Plan

 

94

 

64

 

189

 

128

Cash flow hedges:

 

 

 

 

Net unrealized gain (loss)

 

1,157

 

(4,577)

 

48,410

 

(23,052)

Amount realized and reclassified into earnings

 

(3,150)

 

2,547

 

(6,483)

 

(7,327)

Total other comprehensive income (loss)

 

(1,899)

 

(1,966)

 

42,116

 

(30,251)

Total comprehensive income (loss)

$

161,537

$

84,150

$

222,905

$

(103,456)

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

4

Norwegian Cruise Line Holdings Ltd.

Consolidated Balance Sheets

(Unaudited)

(in thousands, except share data)

June 30, 

December 31, 

    

2024

    

2023

Assets

 

  

 

  

Current assets:

 

  

 

  

Cash and cash equivalents

$

594,098

$

402,415

Accounts receivable, net

 

209,343

 

280,271

Inventories

 

149,931

 

157,646

Prepaid expenses and other assets

 

628,970

 

472,816

Total current assets

 

1,582,342

 

1,313,148

Property and equipment, net

 

16,632,973

 

16,433,292

Goodwill

 

135,764

 

98,134

Trade names

 

500,525

 

500,525

Other long-term assets

 

1,262,229

 

1,147,891

Total assets

$

20,113,833

$

19,492,990

Liabilities and shareholders’ equity

 

  

 

  

Current liabilities:

 

  

 

  

Current portion of long-term debt

$

1,525,488

$

1,744,778

Accounts payable

 

182,451

 

174,338

Accrued expenses and other liabilities

 

1,146,858

 

1,058,919

Advance ticket sales

 

3,779,119

 

3,060,666

Total current liabilities

 

6,633,916

 

6,038,701

Long-term debt

 

11,913,073

 

12,314,147

Other long-term liabilities

 

873,711

 

839,335

Total liabilities

 

19,420,700

 

19,192,183

Commitments and contingencies (Note 11)

 

  

 

  

Shareholders’ equity:

 

  

 

  

Ordinary shares, $0.001 par value; 980,000,000 shares authorized; 439,686,822 shares issued and outstanding at June 30, 2024 and 425,546,570 shares issued and outstanding at December 31, 2023

 

440

 

425

Additional paid-in capital

 

7,878,363

 

7,708,957

Accumulated other comprehensive income (loss)

 

(466,322)

 

(508,438)

Accumulated deficit

 

(6,719,348)

 

(6,900,137)

Total shareholders’ equity

 

693,133

 

300,807

Total liabilities and shareholders’ equity

$

20,113,833

$

19,492,990

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

5

Norwegian Cruise Line Holdings Ltd.

Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

Six Months Ended

June 30, 

    

2024

    

2023

Cash flows from operating activities

 

  

 

  

Net income (loss)

$

180,789

$

(73,205)

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

 

  

 

  

Depreciation and amortization expense

488,027

 

425,288

(Gain) loss on derivatives

(1,129)

9,423

Loss on extinguishment of debt

 

29,000

 

2,801

Provision for bad debts and inventory obsolescence

 

3,198

 

1,497

Gain on involuntary conversion of assets

(4,462)

(4,583)

Share-based compensation expense

 

44,932

 

72,691

Net foreign currency adjustments on euro-denominated debt

 

(8,587)

 

1,822

Changes in operating assets and liabilities:

 

 

Accounts receivable, net

 

66,671

 

106,709

Inventories

 

7,329

 

(5,815)

Prepaid expenses and other assets

 

(124,287)

 

321,120

Accounts payable

 

(2,216)

 

(72,345)

Accrued expenses and other liabilities

 

56,439

 

(75,009)

Advance ticket sales

 

742,360

 

826,221

Net cash provided by operating activities

 

1,478,064

 

1,536,615

Cash flows from investing activities

 

  

 

  

Additions to property and equipment, net

 

(599,505)

 

(974,190)

Cash paid on settlement of derivatives

(23,379)

Acquisition, net of cash acquired

(27,322)

Other

5,955

5,367

Net cash used in investing activities

 

(620,872)

 

(992,202)

Cash flows from financing activities

 

  

 

  

Repayments of long-term debt

 

(778,109)

 

(2,500,777)

Proceeds from long-term debt

 

261,734

 

2,038,187

Proceeds from employee related plans

 

 

2,618

Net share settlement of restricted share units

 

(22,039)

 

(25,223)

Early redemption premium

 

(19,163)

 

Deferred financing fees

 

(107,932)

 

(107,070)

Net cash used in financing activities

 

(665,509)

 

(592,265)

Net increase (decrease) in cash and cash equivalents

 

191,683

 

(47,852)

Cash and cash equivalents at beginning of period

 

402,415

 

946,987

Cash and cash equivalents at end of period

$

594,098

$

899,135

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

6

Norwegian Cruise Line Holdings Ltd.

