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.

​

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.

​

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.

​

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.

​

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.

​

​

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.

​

​

​

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.

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.

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

​

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

​

​

​

​

​

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.

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):

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	Unamortized		​	​	​	​	​	​	​	​
​	​	Principal		​	Deferred		​	Net Carrying		​	Fair Value
​		Amount			Financing Fees			Amount			Amount			Leveling
2024 Exchangeable Notes (1)	​	$	146,601	​	$	(557)	​	$	146,044	​	$	217,790	​	Level 2
2025 Exchangeable Notes	​	​	449,990	​	​	(3,963)	​	​	446,027	​	​	572,567	​	Level 2
2027 1.125% Exchangeable Notes	​	​	1,150,000	​	​	(17,921)	​	​	1,132,079	​	​	1,068,431	​	Level 2
2027 2.5% Exchangeable Notes	​	​	473,175	​	​	(7,836)	​	​	465,339	​	​	453,784	​	Level 2

(1)	Classified within current portion of long-term debt as of December 31, 2023. During the three and six months ended June 30, 2024, substantially all the holders of 2024 Exchangeable Notes elected to exchange their 2024 Exchangeable Notes for 10,658,607 shares and the remaining unexchanged notes were repaid in cash at maturity.

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

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended					​	Six Months Ended
​	​	June 30,					​	June 30,
​	​	2024			2023		​	2024			2023
Coupon interest	​	$	13,308	​	$	14,437	​	$	27,745	​	$	28,875
Amortization of deferred financing fees	​	​	2,709	​	​	2,856	​	​	5,612	​	​	5,499
Total	​	$	16,017	​	$	17,293	​	$	33,357	​	$	34,374

​

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

​

​

Debt Repayments

The following are scheduled principal repayments on our long-term debt including exchangeable notes, which can be settled in shares, and finance lease obligations as of June 30, 2024 (in thousands):

​

​	​	​	​
Year		Amount
Remainder of 2024	​	$	1,070,650
2025	​		1,324,074
2026	​		2,240,090
2027	​		3,301,519
2028	​		1,708,911
2029	​	​	1,924,201
Thereafter	​		2,190,104
Total	​	$	13,759,549

​

Debt Covenants

As of June 30, 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. However, no assurances can be made that such amendments or waivers would be approved by our lenders. Generally, if an event of default under any debt agreement occurs, then pursuant to cross default and/or cross acceleration clauses, substantially all of our outstanding debt and derivative contract payables could become due, and all debt and derivative contracts could be terminated, which would have a material adverse impact on our operations and liquidity.

9. Fair Value Measurements and Derivatives

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

The following hierarchy for inputs used in measuring fair value should maximize the use of observable inputs and minimize the use of unobservable inputs by requiring that the most observable inputs be used when available:

Level 1 Quoted prices in active markets for identical assets or liabilities that are accessible at the measurement dates.

Level 2 Significant other observable inputs that are used by market participants in pricing the asset or liability based on market data obtained from independent sources.

Level 3 Significant unobservable inputs we believe market participants would use in pricing the asset or liability based on the best information available.

Derivatives

We are exposed to market risk attributable to changes in interest rates, foreign currency exchange rates and fuel prices. We attempt to minimize these risks through a combination of our normal operating and financing activities and through the use of derivatives. We assess whether derivatives used in hedging transactions are “highly effective” in offsetting

changes in the cash flow of our hedged forecasted transactions. We use critical terms match or regression analysis for hedge relationships and high effectiveness is achieved when a statistically valid relationship reflects a high degree of offset and correlation between the fair values of the derivative and the hedged forecasted transaction. Cash flows from the derivatives are classified in the same category as the cash flows from the underlying hedged transaction. 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. We monitor concentrations of credit risk associated with financial and other institutions with which we conduct significant business. Credit risk, including but not limited to counterparty non-performance under derivatives, is not considered significant, as we primarily conduct business with large, well-established financial institutions with which we have established relationships, and which have credit risks acceptable to us, or the credit risk is spread out among many creditors. We do not anticipate non-performance by any of our significant counterparties.

