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As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 3/21/24 Lindblad Expeditions Holdings Inc 10-K/A 12/31/23 89:8.5M RDG Filings/FA |
Document/Exhibit Description Pages Size
1: 10-K/A Amendment to Annual Report HTML 1.40M
2: EX-23.1 Exhibit 23.1 Auditor Consent HTML 26K
3: EX-23.2 Exhibit 23.2 Prior Auditor Consent HTML 25K
4: EX-31.1 Certification -- §302 - SOA'02 HTML 32K
5: EX-31.2 Certification -- §302 - SOA'02 HTML 32K
6: EX-32.1 Certification -- §906 - SOA'02 HTML 27K
7: EX-32.2 Certification -- §906 - SOA'02 HTML 27K
13: R1 Document And Entity Information HTML 97K
14: R2 Consolidated Balance Sheets HTML 137K
15: R3 Consolidated Balance Sheets (Parentheticals) HTML 55K
16: R4 Consolidated Statements of Operations HTML 128K
17: R5 Consolidated Statements of Comprehensive (Loss) HTML 60K
Income
18: R6 Consolidated Statements of Stockholders' (Deficit) HTML 86K
Equity
19: R7 Consolidated Statements of Cash Flows HTML 120K
20: R8 Note 1 - Business HTML 35K
21: R9 Note 2 - Summary of Significant Accounting HTML 138K
Policies
22: R10 Note 3 - Earnings Per Share HTML 50K
23: R11 Note 4 - Property and Equipment HTML 39K
24: R12 Note 5 - Goodwill and Intangible Assets HTML 59K
25: R13 Note 6 - Long-term Debt HTML 80K
26: R14 Note 7 - Financial Instruments and Fair Value HTML 64K
Measurements
27: R15 Note 8 - Income Taxes HTML 98K
28: R16 Note 9 - Commitments and Contingencies HTML 65K
29: R17 Note 10 - Employee Benefit Plan HTML 29K
30: R18 Note 11 - Stockholders' Equity HTML 38K
31: R19 Note 12 - Stock-based Compensation HTML 90K
32: R20 Note 13 - Segment Information HTML 75K
33: R21 Significant Accounting Policies (Policies) HTML 192K
34: R22 Note 2 - Summary of Significant Accounting HTML 92K
Policies (Tables)
35: R23 Note 3 - Earnings Per Share (Tables) HTML 46K
36: R24 Note 4 - Property and Equipment (Tables) HTML 36K
37: R25 Note 5 - Goodwill and Intangible Assets (Tables) HTML 64K
38: R26 Note 6 - Long-term Debt (Tables) HTML 67K
39: R27 Note 7 - Financial Instruments and Fair Value HTML 59K
Measurements (Tables)
40: R28 Note 8 - Income Taxes (Tables) HTML 94K
41: R29 Note 9 - Commitments and Contingencies (Tables) HTML 52K
42: R30 Note 12 - Stock-based Compensation (Tables) HTML 80K
43: R31 Note 13 - Segment Information (Tables) HTML 68K
44: R32 Note 1 - Business (Details Textual) HTML 27K
45: R33 Note 2 - Summary of Significant Accounting HTML 56K
Policies (Details Textual)
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Policies - Disaggregation of Revenues by Type
(Details)
47: R35 Note 2 - Summary of Significant Accounting HTML 30K
Policies - Change in Contract Liabilities
(Details)
48: R36 Note 2 - Summary of Significant Accounting HTML 33K
Policies - Reconciliation of Cash, Cash
Equivalents, and Restricted Cash (Details)
49: R37 Note 2 - Summary of Significant Accounting HTML 32K
Policies - Restricted Cash and Marketable
Securities (Details)
50: R38 Note 2 - Summary of Significant Accounting HTML 31K
Policies - Prepaid Expenses and Other Current
Assets (Details)
51: R39 Note 2 - Summary of Significant Accounting HTML 34K
Policies - Property and Equipment, Net (Details)
52: R40 Note 2 - Summary of Significant Accounting HTML 30K
Policies - Accounts Payable and Accrued Expenses
(Details)
53: R41 Note 3 - Earnings Per Share (Details Textual) HTML 32K
54: R42 Note 3 - Earnings Per Share - Schedule of Earnings HTML 64K
Per Share (Details)
55: R43 Note 4 - Property and Equipment (Details Textual) HTML 28K
56: R44 Note 4 - Property and Equipment - Property and HTML 37K
Equipment (Details)
57: R45 Note 5 - Goodwill and Intangible Assets (Details HTML 26K
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58: R46 Note 5 - Goodwill and Intangible Assets - Schedule HTML 31K
of Goodwill (Details)
59: R47 Note 5 - Goodwill and Intangible Assets - HTML 41K
Intangible Assets (Details)
60: R48 Note 5 - Goodwill and Intangible Assets - Future HTML 39K
Amortization Expense (Details)
61: R49 Note 6 - Long-term Debt (Details Textual) HTML 74K
62: R50 Note 6 - Long-term Debt - Long-term Debt (Details) HTML 56K
63: R51 Note 6 - Long-term Debt - Future Minimum Principal HTML 43K
Payments of Long-term Debt (Details)
64: R52 Note 7 - Financial Instruments and Fair Value HTML 61K
Measurements (Details Textual)
65: R53 Note 7 - Financial Instruments and Fair Value HTML 49K
Measurements - Estimated Fair Values of Derivative
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66: R54 Note 7 - Financial Instruments and Fair Value HTML 38K
Measurements - Derivatives Recognized in Condensed
Consolidation Financial Statements (Details)