Consolidated Statements of Changes in Shareholders’ Equity (Deficit)

(Unaudited)

(in thousands)

Three Months Ended June 30, 2024

Accumulated 

Additional

Other

Total

Ordinary 

Paid-in 

Comprehensive

Accumulated

Shareholders’

Shares

    

Capital

    

Income (Loss)

    

Deficit

    

Equity

Balance, March 31, 2024

 

$

429

$

7,708,869

$

(464,423)

$

(6,882,784)

$

362,091

Share-based compensation

 

22,984

22,984

Common share issuance for NCLC exchangeable notes

11

146,517

146,528

Net share settlement of restricted share units

 

(7)

(7)

Other comprehensive loss, net

 

(1,899)

(1,899)

Net income

 

163,436

163,436

Balance, June 30, 2024

$

440

$

7,878,363

$

(466,322)

$

(6,719,348)

$

693,133

Six Months Ended June 30, 2024

Accumulated 

Additional

Other

Total

Ordinary 

Paid-in 

Comprehensive

Accumulated

Shareholders’

    

Shares

    

Capital

    

Income (Loss)

    

Deficit

    

Equity

Balance, December 31, 2023

 

$

425

$

7,708,957

$

(508,438)

$

(6,900,137)

$

300,807

Share-based compensation

 

 

44,932

 

 

 

44,932

Issuance of shares under employee related plans

 

4

 

(4)

 

 

 

Common share issuance for NCLC exchangeable notes

11

146,517

146,528

Net share settlement of restricted share units

 

 

(22,039)

 

 

 

(22,039)

Other comprehensive income, net

 

 

 

42,116

 

 

42,116

Net income

 

 

 

 

180,789

 

180,789

Balance, June 30, 2024

$

440

$

7,878,363

$

(466,322)

$

(6,719,348)

$

693,133

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

7

Norwegian Cruise Line Holdings Ltd.

Consolidated Statements of Changes in Shareholders’ Equity (Deficit) - Continued

(Unaudited)

(in thousands)

Three Months Ended June 30, 2023

Accumulated 

    

    

Additional

Other

Total

Ordinary 

Paid-in 

Comprehensive

Accumulated

Shareholders’

Shares

    

Capital

    

Income (Loss)

    

Deficit

    

Equity (Deficit)

Balance, March 31, 2023

 

$

424

$

7,631,028

$

(505,364)

$

(7,225,636)

$

(99,548)

Share-based compensation

 

 

44,536

 

 

 

44,536

Issuance of shares under employee related plans

 

1

 

(1)

Net share settlement of restricted share units

 

 

(13,917)

 

 

 

(13,917)

Other comprehensive loss, net

 

 

 

(1,966)

 

 

(1,966)

Net income

 

86,116

86,116

Balance, June 30, 2023

$

425

$

7,661,646

$

(507,330)

$

(7,139,520)

$

15,221

Six Months Ended June 30, 2023

    

Accumulated 

    

    

Additional

Other

Total

Ordinary 

Paid-in 

Comprehensive

Accumulated

Shareholders’

    

Shares

    

Capital

    

Income (Loss)

    

Deficit

    

Equity

Balance, December 31, 2022

 

$

421

$

7,611,564

$

(477,079)

$

(7,066,315)

$

68,591

Share-based compensation

 

 

72,691

 

 

 

72,691

Issuance of shares under employee related plans

 

4

 

2,614

 

 

 

2,618

Net share settlement of restricted share units

 

 

(25,223)

 

 

 

(25,223)

Other comprehensive loss, net

 

 

(30,251)

 

 

(30,251)

Net loss

 

(73,205)

(73,205)

Balance, June 30, 2023

$

425

$

7,661,646

$

(507,330)

$

(7,139,520)

$

15,221

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

8

Norwegian Cruise Line Holdings Ltd.

Notes to Consolidated Financial Statements

(Unaudited)

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

References to the “U.S.” are to the United States of America, and “dollar(s)” or “$” are to U.S. dollars, the “U.K.” are to the United Kingdom and “euro(s)” or “€” are to the official currency of the Eurozone. We refer you to “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations— Terminology” for the capitalized terms used and not otherwise defined throughout these notes to consolidated financial statements.

1.   Description of Business and Organization

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, 2024, we had 32 ships with approximately 66,400 Berths. The Company expects to add thirteen additional ships to our fleet from 2025 through 2036.