As of June 30, 2024, we had fuel swaps, which are used to mitigate the financial impact of volatility of fuel prices pertaining to approximately 704 thousand metric tons of our projected fuel purchases, maturing through December 31, 2025.

As of June 30, 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 February 28, 2025.

As of June 30, 2024, 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 €54.3 million, or $58.2 million based on the euro/U.S. dollar exchange rate as of June 30, 2024.

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

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	Assets					​	Liabilities
​	​	​	​	June 30,		​	December 31,		​	June 30,		​	December 31,
​		Balance Sheet Location		2024			2023			2024			2023
Derivative Contracts Designated as Hedging Instruments			​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Fuel contracts	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Prepaid expenses and other assets	​	$	17,081	​	$	—	​	$	609	​	$	—
​	​	Other long-term assets	​	​	4,454	​	​	—	​	​	550	​	​	—
​	​	Accrued expenses and other liabilities	​		—	​		4,309	​		—	​		11,247
​	​	Other long-term liabilities	​		—	​		137	​		15	​		8,932
Foreign currency contracts	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Prepaid expenses and other assets	​		122	​		—	​		—	​		—
Total derivatives designated as hedging instruments			​	$	21,657	​	$	4,446	​	$	1,174	​	$	20,179
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Derivative Contracts Not Designated as Hedging Instruments			​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Fuel contracts	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Prepaid expenses and other assets	​	$	19	​	$	—	​	$	61	​	$	—
​	​	Accrued expenses and other liabilities	​	​	—	​		141	​	​	—	​	​	1,031
​	​	Other long-term liabilities	​	​	—	​		—	​		—	​		280
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total derivatives not designated as hedging instruments			​	$	19	​	$	141	​	$	61	​	$	1,311
Total derivatives	​	​	​	$	21,676	​	$	4,587	​	$	1,235	​	$	21,490

​

The fair values of swap and forward contracts are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. The Company determines the value of options and collars utilizing an option pricing model based on inputs that are either readily available in public markets or can be derived from information available in publicly quoted markets. The option pricing model used by the Company is an industry standard model for valuing options and is used by the broker/dealer community. The inputs to this option pricing model are the option strike price, underlying price, risk-free rate of interest, time to expiration, and volatility. The

fair value of option contracts considers both the intrinsic value and any remaining time value associated with those derivatives that have not yet settled. The Company also considers counterparty credit risk and its own credit risk in its determination of all estimated fair values.

Our derivatives and financial instruments were categorized as Level 2 in the fair value hierarchy, and we had no derivatives or financial instruments categorized as Level 1 or Level 3. Our derivative contracts include rights of offset with our counterparties. We have elected to net certain assets and liabilities within counterparties when the rights of offset exist. We are not required to post cash collateral related to our derivative instruments.

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

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	Gross		​	​	​	​	Gross		​	​	​
​	​	Gross		​	Amounts		​	Total Net		​	Amounts		​	​	​
June 30, 2024		Amounts			Offset			Amounts			Not Offset			Net Amounts
Assets	​	$	21,676	​	$	(1,220)	​	$	20,456	​	$	(122)	​	$	20,334
Liabilities	​	​	15	​	​	—	​	​	15	​	​	—	​	​	15

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	Gross		​	​	​	​	Gross		​	​	​
​	​	Gross		​	Amounts		​	Total Net		​	Amounts		​	​	​
December 31, 2023		Amounts			Offset			Amounts			Not Offset			Net Amounts
Liabilities	​	$	21,490	​	$	(4,587)	​	$	16,903	​	$	—	​	$	16,903

​

The effects of cash flow hedge accounting on accumulated other comprehensive income (loss) were as follows (in thousands):