67: R55 Note 8 - Income Taxes (Details Textual) HTML 36K
68: R56 Note 8 - Income Taxes - U.S. and Foreign HTML 33K
Components of Income (Details)
69: R57 Note 8 - Income Taxes - Income Tax Provisions HTML 50K
(Details)
70: R58 Note 8 - Income Taxes - Reconciliation of Income HTML 41K
Tax (Benefit) Expense (Details)
71: R59 Note 8 - Income Taxes - Deferred Tax Assets HTML 48K
(Liabilities) (Details)
72: R60 Note 9 - Commitments and Contingencies (Details HTML 48K
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Non-controlling Interest (Details)
74: R62 Note 9 - Commitments and Contingencies - Operating HTML 36K
Lease Payment (Details)
75: R63 Note 9 - Commitments and Contingencies - Operating HTML 26K
Lease Payment (Details) (Parentheticals)
76: R64 Note 9 - Commitments and Contingencies - Charter HTML 29K
Commitments (Details)
77: R65 Note 10 - Employee Benefit Plan (Details Textual) HTML 29K
78: R66 Note 11 - Stockholders' Equity (Details Textual) HTML 96K
79: R67 Note 12 - Stock-based Compensation (Details HTML 84K
Textual)
80: R68 Note 12 - Stock-based Compensation - Summary of HTML 59K
PSU, Restricted Share and RSU Activity (Details)
81: R69 Note 12 - Share-based Compensation - Summary of HTML 43K
Significant Assumptions for Share-based
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82: R70 Note 12 - Stock-based Compensation - Summary of HTML 63K
Option Activity (Details)
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84: R72 Note 13 - Segment Information - Segment HTML 57K
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| lindb20231231_10k.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM i 10-K/A
i Amendment No. 1
(Mark One)
i ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended i December 31, 2023
i ☐ 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 i 001-35898
LINDBLAD EXPEDITIONS HOLDINGS, INC.
(Exact Name of Registrant as Specified in Its Charter)
| i Delaware | i 27-4749725 | |
| (State or Other Jurisdiction of | (I.R.S. Employer |
| i 96 Morton Street, 9th Floor, i New York, i New York | i 10014 | |
| (Address of Principal Executive Offices) | (Zip Code) |
( i 212) i 261-9000
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| i Common Stock, par value $0.0001 per share | i LIND | The i NASDAQ Stock Market LLC | ||
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ i No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ☐ i No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days. i 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). i Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 ☐ | i Accelerated filer ☒ |
| Non-accelerated filer ☐ | Smaller reporting company i ☐ |
| Emerging growth company i ☐ |
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. i ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. i ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes i ☐ No ☒
As of June 30, 2023 (the last business day of the registrant’s most recently completed second fiscal quarter), the aggregate market value of the common stock held by non-affiliates of the registrant was approximately $ i 402.2 million based on the closing sales price of $10.88 on the NASDAQ Capital Market.
As of February 26, 2024, there were i 53,429,359 shares of the registrant’s common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
None
Explanatory Note
The sole purpose of this Amendment No. 1 to the Annual Report on Form 10-K (“Amendment No. 1”) of Lindblad Expeditions Holdings, Inc. (the “Company”) for the year ended December 31, 2023, originally filed with the Securities and Exchange Commission on March 6, 2024 (the “2023 Form 10-K”), is to solely correct clerical errors in the report titled “Report of Independent Registered Public Accounting Firm” provided by Ernst & Young LLP (the “Audit Report”) of Part II, Item 8. Financial Statements and Supplementary Data of the. Specifically, the Audit Report inadvertently contained an incorrect date.
This Amendment No. 1 does not reflect events occurring after the filing of the 2023 Form 10-K, does not update disclosures contained in the 2023 Form 10-K and does not modify or amend the 2023 Form 10-K except to correct the clerical errors as specifically described above. Pursuant to Rule 12b-15 of the Securities Exchange Act of 1934, as amended, this Amendment contains the complete text of Item 8. Financial Statements and Supplementary Data, Item 15. Exhibits and Financial Statement Schedules, and certifications of the Company’s Principal Executive Officer and Principal Financial Officer required under Items 302 and 906 of the Sarbanes-Oxley Act of 2002, as amended, dated as of the date of this Amendment, as well as updated inline XBRL exhibits.
