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, 2020

☐ 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 275,618,888 ordinary shares outstanding as of July 31, 2020.

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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	30

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49

Item 4.	Controls and Procedures	50

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	51

Item 1A.	Risk Factors	52

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	56

Item 5.	Other Information	57

Item 6.	Exhibits	57

SIGNATURES		61

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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,
	2020		2019		2020		2019
Revenue
Passenger ticket	$	13,835	$	1,179,404	$	854,626	$	2,152,677
Onboard and other		3,094		484,873		409,185		915,230
Total revenue		16,929		1,664,277		1,263,811		3,067,907
Cruise operating expense
Commissions, transportation and other		34,601		297,691		366,969		526,955
Onboard and other		3,188		107,063		78,161		186,476
Payroll and related		128,744		229,385		375,891		452,492
Fuel		48,992		100,531		174,016		198,784
Food		6,997		54,347		56,213		109,392
Other		79,130		169,407		244,662		310,976
Total cruise operating expense		301,652		958,424		1,295,912		1,785,075
Other operating expense
Marketing, general and administrative		131,436		240,901		402,125		489,843
Depreciation and amortization		179,252		156,271		377,449		326,012
Impairment loss		—		—		1,607,797		—
Total other operating expense		310,688		397,172		2,387,371		815,855
Operating income (loss)		(595,411)		308,681		(2,419,472)		466,977
Non-operating income (expense)
Interest expense, net		(114,537)		(65,969)		(183,444)		(139,472)
Other income (expense), net		(14,418)		3,616		(8,595)		3,182
Total non-operating income (expense)		(128,955)		(62,353)		(192,039)		(136,290)
Net income (loss) before income taxes		(724,366)		246,328		(2,611,511)		330,687
Income tax benefit (expense)		9,123		(6,138)		15,296		27,660
Net income (loss)	$	(715,243)	$	240,190	$	(2,596,215)	$	358,347
Weighted-average shares outstanding
Basic		239,342,745		215,426,441		226,486,772		216,328,943
Diluted		239,342,745		216,810,766		226,486,772		217,837,005
Earnings (loss) per share
Basic	$	(2.99)	$	1.11	$	(11.46)	$	1.66
Diluted	$	(2.99)	$	1.11	$	(11.46)	$	1.65

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

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Norwegian Cruise Line Holdings Ltd.

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(in thousands)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Net income (loss)	$	(715,243)	$	240,190	$	(2,596,215)	$	358,347
Other comprehensive income (loss):
Shipboard Retirement Plan		102		94		204		189
Cash flow hedges:
Net unrealized gain (loss)		54,478		(17,189)		(251,382)		(2,037)
Amount realized and reclassified into earnings		28,782		(9,274)		50,781		(16,274)
Total other comprehensive income (loss)		83,362		(26,369)		(200,397)		(18,122)
Total comprehensive income (loss)	$	(631,881)	$	213,821	$	(2,796,612)	$	340,225

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

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Norwegian Cruise Line Holdings Ltd.

Consolidated Balance Sheets

(Unaudited)

(in thousands, except share data)


	June 30,		December 31,
	2020		2019
Assets
Current assets:
Cash and cash equivalents	$	2,259,949	$	252,876
Accounts receivable, net		74,213		75,109
Inventories		82,263		95,427
Prepaid expenses and other assets		334,243		306,733
Total current assets		2,750,668		730,145
Property and equipment, net		13,488,514		13,135,337
Goodwill		98,134		1,388,931
Tradenames		500,525		817,525
Other long-term assets		690,218		612,661
Total assets	$	17,528,059	$	16,684,599
Liabilities and shareholders’ equity
Current liabilities:
Current portion of long-term debt	$	337,338	$	746,358
Accounts payable		484,927		100,777
Accrued expenses and other liabilities		648,216		782,275
Advance ticket sales		1,113,374		1,954,980
Total current liabilities		2,583,855		3,584,390
Long-term debt		10,011,872		6,055,335
Other long-term liabilities		595,307		529,295
Total liabilities		13,191,034		10,169,020
Commitments and contingencies (Note 11)
Shareholders’ equity:
Ordinary shares, $0.001 par value; 490,000,000 shares authorized; 280,798,331 shares issued and 256,347,472 shares outstanding at June 30, 2020 and 237,533,270 shares issued and 213,082,411 shares outstanding at December 31, 2019		281		237
Additional paid-in capital		4,851,781		4,235,690
Accumulated other comprehensive income (loss)		(495,887)		(295,490)
Retained earnings		1,234,776		3,829,068
Treasury shares (24,450,859 at June 30, 2020 and December 31, 2019, at cost)		(1,253,926)		(1,253,926)
Total shareholders’ equity		4,337,025		6,515,579
Total liabilities and shareholders’ equity	$	17,528,059	$	16,684,599

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

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Norwegian Cruise Line Holdings Ltd.

Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)


	Six Months Ended
	June 30,
	2020		2019
Cash flows from operating activities
Net income (loss)	$	(2,596,215)	$	358,347
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization expense		379,375		326,471
Impairment loss		1,607,797		—
Deferred income taxes, net		(14,458)		(29,793)
Loss on derivatives		8,294		—
Loss on extinguishment of debt		5,014		3,988
Provision for bad debts and inventory obsolescence		10,359		1,057
Gain on involuntary conversion of assets		(1,403)		(2,810)
Share-based compensation expense		55,147		56,650
Net foreign currency adjustments		160		(716)
Changes in operating assets and liabilities:
Accounts receivable, net		(2,108)		(15,121)
Inventories		11,996		(1,342)
Prepaid expenses and other assets		(115,066)		(57,929)
Accounts payable		369,519		(81,690)
Accrued expenses and other liabilities		(202,547)		(74,470)
Advance ticket sales		(844,244)		558,579
Net cash provided by (used in) operating activities		(1,328,380)		1,041,221
Cash flows from investing activities
Additions to property and equipment, net		(725,477)		(413,888)
Cash received on settlement of derivatives		—		289
Cash paid on settlement of derivatives		(28,606)		—
Other		2,519		4,047
Net cash used in investing activities		(751,564)		(409,552)
Cash flows from financing activities
Repayments of long-term debt		(207,863)		(2,808,615)
Proceeds from long-term debt		3,962,655		2,652,000
Common share issuance proceeds, net		441,935		—
Proceeds from employee related plans		4,100		11,368
Net share settlement of restricted share units		(15,318)		(20,830)
Purchases of treasury shares		—		(200,071)
Early redemption premium		—		(117)
Deferred financing fees		(94,559)		(9,330)
Net cash provided by (used in) financing activities		4,090,950		(375,595)
Effect of exchange rates on cash and cash equivalents		(3,933)		—
Net increase in cash and cash equivalents		2,007,073		256,074
Cash and cash equivalents at beginning of period		252,876		163,851
Cash and cash equivalents at end of period	$	2,259,949	$	419,925

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

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Norwegian Cruise Line Holdings Ltd.

Consolidated Statements of Changes in Shareholders’ Equity

(Unaudited)

(in thousands)


	Three Months Ended June 30, 2020
					Accumulated
			Additional		Other						Total
	Ordinary		Paid-in		Comprehensive		Retained		Treasury		Shareholders’
	Shares		Capital		Income (Loss)		Earnings		Shares		Equity
Balance, March 31, 2020	$	239	$	4,257,571	$	(579,249)	$	1,950,019	$	(1,253,926)	$	4,374,654
Share-based compensation		—		22,389		—		—		—		22,389
Common share issuance proceeds, net		42		440,924		—		—		—		440,966
Net share settlement of restricted share units		—		(343)		—		—		—		(343)
Beneficial conversion feature		—		131,240		—		—		—		131,240
Other comprehensive income, net		—		—		83,362		—		—		83,362
Net loss		—		—		—		(715,243)		—		(715,243)
Balance, June 30, 2020	$	281	$	4,851,781	$	(495,887)	$	1,234,776	$	(1,253,926)	$	4,337,025

	Six Months Ended June 30, 2020
					Accumulated
			Additional		Other						Total
	Ordinary		Paid-in		Comprehensive		Retained		Treasury		Shareholders’
	Shares		Capital		Income (Loss)		Earnings		Shares		Equity
Balance, December 31, 2019	$	237	$	4,235,690	$	(295,490)	$	3,829,068	$	(1,253,926)	$	6,515,579
Share-based compensation		—		55,147		—		—		—		55,147
Issuance of shares under employee related plans		2		4,098		—		—		—		4,100
Common share issuance proceeds, net		42		440,924		—		—		—		440,966
Net share settlement of restricted share units		—		(15,318)		—		—		—		(15,318)
Beneficial conversion feature		—		131,240		—		—		—		131,240
Cumulative change in accounting policy		—		—		—		1,923		—		1,923
Other comprehensive loss, net		—		—		(200,397)		—		—		(200,397)
Net loss		—		—		—		(2,596,215)		—		(2,596,215)
Balance, June 30, 2020	$	281	$	4,851,781	$	(495,887)	$	1,234,776	$	(1,253,926)	$	4,337,025

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

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Norwegian Cruise Line Holdings Ltd.