We have four Prima Class Ships on order with currently scheduled delivery dates from 2025 through 2028. We have one Allura Class Ship on order for delivery in 2025. We also have orders for two new classes of ships: four Oceania Cruises ships with deliveries scheduled from 2027 through 2031 and two Prestige Class Ships with deliveries scheduled in 2026 and 2029. The orders for two of the new class of Oceania Cruises ships currently scheduled for delivery in 2030 and 2031 are expected to be cancelled and replaced with orders for four Norwegian Cruise Line ships of a new class with expected delivery dates from 2030 through 2036.

2.   Summary of Significant Accounting Policies

Liquidity

As of June 30, 2024, we had liquidity of approximately $2.7 billion, including cash and cash equivalents of $594.1 million, borrowings available under our $1.2 billion undrawn Revolving Loan Facility, a €200 million commitment that can be used for future newbuild payments and a $650 million undrawn commitment of senior unsecured notes issuable by NCLC less related fees (see Note 8 – “Long-Term Debt” for further information regarding our commitments). 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

The accompanying consolidated financial statements are unaudited and, in our opinion, contain all normal recurring adjustments necessary for a fair statement of the results for the periods presented.

Our operations are seasonal and results for interim periods are not necessarily indicative of the results for the entire fiscal year. Historically, demand for cruises has been strongest during the Northern Hemisphere’s summer months. 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.

9

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing net income (loss) by the basic weighted-average number of shares outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) and assumed conversion of exchangeable notes by diluted weighted-average shares outstanding.

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

Three Months Ended

Six Months Ended

June 30, 

June 30, 

    

2024

    

2023

    

2024

    

2023

Net income (loss) - Basic EPS

$

163,436

$

86,116

$

180,789

$

(73,205)

Effect of dilutive securities - exchangeable notes

16,017

4,603

9,225

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

$

179,453

$

90,719

$

190,014

$

(73,205)

Basic weighted-average shares outstanding

 

434,807,434

 

424,178,775

 

430,805,477

 

423,421,203

Dilutive effect of share awards

 

2,054,804

 

2,758,715

 

3,135,246

 

Dilutive effect of exchangeable notes

76,727,496

34,137,750

34,137,750

Diluted weighted-average shares outstanding

 

513,589,734

 

461,075,240

 

468,078,473

 

423,421,203

Basic EPS

$

0.38

$

0.20

$

0.42

$

(0.17)

Diluted EPS

$

0.35

$

0.20

$

0.41

$

(0.17)

Each exchangeable note (see Note 8 – “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 June 30, 2023 and the six months ended June 30, 2024, the 2024 Exchangeable Notes, 2025 Exchangeable Notes and 2027 2.5% Exchangeable Notes were anti-dilutive. During the six months ended June 30, 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 June 30, 2024 and 2023, a total of 7.1 million and 55.7 million shares, respectively, and for the six months ended June 30, 2024 and 2023, a total of 53.3 million and 89.6 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

The majority of our transactions are settled in U.S. dollars. We remeasure assets and liabilities denominated in foreign currencies at exchange rates in effect at the balance sheet date. The resulting gains or losses are recognized in our consolidated statements of operations within other income (expense), net. We recognized a gain of $2.3 million and a loss of $11.1 million for the three months ended June 30, 2024 and 2023, respectively, and a gain of $15.6 million and a loss of $19.8 million for the six months ended June 30, 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.

Depreciation and Amortization Expense

The amortization of deferred financing fees is included in depreciation and amortization expense in the consolidated statements of cash flows; however, for purposes of the consolidated statements of operations they are included in interest expense, net.

Accounts Receivable, Net

Accounts receivable, net included $12.4 million and $20.1 million due from credit card processors as of June 30, 2024 and December 31, 2023, respectively.

10

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.

3. Acquisition

On April 25, 2024, Norwegian acquired 100% of the voting equity interest of Independent Maritime Advisors Ltd. (“IMA”), a consulting company specializing in project management for newbuilds and vessel conversions for $37.5 million, which consisted primarily of cash and also included deferred consideration and the settlement of a pre-existing relationship. Norwegian acquired IMA to bring newbuild project management and supervision in-house and optimize the overall capital outflow for newbuild expenditures, which generates synergies that create goodwill.

The preliminary purchase price was allocated as follows (in thousands):

Assets, other than goodwill

$

4,302

Goodwill

 

37,630

Liabilities

 

(9,088)

Total consideration allocated, net of $4.7 million of cash acquired

$

32,844

As of June 30, 2024, the measurement period pertaining to the acquisition remains open and is subject to further adjustment. The acquisition includes deferred consideration, which is currently considered probable of payment in full; however, if new information arises, a change in consideration could impact our goodwill or liabilities. The acquisition of IMA does not have a material impact on the Company’s consolidated statements of operations.