PART II
| Item 8. |
The consolidated financial statements and related financial statement schedules required under Item 8 are included beginning on page F-1 of this Report.
PART IV
| Item 15. |
| (a) |
The following documents are filed as part of this Form 10-K or incorporated herein by reference: |
| (1) |
Consolidated Financial Statements. |
See Index to Consolidated Financial Statements on page F-1.
| (2) |
Financial Statement Schedules. |
None.
| (3) |
Exhibits. |
The following exhibits are filed or incorporated by reference as part of this Form 10-K.
| 23.1 | Consent of Ernst & Young LLP. | Herewith | ||||||
| 97.1 | Policy Relating to Recovery of Erroneously Awarded Compensation. | By Reference | 10-K | March 6, 2024 | ||||
| 101.INS |
Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) |
Herewith |
||||||
| 101.SCH |
Inline XBRL Taxonomy Extension Schema Document |
Herewith |
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| 101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
Herewith |
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| 101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
Herewith |
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| 101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document |
Herewith |
||||||
| 101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
Herewith |
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| 104 |
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
| * |
Management compensatory agreement. |
| # | Schedules and similar attachments to this Exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K. Lindblad Expeditions Holdings, Inc. agrees to furnish supplementally a copy of any omitted schedule or exhibit to the U.S. Securities and Exchange Commission upon request. |
| † |
Certain portions of this Exhibit have been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K. The omitted information is (i) not material and (ii) the type that the Company and Lindblad Expeditions Holdings, Inc. each treat as private or confidential. Lindblad Expeditions Holdings, Inc. agrees to furnish supplementally an unredacted copy of this Exhibit to the U.S. Securities and Exchange Commission upon request. |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Amendment No. 1 to the Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized on March 21, 2024.
| LINDBLAD EXPEDITIONS HOLDINGS, INC. |
||
| (Registrant) |
||
| By: |
/s/ Sven Lindblad |
|
| Sven Lindblad | ||
| Chief Executive Officer |
||
| (Principal Executive Officer) |
||
LINDBLAD EXPEDITIONS HOLDINGS, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of Lindblad Expeditions Holdings, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Lindblad Expeditions Holdings, Inc. and subsidiaries as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive (loss) income, stockholders' (deficit) equity and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 6, 2024, expressed unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Unearned Passenger Revenue – Future Travel Certificates
| Description of the Matter | As described in Note 2 to the consolidated financial statements, the Company records unearned passenger revenue when guests remit deposits in advance of tour embarkation. In conjunction with the suspension or rescheduling of tours, the Company has provided guests with future travel certificates, which in some instances exceeded the original cash deposit. The value of future travel certificates in excess of cash received, is being recognized as a discount to tour revenues at the time the related tour occurs. Future travel certificates are valued based on the Company’s expectation that a guest will travel again.
Auditing the Company's accounting for the unearned passenger revenue related to future travel certificates was complex and challenging due to the estimation required by management to determine the value of unearned passenger revenue for future travel certificates, including the sensitivity of the value to the significant assumptions of repeat guests. |
| How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company's process to determine the unearned passenger revenue value for future travel certificates, including the assumptions related to repeat guests and the completeness and accuracy of data utilized in such process.
To test the unearned passenger revenue value for future travel certificates, we performed audit procedures that included, among others, evaluating the repeat guest assumption based on historical experience as well as testing the accuracy and completeness of the underlying data used in management's calculation. We also performed sensitivity analyses to evaluate the changes in the value of unearned passenger revenue of future travel certificates for changes in the Company’s significant assumption. |
/s/ i Ernst & Young LLP
We have served as the Company’s auditor since 2022.
i Hartford, Connecticut
March 6, 2024
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of
Lindblad Expeditions Holdings, Inc. and Subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of operations, comprehensive loss, stockholders’ deficit and cash flows of Lindblad Expeditions Holdings, Inc. and Subsidiaries (the “Company”) for the year ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the results of its operations and its cash flows for the year ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ Marcum llp
We have served as the Company’s auditor from 2015 to 2022.