Consolidated Statements of Changes in Shareholders’ Equity - Continued

(Unaudited)

(in thousands)


	Three Months Ended June 30, 2019
					Accumulated
			Additional		Other						Total
	Ordinary		Paid-in		Comprehensive		Retained		Treasury		Shareholders’
	Shares		Capital		Income (Loss)		Earnings		Shares		Equity
Balance, March 31, 2019	$	237	$	4,145,530	$	(153,400)	$	3,016,997	$	(1,104,062)	$	5,905,302
Share-based compensation		—		29,651		—		—		—		29,651
Issuance of shares under employee related plans		—		3,624		—		—		—		3,624
Treasury shares		—		—		—		—		(75)		(75)
Net share settlement of restricted share units		—		(1,980)		—		—		—		(1,980)
Other comprehensive loss, net		—		—		(26,369)		—		—		(26,369)
Net income		—		—		—		240,190		—		240,190
Balance, June 30, 2019	$	237	$	4,176,825	$	(179,769)	$	3,257,187	$	(1,104,137)	$	6,150,343

	Six Months Ended June 30, 2019
					Accumulated
			Additional		Other						Total
	Ordinary		Paid-in		Comprehensive		Retained		Treasury		Shareholders’
	Shares		Capital		Income (Loss)		Earnings		Shares		Equity
Balance, December 31, 2018	$	235	$	4,129,639	$	(161,647)	$	2,898,840	$	(904,066)	$	5,963,001
Share-based compensation		—		56,650		—		—		—		56,650
Issuance of shares under employee related plans		2		11,366		—		—		—		11,368
Treasury shares		—		—		—		—		(200,071)		(200,071)
Net share settlement of restricted share units		—		(20,830)		—		—		—		(20,830)
Other comprehensive loss, net		—		—		(18,122)		—		—		(18,122)
Net income		—		—		—		358,347		—		358,347
Balance, June 30, 2019	$	237	$	4,176,825	$	(179,769)	$	3,257,187	$	(1,104,137)	$	6,150,343

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

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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 (including Prestige (as defined below), except for periods prior to the consummation of the Acquisition of Prestige (as defined below)), (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, and (v) “Prestige” refers to Prestige Cruises International S. de R.L. (formerly Prestige Cruises International, Inc.), together with its consolidated subsidiaries, including Prestige Cruise Holdings S. de R.L. (formerly Prestige Cruise Holdings, Inc.), Prestige’s direct wholly-owned subsidiary, which in turn is the parent of Oceania Cruises S. de R.L. (formerly Oceania Cruises, Inc.) (“Oceania Cruises”) and Seven Seas Cruises S. de R.L. (“Regent”) (Oceania Cruises also refers to the brand by the same name and Regent also refers to the brand Regent Seven Seas Cruises).

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, 2020, we had 28 ships with approximately 59,150 Berths and had orders for nine additional ships to be delivered through 2027, subject to certain conditions. Due to the novel coronavirus (“COVID-19”), we have temporarily suspended global cruise voyages through October 31, 2020. We refer you to Note 2 – “Summary of Significant Accounting Policies” for further information.

We have one Explorer Class Ship on order for delivery in 2023. We have two Allura Class Ships on order for delivery in 2023 and 2025. Project Leonardo will introduce an additional six ships with expected delivery dates from 2022 through 2027. These additions to our fleet will increase our total Berths to approximately 82,000. The impacts of COVID-19 on the shipyards where our ships are under construction (or will be constructed) have resulted in some delays in expected ship deliveries, and the impacts of COVID-19 could result in additional delays in ship deliveries in the future, which may be prolonged.