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	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
Derivatives		Comprehensive Loss						Income (Expense)		(Loss) into Income (Expense)
​	​	Three Months		​	Three Months		​	​	​	Three Months		​	Three Months
​	​	Ended		​	Ended		​	​	​	Ended		​	Ended
​		June 30, 2024			June 30, 2023			​		June 30, 2024			June 30, 2023
Fuel contracts	​	$	1,035	​	$	(12,055)		Fuel	​	$	6,838	​	$	572
Fuel contracts	​	​	—	​	​	—	​	Other income (expense), net	​	​	432	​	​	(306)
Foreign currency contracts	​		122	​		7,478		Depreciation and amortization	​		(4,120)	​		(2,813)
Total gain (loss) recognized in other comprehensive loss	​	$	1,157	​	$	(4,577)			​	$	3,150	​	$	(2,547)

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	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
Derivatives		Comprehensive Loss						Income (Expense)		(Loss) into Income (Expense)
​	​	Six Months		​	Six Months		​	​	​	Six Months		​	Six Months
​	​	Ended		​	Ended		​	​	​	Ended		​	Ended
​		June 30, 2024			June 30, 2023		​	​		June 30, 2024			June 30, 2023
Fuel contracts		$	48,288	​	$	(41,070)	​	Fuel		$	13,415	​	$	13,169
Fuel contracts	​	​	—	​	​	—	​	Other income (expense), net	​	​	1,307	​	​	(343)
Foreign currency contracts			122	​		18,018	​	Depreciation and amortization			(8,239)	​		(5,499)
Total gain (loss) recognized in other comprehensive loss		$	48,410	​	$	(23,052)	​			$	6,483	​	$	7,327

​

​

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

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended June 30, 2024								​	Three Months Ended June 30, 2023
​	​	​	​	​	Depreciation		​	​	​	​	​	​	​	Depreciation		​	​	​
​	​	​	​	​	and		​	Other Income		​	​	​	​	and		​	Other Income
​		Fuel			Amortization			(Expense), net			Fuel			Amortization			(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	​	$	174,964	​	$	222,405	​	$	1,896	​	$	164,242	​	$	197,115	​	$	(8,043)
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income (expense)	​			​			​			​			​			​
Fuel contracts	​	​	6,838	​	​	—	​	​	—	​	​	572	​	​	—	​	​	—
Foreign currency contracts	​	​	—	​	​	(4,120)	​	​	—	​	​	—	​	​	(2,813)	​	​	—
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
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	​	​	—	​	​	—	​	​	432	​	​	—	​	​	—	​	​	(306)

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Six Months Ended June 30, 2024								​	Six Months Ended June 30, 2023
​	​	​	​	​	Depreciation		​	​	​	​	​	​	​	Depreciation		​	​	​
​	​	​	​	​	and		​	Other Income		​	​	​	​	and		​	Other Income
​		Fuel			Amortization			(Expense), net			Fuel			Amortization			(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	​	$	372,698	​	$	445,334	​	$	20,033	​	$	359,110	​	$	391,905	​	$	(16,998)
​	​	​		​	​		​	​	​	​	​		​	​		​	​	​
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income (expense)		​			​			​	​		​			​		​
Fuel contracts		​	13,415		​	—		​	—		​	13,169		​	—	​	​	—
Foreign currency contracts		​	—	​	​	(8,239)		​	—		​	—		​	(5,499)	​	​	—
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
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	​	​	—	​	​	—	​	​	1,307	​	​	—	​	​	—	​	​	(343)

​

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

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	Amount of Gain (Loss) Recognized in Income
​	​	​	Three Months Ended					​	Six Months Ended
​	​	​	June 30,					​	June 30,
​	Location of Gain (Loss)		2024			2023			2024			2023
Derivatives not designated as hedging instruments	​	​			​			​			​
Fuel contracts	Other income (expense), net	​	$	(13)	​	$	(251)	​	$	2,186	​	$	(847)

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Long-Term Debt

As of June 30, 2024 and December 31, 2023, the fair value of our long-term debt, including the current portion, was $13.0 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. The fair value of our long-term revolving and term loan facilities was calculated based on estimated rates for the same or similar instruments with similar terms and remaining maturities. The fair value of our exchangeable notes considers observable risk-free rates; credit spreads of the same or similar instruments; and share prices, tenors, and historical and implied volatilities which are sourced from observable market data. The inputs are considered to be Level 2 in the fair value hierarchy. Market risk associated with our long-term variable rate debt is the potential increase in interest expense from an increase in interest rates or from an increase in share values.