Melville, NY
LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES
(In thousands, except share and per share data)
| As of December 31, | ||||||||
| 2022 | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | i 156,845 | $ | i 87,177 | ||||
| Restricted cash | i 30,499 | i 28,847 | ||||||
| Short-term securities | i - | i 13,591 | ||||||
| Prepaid expenses and other current assets | i 57,158 | i 53,704 | ||||||
| Total current assets | i 244,502 | i 183,319 | ||||||
| Property and equipment, net | i 526,002 | i 539,406 | ||||||
| Goodwill | i 42,017 | i 42,017 | ||||||
| Intangibles, net | i 9,412 | i 11,219 | ||||||
| Other long-term assets | i 9,364 | i 12,014 | ||||||
| Total assets | $ | i 831,297 | $ | i 787,975 | ||||
| LIABILITIES | ||||||||
| Current Liabilities: | ||||||||
| Unearned passenger revenues | $ | i 252,199 | $ | i 245,101 | ||||
| Accounts payable and accrued expenses | i 65,055 | i 71,019 | ||||||
| Long-term debt - current | i 47 | i 23,337 | ||||||
| Lease liabilities - current | i 1,923 | i 1,663 | ||||||
| Total current liabilities | i 319,224 | i 341,120 | ||||||
| Long-term debt, less current portion | i 621,778 | i 529,452 | ||||||
| Deferred tax liabilities | i 2,118 | i - | ||||||
| Other long-term liabilities | i 1,943 | i 3,049 | ||||||
| Total liabilities | i 945,063 | i 873,621 | ||||||
| Commitments and contingencies | - | - | ||||||
| Series A redeemable convertible preferred stock, 165,000 shares authorized; 62,000 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively | i 73,514 | i 69,143 | ||||||
| Redeemable noncontrolling interests | i 37,784 | i 27,886 | ||||||
| i 111,298 | i 97,029 | |||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Preferred stock, $0.0001 par value, 1,000,000 shares authorized; 62,000 Series A shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively | i - | i - | ||||||
| Common stock, $0.0001 par value, 200,000,000 shares authorized; 53,390,082 and 53,177,437 issued, 53,332,150 and 53,110,132 outstanding as of December 31, 2023 and December 31, 2022, respectively | i 5 | i 5 | ||||||
| Additional paid-in capital | i 97,139 | i 83,850 | ||||||
| Accumulated deficit | ( i 322,208 | ) | ( i 266,530 | ) | ||||
| Total stockholders' deficit | ( i 225,064 | ) | ( i 182,675 | ) | ||||
| Total liabilities, mezzanine equity and stockholders' deficit | $ | i 831,297 | $ | i 787,975 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except share and per share data)
| For the years ended December 31, |
||||||||||||
| 2022 |
2021 |
|||||||||||
| Tour revenues |
$ | i 569,543 | $ | i 421,500 | $ | i 147,107 | ||||||
| Operating expenses: |
||||||||||||
| Cost of tours |
i 322,376 | i 283,217 | i 124,484 | |||||||||
| General and administrative |
i 118,431 | i 96,291 | i 65,445 | |||||||||
| Selling and marketing |
i 71,426 | i 60,996 | i 28,484 | |||||||||
| Depreciation and amortization |
i 46,711 | i 44,042 | i 39,525 | |||||||||
| Total operating expenses |
i 558,944 | i 484,546 | i 257,938 | |||||||||
| Operating income (loss) |
i 10,599 | ( i 63,046 | ) | ( i 110,831 | ) | |||||||
| Other (expense) income: |
||||||||||||
| Interest expense, net |
( i 45,014 | ) | ( i 37,495 | ) | ( i 24,578 | ) | ||||||
| Gain (loss) on foreign currency |
i 751 | ( i 1,236 | ) | ( i 1,265 | ) | |||||||
| Other (expense) income |
( i 4,066 | ) | ( i 307 | ) | i 15,487 | |||||||
| Total other expense |
( i 48,329 | ) | ( i 39,038 | ) | ( i 10,356 | ) | ||||||
| Loss before income taxes |
( i 37,730 | ) | ( i 102,084 | ) | ( i 121,187 | ) | ||||||
| Income tax expense (benefit) |
i 3,146 | i 6,076 | ( i 2,019 | ) | ||||||||
| Net loss |
( i 40,876 | ) | ( i 108,160 | ) | ( i 119,168 | ) | ||||||
| Net income attributable to noncontrolling interest |
i 4,734 | i 3,221 | i 38 | |||||||||
| Net loss attributable to Lindblad Expeditions Holdings, Inc. |
( i 45,610 | ) | ( i 111,381 | ) | ( i 119,206 | ) | ||||||
| Series A redeemable convertible preferred stock dividend |
i 4,373 | i 4,671 | i 5,289 | |||||||||
| Non-cash deemed dividend |
i - | i - | i 170 | |||||||||
| Net loss available to stockholders |
$ | ( i 49,983 | ) | $ | ( i 116,052 | ) | $ | ( i 124,665 | ) | |||
| Weighted average shares outstanding |
||||||||||||
| Basic |
i 53,256,513 | i 52,018,987 | i 50,109,426 | |||||||||
| Diluted |
i 53,256,513 | i 52,018,987 | i 50,109,426 | |||||||||
| Undistributed loss per share available to stockholders: |
||||||||||||
| Basic |
$ | ( i 0.94 | ) | $ | ( i 2.23 | ) | $ | ( i 2.41 | ) | |||
| Diluted |
$ | ( i 0.94 | ) | $ | ( i 2.23 | ) | $ | ( i 2.41 | ) | |||
The accompanying notes are an integral part of these consolidated financial statements.
| LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES |
| (In thousands) |
| For the years ended December 31, |
||||||||||||
| 2022 |
2021 |
|||||||||||
| Net loss |
$ | ( i 40,876 | ) | $ | ( i 108,160 | ) | $ | ( i 119,168 | ) | |||
| Other comprehensive income: |
||||||||||||
| Cash flow hedges: |
||||||||||||
| Net unrealized loss |
i - | i - | ( i 1,682 | ) | ||||||||
| Reclassification adjustment, net of tax |
i - | i 634 | i 2,650 | |||||||||
| Total other comprehensive income |
i - | i 634 | i 968 | |||||||||
| Total comprehensive loss |
( i 40,876 | ) | ( i 107,526 | ) | ( i 118,200 | ) | ||||||
| Less: comprehensive income attributive to non-controlling interest |
i 4,734 | i 3,221 | i 38 | |||||||||
| Comprehensive loss attributable to stockholders |
$ | ( i 45,610 | ) | $ | ( i 110,747 | ) | $ | ( i 118,238 | ) | |||
The accompanying notes are an integral part of these consolidated financial statements.
| LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES |
| (In thousands, except share data) |
| Common Stock |
Additional Paid-In |
Accumulated |
Accumulated Other Comprehensive |
Total Stockholders' |
||||||||||||||||||||
| Shares |
Amount |
Capital |
Deficit |
Loss |
Equity (Deficit) |
|||||||||||||||||||
| Balance as of December 31, 2020 |
i 49,905,512 | $ | i 5 | $ | i 48,127 | $ | ( i 11,572 | ) | $ | ( i 1,602 | ) | $ | i 34,958 | |||||||||||
| Stock-based compensation |
- | i - | i 5,429 | i - | i - | i 5,429 | ||||||||||||||||||
| Net activity related to equity compensation plans |
i 246,608 | i - | ( i 2,221 | ) | i - | i - | ( i 2,221 | ) | ||||||||||||||||
| Issuance of stock for acquisition |
i 82,302 | i - | i 1,770 | i - | i - | i 1,770 | ||||||||||||||||||
| Issuance of stock for conversion of preferred stock |
i 566,364 | i - | i 5,380 | i - | i - | i 5,380 | ||||||||||||||||||
| Non-cash deemed dividend to preferred share holders |
- | i - | i - | ( i 170 | ) | i - | ( i 170 | ) | ||||||||||||||||
| Other comprehensive income, net |
- | i - | i - | i - | i 968 | i 968 | ||||||||||||||||||
| Redeemable noncontrolling interest |
- | i - | i - | ( i 202 | ) | i - | ( i 202 | ) | ||||||||||||||||
| Series A preferred stock dividend |
- | - | - | ( i 5,289 | ) | - | ( i 5,289 | ) | ||||||||||||||||
| Net loss attributable to Lindblad Expeditions Holdings, Inc. |
- | i - | i - | ( i 119,206 | ) | i - | ( i 119,206 | ) | ||||||||||||||||
| Balance as of December 31, 2021 |
i 50,800,786 | $ | i 5 | $ | i 58,485 | $ | ( i 136,439 | ) | $ | ( i 634 | ) | $ | ( i 78,583 | ) | ||||||||||
| Stock-based compensation |
- | i - | i 6,992 | i - | i - | i 6,992 | ||||||||||||||||||
| Net activity related to equity compensation plans |
i 267,090 | i - | ( i 1,056 | ) | i - | i - | ( i 1,056 | ) | ||||||||||||||||
| Issuance of stock for conversion of preferred stock |
i 2,109,561 | i - | i 19,429 | i - | i - | i 19,429 | ||||||||||||||||||
| Other comprehensive income, net |
- | i - | i - | i - | i 634 | i 634 | ||||||||||||||||||
| Redeemable noncontrolling interest |
- | i - | i - | ( i 14,039 | ) | i - | ( i 14,039 | ) | ||||||||||||||||
| Series A preferred stock dividend |
- | i - | i - | ( i 4,671 | ) | i - | ( i 4,671 | ) | ||||||||||||||||
| Net loss attributable to Lindblad Expeditions Holdings, Inc. |
- | i - | i - | ( i 111,381 | ) | i - | ( i 111,381 | ) | ||||||||||||||||
| Balance as of December 31, 2022 |
i 53,177,437 | $ | i 5 | $ | i 83,850 | $ | ( i 266,530 | ) | $ | i - | $ | ( i 182,675 | ) | |||||||||||
| Stock-based compensation |
- | i - | i 13,886 | i - | i - | i 13,886 | ||||||||||||||||||
| Net activity related to equity compensation plans |
i 212,645 | i - | ( i 597 | ) | i - | i - | ( i 597 | ) | ||||||||||||||||
| Redeemable noncontrolling interest |
- | i - | i - | ( i 5,695 | ) | i - | ( i 5,695 | ) | ||||||||||||||||
| Series A preferred stock dividend |