2. Summary of Significant Accounting Policies

Liquidity and Management’s Plan

Due to the continued spread of COVID-19, growing travel restrictions and limited access to ports around the world, in March 2020, the Company implemented a voluntary suspension of all cruise voyages across its three brands, which has subsequently been extended through October 31, 2020. On March 14, 2020, concurrent with our and the broader cruise industry’s original suspension, the U.S. Centers for Disease Control and Prevention (“CDC”) issued a No Sail Order through April 13, 2020, which was subsequently extended through July 24, 2020. On July 16, 2020, the CDC extended its No Sail Order until the earliest of (a) the expiration of the Secretary of Health and Human Services’ declaration that COVID-19 constitutes a public health emergency, (b) the date the Director of the CDC rescinds or modifies the No Sail Order based on specific public health or other considerations or (c) September 30, 2020. In addition, the duration of any voluntary suspensions we have implemented and the resumption of operations outside of the United States will be dependent, in part, on the severity and duration of the COVID-19 pandemic, the status of the CDC’s No Sail Order, the lifting of various travel restrictions and travel bans issued by various countries around the world, as well as the availability of ports around the world. Significant events affecting travel, including COVID-19, typically have an impact on the demand for cruise vacations, with the full extent of the impact generally determined by the length of time the event influences travel decisions. We believe the ongoing effects of COVID-19 on our operations and global bookings have had, and will continue to have, a significant impact on our financial results and liquidity, and such negative impact

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may continue well beyond the containment of such an outbreak. Due to the unknown duration and extent of the COVID-19 pandemic, travel restrictions and advisories, the potential unavailability of ports and/or destinations, unknown cancellations and timing of redeployments and a general impact on consumer sentiment regarding cruise travel, the full effect on our financial performance and financial condition cannot be quantified at this time, but we expect to report a net loss for the year ending December 31, 2020.

Since March 2020, we have taken several actions to bolster our financial condition while our global cruise voyages are suspended. In March 2020, NCLC borrowed the full amount of $1.55 billion under its $875 million Revolving Loan Facility and its $675 million Epic Credit Facility, dated as of March 5, 2020. We have taken additional measures to improve our liquidity by refinancing existing debt amortization, including under our agreements with export credit agencies and related governments, and by extending the maturities and refinancing amortization under other agreements, which has resulted in approximately $1.6 billion of payment deferrals. See Note 8 – “Long-Term Debt” for further information. Through June 30, 2020, the Company received additional financing through various debt financings and an equity offering totaling $2.4 billion in gross proceeds. The equity offering resulted in 41,818,181 shares being issued in exchange for gross proceeds of $460 million. See Note 8 – “Long-Term Debt” for further information on the debt financings. Subsequent to June 30, 2020, the Company received another $1.5 billion in gross proceeds from additional debt financings and an additional equity offering, of which approximately $675 million was used to repay in full and terminate the Epic Credit Facility. Refer to Note 8 – “Long-Term Debt” for further information on the debt financings and Note 16 – “Subsequent Events” for further information on the equity financing. The Company has also undertaken several proactive cost reduction and cash conservation measures to mitigate the financial and operational impacts of COVID-19, through the reduction of capital expenditures and operating expenses, including food, fuel, insurance, port charges and reduced crew manning of vessels during the suspension, resulting in lower crew payroll expense.

In accordance with Accounting Standards Update (“ASU”) No. 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued. Based on the actions the Company has taken as described above and our resulting current resources, the Company has alleviated the substantial doubt previously disclosed and has sufficient liquidity to satisfy our obligations over the next twelve months and maintain minimum levels of liquidity as required by certain of our debt agreements.

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; however, demand for cruises during the summer months of 2020 has been materially adversely impacted by the COVID-19 pandemic. The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2019, which are included in our most recent Annual Report on Form 10-K filed with the SEC, as updated by our Current Report on Form 8-K filed on July 8, 2020.

Reclassifications

Certain amounts in prior periods have been reclassified to conform to the current period presentation.

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Earnings (Loss) Per Share

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Net income (loss)	$	(715,243)	$	240,190	$	(2,596,215)	$	358,347
Basic weighted-average shares outstanding		239,342,745		215,426,441		226,486,772		216,328,943
Dilutive effect of share awards		—		1,384,325		—		1,508,062
Diluted weighted-average shares outstanding		239,342,745		216,810,766		226,486,772		217,837,005
Basic earnings (loss) per share	$	(2.99)	$	1.11	$	(11.46)	$	1.66
Diluted earnings (loss) per share	$	(2.99)	$	1.11	$	(11.46)	$	1.65

For the three months ended June 30, 2020 and 2019, a total of 59.2 million and 3.6 million shares, respectively, and for the six months ended June 30, 2020 and 2019, a total of 33.1 million and 4.5 million shares, respectively, have been excluded from diluted weighted-average shares outstanding because the effect of including them would have been anti-dilutive.