Other

The carrying amounts reported in the consolidated balance sheets of all other financial assets and liabilities approximate fair value.

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10. Employee Benefits and Compensation Plans

In January 2013, NCLH adopted the 2013 Performance Incentive Plan, which as amended and restated through 2023 (the “Restated 2013 Plan”), provided for a maximum aggregate limit of 42,009,006 shares that could have been delivered pursuant to all awards granted under the plan. In June 2024, 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 3,000,000, resulting in an increase in the maximum aggregate limit to 45,009,006 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 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 six months ended June 30, 2024:

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​	​	​	​	​	​	​	​	​	​	​
​	​	Number of	​	Weighted-		​	Number of	​	Weighted-
​	​	Time-Based	​	Average Grant		​	Performance-	​	Average Grant
​		Awards		Date Fair Value			Based Awards		Date Fair Value
Non-vested as of January 1, 2024		9,083,120	​	$	17.39		2,140,134	​	$	19.41
Granted		4,673,132	​	​	19.25	​	945,040	​	​	19.29
Vested		(4,292,171)	​	​	18.85	​	(334,888)	​	​	31.78
Forfeited or expired		(167,226)	​	​	17.39	​	—	​	​	—
Non-vested as of June 30, 2024		9,296,855	​	​	17.66		2,750,286	​	​	17.86

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Share Option Awards

The following table sets forth a summary of option activity under NCLH’s Restated 2013 Plan for the six months ended June 30, 2024:

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	Weighted-	​	​
​	​	Number of Share Option Awards			​	Weighted-Average Exercise Price					​	Average	​	Aggregate
​	​	Time-	​	Performance-	​	Time-		​	Performance-		​	Contractual	​	Intrinsic
​	​	Based	​	Based	​	Based		​	Based		​	Term	​	Value
​		Awards		Awards		Awards			Awards			(years)		(in thousands)
Outstanding as of January 1, 2024		3,524,856	​	114,583	​	$	52.98	​	$	59.43	​	1.26	​	$	—
Forfeited and cancelled		(1,011,038)	​	(114,583)	​	​	50.91	​	​	59.43	​	​	​
Outstanding as of June 30, 2024		2,513,818	​	—	​	​	53.81	​	​	—	​	1.06	​	​	—

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

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended					​	Six Months Ended
​	​	June 30,					​	June 30,
​		2024			2023			2024			2023
Payroll and related expense	​	$	5,077	​	$	4,876	​	$	9,691	​	$	9,333
Marketing, general and administrative expense	​		17,907	​		39,660	​		35,241	​		63,358
Total share-based compensation expense	​	$	22,984	​	$	44,536	​	$	44,932	​	$	72,691

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11. Commitments and Contingencies

Ship Construction Contracts

For the Norwegian brand, we have 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. For the Oceania Cruises brand, we have 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. For the Oceania Cruises brand, we also have an order for four additional ships (which includes two ships on order, which are currently scheduled for delivery in 2030 and 2031, respectively, but are expected to be cancelled), each at approximately 86,000 Gross Tons and 1,450 Berths, with scheduled delivery dates from 2027 through 2031. For the Regent Seven Seas Cruises brand, we have an order for two Prestige Class Ships, each at approximately 77,000 Gross Tons and 850 Berths, with scheduled delivery dates in 2026 and 2029. 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.

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The combined contract prices, including amendments and change orders, of the 11 ships on order for delivery as of June 30, 2024 (which includes two ships on order for Oceania Cruises, which are currently scheduled for delivery in 2030 and 2031, respectively, but are expected to be cancelled, and excludes orders for four Norwegian Cruise Line ships, which were not effective as of June 30 ,2024) was approximately €11.0 billion, or $11.8 billion based on the euro/U.S. dollar exchange rate as of June 30, 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, excluding the two ships on order for Oceania Cruises that are expected to be cancelled, 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.