- | i - | i - | ( i 4,373 | ) | i - | ( i 4,373 | ) | ||||||||||||||||
| Net loss attributable to Lindblad Expeditions Holdings, Inc. |
- | i - | i - | ( i 45,610 | ) | i - | ( i 45,610 | ) | ||||||||||||||||
| Balance as of December 31, 2023 |
i 53,390,082 | $ | i 5 | $ | i 97,139 | $ | ( i 322,208 | ) | $ | i - | $ | ( i 225,064 | ) | |||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
| For the years ended December 31, |
||||||||||||
| 2022 |
2021 |
|||||||||||
| Cash Flows From Operating Activities |
||||||||||||
| Net loss |
$ | ( i 40,876 | ) | $ | ( i 108,160 | ) | $ | ( i 119,168 | ) | |||
| Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||||||
| Depreciation and amortization |
i 46,711 | i 44,042 | i 39,525 | |||||||||
| Amortization of deferred financing costs and other, net |
i 3,368 | i 2,669 | i 3,203 | |||||||||
| Amortization of right-to-use lease assets |
i 811 | i 608 | i 21 | |||||||||
| Stock-based compensation |
i 13,886 | i 6,992 | i 5,563 | |||||||||
| Deferred income taxes |
i 2,719 | i 5,481 | ( i 833 | ) | ||||||||
| (Gain) loss on foreign currency |
( i 751 | ) | i 1,236 | i 1,265 | ||||||||
| Write-off of unamortized issuance costs related to debt refinancing |
i 3,860 | i 9,004 | i - | |||||||||
| Changes in operating assets and liabilities |
||||||||||||
| Prepaid expenses and other current assets |
( i 3,454 | ) | ( i 19,695 | ) | ( i 11,768 | ) | ||||||
| Unearned passenger revenues |
i 7,098 | i 32,503 | i 83,946 | |||||||||
| Other long-term assets |
( i 1,871 | ) | i 2,556 | ( i 684 | ) | |||||||
| Other long-term liabilities |
i - | i 689 | i 6,140 | |||||||||
| Accounts payable and accrued expenses |
( i 5,210 | ) | i 20,530 | i 25,285 | ||||||||
| Operating lease liabilities |
( i 850 | ) | ( i 658 | ) | i - | |||||||
| Net cash provided by (used in) operating activities |
i 25,441 | ( i 2,203 | ) | i 32,495 | ||||||||
| Cash Flows From Investing Activities |
||||||||||||
| Purchases of property and equipment |
( i 29,963 | ) | ( i 38,205 | ) | ( i 96,688 | ) | ||||||
| Sale (purchase) of securities |
i 15,163 | ( i 15,000 | ) | i - | ||||||||
| Proceeds from loan principal repayment |
i - | i 3,610 | i - | |||||||||
| Acquisition (net of cash acquired) |
i - | i - | ( i 18,036 | ) | ||||||||
| Net cash used in investing activities |
( i 14,800 | ) | ( i 49,595 | ) | ( i 114,724 | ) | ||||||
| Cash Flows From Financing Activities |
||||||||||||
| Proceeds from long-term debt |
i 275,000 | i 360,000 | i 61,720 | |||||||||
| Repayments of long-term debt |
( i 205,704 | ) | ( i 352,941 | ) | ( i 5,957 | ) | ||||||
| Payment of deferred financing costs |
( i 7,489 | ) | ( i 10,874 | ) | ( i 3,135 | ) | ||||||
| Repurchase under stock-based compensation plans and related tax impacts |
( i 1,128 | ) | ( i 1,056 | ) | ( i 2,221 | ) | ||||||
| Net cash provided by (used in) financing activities |
i 60,679 | ( i 4,871 | ) | i 50,407 | ||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash |
i 71,320 | ( i 56,669 | ) | ( i 31,822 | ) | |||||||
| Cash, cash equivalents and restricted cash at beginning of period |
i 116,024 | i 172,693 | i 204,515 | |||||||||
| Cash, cash equivalents and restricted cash at end of period |
$ | i 187,344 | $ | i 116,024 | $ | i 172,693 | ||||||
| Supplemental disclosures of cash flow information: |
||||||||||||
| Cash paid during the period: |
||||||||||||
| Interest |
$ | i 43,695 | $ | i 25,815 | $ | i 18,260 | ||||||
| Income taxes |
i 711 | i 309 | i 98 | |||||||||
| Non-cash investing and financing activities: |
||||||||||||
| Non-cash preferred stock dividend |
i 4,373 | i 4,671 | $ | i 5,289 | ||||||||
| Value of shares issued for acquisition |
i - | i - | i 1,770 | |||||||||
| Non-cash preferred stock deemed dividend |
i - | i - | i 170 | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
Lindblad Expeditions Holdings, Inc.