4.   Revenue Recognition

Disaggregation of Revenue

Revenue and cash flows are affected by economic factors in various geographical regions. Revenues by destination were as follows (in thousands):

Three Months Ended

Six Months Ended

June 30, 

June 30, 

    

2024

    

2023

    

2024

    

2023

North America

$

1,176,098

$

1,221,177

$

2,736,870

$

2,582,230

Europe

 

1,055,061

 

880,129

 

1,080,297

 

961,447

Asia-Pacific

 

118,527

 

89,890

 

515,529

 

295,552

Other

22,806

14,296

231,011

188,202

Total revenue

$

2,372,492

$

2,205,492

$

4,563,707

$

4,027,431

11

North America includes the U.S., the Caribbean, Canada and Mexico. Europe includes the Baltic region, Canary Islands and Mediterranean. Asia-Pacific includes Australia, New Zealand and Asia. Other includes all other international territories.

Segment Reporting and Geographic Concentration

We have concluded that our business has a single reportable segment.

Although we sell cruises on an international basis, our passenger ticket revenue is primarily attributed to U.S.-sourced guests who make reservations through the U.S. Revenue attributable to U.S.-sourced guests has approximated 84-87% of total revenue over the preceding three fiscal years. No other individual country’s revenues exceed 10% in any given period.

Contract Balances

Receivables from customers are included within accounts receivable, net. As of June 30, 2024 and December 31, 2023, our receivables from customers were $112.1 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 $64.5 million. The future cruise credits are not contracts, and therefore, guests who elected this option are excluded from our contract liability balance; however, the credit for the original amount paid is included in advance ticket sales.

Our contract liabilities are included within advance ticket sales. As of June 30, 2024 and December 31, 2023, our contract liabilities were $2.9 billion and $2.2 billion, respectively. Of the amounts included within contract liabilities as of June 30, 2024, 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. For the six months ended June 30, 2024, $2.1 billion of revenue recognized was included in the contract liability balance at the beginning of the period.

5.   Leases

Operating lease balances were as follows (in thousands):

    

Balance Sheet location

    

June 30, 2024

 

December 31, 2023

Operating leases

 

  

 

  

  

Right-of-use assets

 

Other long-term assets

$

761,106

$

753,652

Current operating lease liabilities

 

Accrued expenses and other liabilities

23,348

23,226

Non-current operating lease liabilities

 

Other long-term liabilities

651,555

644,646

12

6.   Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) for the six months ended June 30, 2024 was as follows (in thousands):

Six Months Ended June 30, 2024

    

    

Change

Accumulated

Change

Related to

Other

Related to

Shipboard

Comprehensive

Cash Flow

Retirement

    

Income (Loss)

    

Hedges

 Plan

Accumulated other comprehensive income (loss) at beginning of period

$

(508,438)

$

(508,524)

$

86

  

Current period other comprehensive income before reclassifications

 

48,410

 

48,410

  

 

  

Amounts reclassified into earnings

 

(6,294)

 

(6,483)

(1)

 

189

(2)

Accumulated other comprehensive income (loss) at end of period

$

(466,322)

$

(466,597)

(3)

$

275

  

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

Six Months Ended June 30, 2023

    

    

Change

 

Accumulated

Change

Related to

Other

Related to

Shipboard

Comprehensive

Cash Flow

Retirement

    

Income (Loss)

    

Hedges

 Plan

Accumulated other comprehensive income (loss) at beginning of period

 

$

(477,079)

$

(480,578)

$

3,499

 

Current period other comprehensive loss before reclassifications

 

 

(23,052)

 

 

(23,052)

  

 

 

Amounts reclassified into earnings

 

 

(7,199)

 

 

(7,327)

(1)

 

128

(2)

Accumulated other comprehensive income (loss) at end of period

 

$

(507,330)

 

$

(510,957)

$

3,627

 

(1)We refer you to Note 9 “Fair Value Measurements and Derivatives” for the affected line items in the consolidated statements of operations.
(2)Amortization of prior-service cost and actuarial loss reclassified to other income (expense), net.
(3)Includes $0.8 million of gains expected to be reclassified into earnings in the next 12 months.

7.Property and Equipment, Net

Property and equipment, net increased $199.7 million for the six months ended June 30, 2024 primarily due to ships under construction.

8.   Long-Term Debt

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.

13

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 June 30, 2024 (in thousands):

Unamortized

Principal

Deferred

Net Carrying

Fair Value

    

Amount

    

Financing Fees

    

Amount

    

Amount

    

Leveling

2025 Exchangeable Notes

$

449,990

$

(2,801)

$

447,189

$

533,751

Level 2

2027 1.125% Exchangeable Notes

1,150,000

(15,165)

1,134,835

1,074,399

Level 2

2027 2.5% Exchangeable Notes

473,175

(6,670)

466,505

454,310

Level 2

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