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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):

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​	​	​	​
Year		Amount
Remainder of 2024	​	$	235,228
2025	​	​	2,026,241
2026	​		2,165,579
2027	​		2,190,155
2028	​		2,104,462
2029	​		825,383
Thereafter	​		1,619,109
Total minimum annual payments	​	$	11,166,157

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The above presentation reflects the contractual delivery date in the fourth quarter of 2028 of the second new Oceania Cruises ship. However, it is expected that this delivery date may be moved to early 2029.

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Litigation

Investigations

​

In March 2020, the Florida Attorney General announced an investigation related to the Company’s marketing during the COVID-19 pandemic. Following the announcement of the investigation by the Florida Attorney General, we received notifications from other attorneys general and governmental agencies that they are conducting similar investigations. The Company is cooperating with these ongoing investigations, the outcomes of which cannot be predicted at this time.

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Helms-Burton Act

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 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. The court scheduled a trial on determination of damages only for November 2022. The plaintiff elected to seek what the court ruled to be its baseline statutory damage amount, which was the amount of the certified claim plus interest, trebled and with attorneys’ fees. Given this, there was no fact issue to be tried, and the matter was removed from the trial calendar. On December 30, 2022, the court entered a final judgment of approximately $112.9 million and, on January 23, 2023, the Company filed a notice of appeal from that judgment. On April 12, 2023, the Company posted a sufficient supersedeas bond with the court to prevent any efforts by the plaintiff to collect on the judgment pending the appeal. On June 30, 2023, the Company filed its opening appellate brief with the United States Court of Appeals for the Eleventh Circuit. On September 29, 2023, the plaintiff filed its answering brief responding to the Company’s opening brief in the Eleventh Circuit. On May 17, 2024, the Court heard oral argument on the matter. 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, 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.

Other

In the normal course of our business, various other claims and lawsuits have been filed or are pending against us. Most of these claims and lawsuits are covered by insurance and, accordingly, the maximum amount of our liability is typically limited to our deductible amount. Nonetheless, the ultimate outcome of these claims and lawsuits that are not covered by insurance cannot be determined at this time. We have evaluated our overall exposure with respect to all of our threatened and pending litigation and, to the extent required, we have accrued amounts for all estimable probable losses associated with our deemed exposure. We are currently unable to estimate any other potential losses beyond those accrued, as discovery is not complete nor is adequate information available to estimate such range of loss or potential recovery. However, based on our current knowledge, we do not believe that the aggregate amount or range of reasonably possible losses with respect to these matters will be material to our consolidated results of operations, financial condition or cash flows. We intend to vigorously defend our legal position on all claims and, to the extent necessary, seek recovery.

Other Contingencies

​

The Company also has agreements with its credit card processors that govern approximately $3.5 billion in advance ticket sales at June 30, 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. Although the agreements vary, these requirements may generally be satisfied either through a percentage of customer payments withheld or providing cash funds directly to the card processor. Any cash reserve or collateral requested could be increased or decreased. As of June 30, 2024, we had cash reserves of approximately $43.9 million with credit card processors, which includes approximately $12.4 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.

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12. Other Income (Expense), Net

For the three and six months ended June 30, 2024, other income (expense), net consisted of income of $1.9 million and $20.0 million, respectively, and for the three and six months ended June 30, 2023, other income (expense), net consisted of expense of $8.0 million and $17.0 million, respectively, primarily due to net gains and losses on foreign currency remeasurements.

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13. Supplemental Cash Flow Information

For the six months ended June 30, 2024 and 2023, we had non-cash investing activities consisting of changes in accruals related to property and equipment of $36.3 million and $49.4 million, respectively.

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14. Subsequent event

In July 2024, the Company entered into a memorandum of agreement regarding the order for the four additional ships for Norwegian Cruise Line that is subject to Board of Director approval in early August. If approved, the aggregate cost of all ships on order (which includes two ships on order for Oceania Cruises, which are currently scheduled for delivery in 2030 and 2031, respectively, but are expected to be cancelled), will be approximately €19.3 billion, or $20.7 billion based on the euro/U.S. dollar exchange rate as of June 30, 2024.

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