Notes to the Consolidated Financial Statements
NOTE 1 — BUSINESS
Organization
Lindblad Expeditions Holdings, Inc. and its consolidated subsidiaries’ (the “Company” or “Lindblad”) mission is offering life-changing adventures around the world and pioneering innovative ways to allow its guests to connect with exotic and remote places. The Company currently operates a fleet of ten owned expedition ships and six seasonal charter vessels under the Lindblad brand, operates land-based, eco-conscious expeditions and active nature focused trips and tours under the Natural Habitat, Inc. (“Natural Habitat”) and Off the Beaten Path, LLC (“Off the Beaten Path”) brands, operates luxury cycling and adventure tours under the DuVine Cycling + Adventure Company (“DuVine”) brand, and designs handcrafted walking tours under the Classic Journeys, LLC (“Classic Journeys”) brand.
The Company operates the following reportable business segments:
Lindblad Segment. The Lindblad segment primarily provides ship-based expeditions aboard customized, nimble and intimately-scaled vessels that are able to venture where larger cruise ships cannot, thus allowing Lindblad to offer up-close experiences in the planet’s wild and remote places and capitals of culture. Each expedition ship is fully equipped with state-of-the-art tools for in-depth exploration and the majority of expeditions involve travel to remote places with limited infrastructure and ports, such as Antarctica and the Arctic, or places that are best accessed by a ship, such as the Galápagos Islands, Alaska, Baja California’s Sea of Cortez and Panama, and foster active engagement by guests. The Company has an agreement with National Geographic Partners, LLC (“National Geographic”), which provides for lecturers and National Geographic experts, including photographers, writers, marine biologists, naturalists, field researchers and film crews, to join many of the Company’s expeditions.
Land Experiences Segment. The Land Experiences segment includes our four primarily land-based brands, Natural Habitat, DuVine, Off the Beaten Path and Classic Journeys.
Natural Habitat offers over 100 different expedition itineraries in more than 45 countries spanning all seven continents, with eco-conscious expeditions and nature-focused, small-group tours that include polar bear tours in Churchill, Canada, Alaskan grizzly bear adventures, small-group Galápagos Islands tours and African safaris. Natural Habitat has partnered with World Wildlife Fund (“WWF”) to offer conservation travel, which is sustainable travel that contributes to the protection of nature and wildlife.
Off the Beaten Path offers active small-group adventures, led by local, experienced guides, with distinct focus on wildlife, hiking national parks and culture. Off the Beaten Path offerings include insider national park experiences in the Rocky Mountains, Desert Southwest, and Alaska, as well as unique trips across Central and South America, Oceania, Europe and Africa.
DuVine offers intimate group cycling and adventure tours around the world with local cycling experts as guides, immersive in local cultural, cuisine and high-quality accommodations. International cycling tours include the exotic Costa Rican rainforests, the rocky coasts of Ireland and the vineyards of Spain while cycling adventures in the United States include cycling beneath the California redwoods, pedaling through Vermont farmland and wine tastings in the world-class vineyards of Napa and Sonoma.
Classic Journeys offers highly curated active small-group and private custom journeys centered around cinematic walks led by expert local guides in over 50 countries around the world. These walking tours are highlighted by expert local guides, luxury boutique accommodations, and handcrafted itineraries that immerse guests into the history and culture of the places they are exploring and the people who live there.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
i
Basis of Presentation
The consolidated financial statements include the accounts of the Company after elimination of all intercompany accounts and transactions. The consolidated financial statements and accompanying footnotes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”). The presentation of prior period marine operating supply and inventory on the consolidated balance sheets has been combined with prepaid expenses and other current assets to conform to the 2023 presentation, with related impact to the consolidated statement of cash flows, which had no effect on previously reported current asses or total assets.
i
Use of Estimates
The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities as well as revenues and expenses and related disclosures. Actual results could differ from such estimates. Management estimates include determining the estimated lives of long-lived and intangible assets, the valuation of stock-based compensation awards, future travel certificate breakage, annual goodwill impairment assessment, and the recovery of deferred tax assets. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the consolidated financial statements in the period that they are determined to be necessary.
i
Revenue Recognition
Revenues are measured based on consideration specified in the Company’s contracts with guests and are recognized as the related performance obligations are satisfied. The majority of the Company’s revenues are derived from guest ticket contracts which are reported as tour revenues. The Company’s primary performance obligation under these contracts is to provide an expedition, trip or tour, and may include pre- and post-expedition excursions, hotel accommodations, land-based expeditions and air transportation to and from the ships or the trip or tour beginning or end point. Upon satisfaction of the Company’s primary performance obligation, revenue is recognized over the duration of each expedition, trip or tour.
Tour revenues also include revenues from the sale of goods and services onboard the Company’s ships, cancellation fees and trip insurance. Revenues from the sale of goods and services rendered onboard are recognized upon purchase. Guest cancellation fees are recognized as tour revenues at the time of the cancellation. The Company records a liability for estimated trip insurance claims based on the Company’s claims history. Proceeds received from trip insurance premiums in excess of this liability are recorded as revenue in the period in which they are received.