Foreign Currency

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. Gains or losses resulting from transactions denominated in other currencies are recognized in our consolidated statements of operations within other income, net. We recognized a loss of $10.2 million and $3.3 million for the three months ended June 30, 2020 and 2019, respectively, and a gain of $9.7 million and a loss of $4.3 million for the six months ended June 30, 2020 and 2019, respectively, related to transactions denominated in other currencies.

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.

Recently Issued Accounting Guidance

In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provided guidance to alleviate the burden in accounting for reference rate reform by allowing certain expedients and exceptions in applying GAAP to contracts, hedging relationships and other transactions impacted by reference rate reform. The provisions apply only to those transactions that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. Adoption of the provisions of ASU 2020-04 are optional and are effective from March 12, 2020 through December 31, 2022. We are currently evaluating the impact of ASU 2020-04 on our consolidated financial statements.

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3. 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,
	2020		2019		2020		2019
North America	$	3,366	$	968,466	$	954,422	$	1,951,455
Europe		9,701		508,435		23,036		542,187
Asia-Pacific		—		67,239		150,921		290,006
South America		—		3,765		76,306		94,068
Other		3,862		116,372		59,126		190,191
Total revenue	$	16,929	$	1,664,277	$	1,263,811	$	3,067,907

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

We have concluded that our business has a single reportable segment. Each brand, Norwegian, Oceania Cruises and Regent, constitutes a business for which discrete financial information is available and management regularly reviews the brand level operating results and, therefore, each brand is considered an operating segment. Our operating segments have similar economic and qualitative characteristics, including similar long-term margins and similar products and services; therefore, we aggregate all of the operating segments into one 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 in the U.S. Revenue attributable to U.S.-sourced guests has historically approximated 75-80%. 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, 2020 and December 31, 2019, our receivables from customers were $4.5 million and $15.3 million, respectively.

Beginning in March 2020, our brands launched new cancellation policies to permit our guests to cancel cruises which are not part of the Company’s temporary suspension of voyages up to 48 hours or 15 days, depending on the brand, prior to embarkation and receive a refund in the form of a credit to be applied toward a future cruise. These programs are currently in place for cruises booked through specific time periods specified by brand, and for cruises scheduled to embark through specified time periods, depending on the brand. The future cruise credit is valid for any sailing through December 31, 2022, and we may extend this offer. The future cruise credits are not contracts, and therefore, guests who have 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, 2020 and December 31, 2019, our contract liabilities were $66.1 million and $1.4 billion, respectively. Of the amounts included within contract liabilities as of June 30, 2020, approximately 40% were refundable in accordance with our cancellation policies. For the six months ended June 30, 2020, $0.9 billion of revenue recognized was included in the contract liability balance at the beginning of the period.

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For cruise vacations that had been cancelled by us due to COVID-19, approximately $38.6 million and $130.6 million in costs to obtain these contracts, consisting of protected commissions and credit card fees, were recognized in earnings during the three and six months ended June 30, 2020, respectively.

4. Intangible Assets

We evaluate goodwill and tradenames for impairment annually or more frequently when an event occurs or circumstances change that indicates the carrying value of a reporting unit may not be recoverable. In March 2020, the Company announced a voluntary suspension of all cruise voyages for its three brands, which has subsequently been extended through October 31, 2020. Due to the temporary suspension of operations and decline in our stock price, we performed interim goodwill and tradename impairment tests as of March 31, 2020. We refer you to Note 9 – “Fair Value Measurements and Derivatives” for information on our valuation assumptions.

The changes in the carrying amount of goodwill for each reporting unit for the six months ended June 30, 2020 are as follows (in thousands):


	Reporting Unit
	Norwegian				Regent
	Cruise		Oceania		Seven Seas		Total
	Line		Cruises		Cruises		Goodwill
Balance, December 31, 2019	$	403,805	$	523,026	$	462,100	$	1,388,931
Impairment loss		(403,805)		(523,026)		(363,966)		(1,290,797)
Balance, June 30, 2020	$	—	$	—	$	98,134