The Company sources its guest bookings through a combination of direct selling and various agency networks and alliances. The following table disaggregates tour revenues by the sales channel it was derived from:
i
| For the years ended December 31, | ||||||||||||
| 2022 | 2021 | |||||||||||
| Guest ticket revenue: | ||||||||||||
| Direct | i 53 | % | i 50 | % | i 56 | % | ||||||
| National Geographic | i 12 | % | i 14 | % | i 14 | % | ||||||
| Agencies | i 19 | % | i 20 | % | i 18 | % | ||||||
| Affinity | i 6 | % | i 5 | % | i 5 | % | ||||||
| Guest ticket revenue | i 90 | % | i 89 | % | i 93 | % | ||||||
| Other tour revenue | i 10 | % | i 11 | % | i 7 | % | ||||||
| Tour revenues | i 100 | % | i 100 | % | i 100 | % | ||||||
/
i
Customer Deposits and Contract Liabilities
The Company’s guests remit deposits in advance of tour embarkation. Guest deposits consist of guest ticket revenues as well as revenues from the sale of pre- and post-expedition excursions, hotel accommodations, land-based expeditions and certain air transportation. Guest deposits represent unearned revenues and are reported as unearned passenger revenues when received and are subsequently recognized as tour revenue over the duration of the expedition. The Company does not consider guest deposits to be a contract liability until the guest no longer has the right, resulting from the passage of time, to cancel their reservation and receive a full refund. Guests were previously provided an option of either a refund or future travel certificates, which in some instances the value of the future travel certificate exceeded the original cash deposit. The value of future travel certificates in excess of cash
received is being recognized as a discount to tour revenues at the time the related expedition occurs and includes an estimate of breakage based on historical behavior of the customer and/or time to expiration of the certificate. As of December 31, 2023 and 2022 the Company has recorded $ i 252.2 million and $ i 245.1 million, related to unearned passenger revenue, respectively.
The change in contract liabilities within unearned passenger revenues are as follows:
i
| Contract Liabilities | ||||
| (In thousands) | ||||
| Balance as of December 31, 2022 | $ | i 178,198 | ||
| Recognized in tour revenues during the period | ( i 548,052 | ) | ||
| Additional contract liabilities in period | i 463,760 | |||
| Balance as of December 31, 2023 | $ | i 93,906 | ||
/
i
Cost of Tours
Cost of tours represents the direct costs associated with revenues during expeditions, trips and tours, including costs of pre- or post-expedition excursions, hotel accommodations, land-based expeditions, air and other transportation expenses and costs of goods and services rendered onboard, payroll and related expenses for shipboard, guides and expedition personnel, food costs for guests and crew, fuel and related costs and other expenses such as land costs, port costs, repairs and maintenance, equipment expense, drydock, ship insurance and charter hire expenses.
i
General and Administrative Expense
General and administrative expenses primarily represent the costs of the Company’s shore-side vessel support, credit card commissions, reservations and other administrative functions, and includes salaries and related benefits, professional fees and occupancy costs.
Selling and Marketing Expense
Selling and marketing expenses include commissions, royalties and a broad range of advertising and marketing expenses. These include advertising costs of direct mail, email, digital media, traditional media, travel agencies and brand websites, as well as costs associated with website development and maintenance, social media and corporate sponsorship costs. Advertising is charged to expense as incurred. Advertising expenses totaled $ i 33.2 million, $ i 31.6 million and $ i 19.1 million for the years ended December 31, 2023, 2022 and 2021, respectively. The largest component of advertising expense for each of the years ended December 31, 2023, 2022 and 2021 was online advertising, which totaled $ i 17.3 million, $ i 14.7 million and $ i 9.8 million, respectively.
/
i
Cash and Cash Equivalents
The Company considers all highly liquid instruments with an original maturity of six months or less, as well as deposits in financial institutions, to be cash and cash equivalents. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the balance sheet that sum to the total of the same such amounts shown in the statement of cash flows:
i
| As of December 31, | ||||||||||||
| 2022 | 2021 | |||||||||||
| (In thousands) | ||||||||||||
| Cash and cash equivalents | $ | i 156,845 | $ | i 87,177 | $ | i 150,753 | ||||||
| Restricted cash | i 30,499 | i 28,847 | i 21,940 | |||||||||
| Total cash, cash equivalents and restricted cash as presented in the statement of cash flows | $ | i 187,344 | $ | i 116,024 | $ | i 172,693 | ||||||
/
i
Concentration of Credit Risk
The Company maintains cash in several financial institutions in the U.S. and other countries which, at times, may exceed the federally insured limits. Accounts held in the U.S. are guaranteed by the Federal Deposit Insurance Corporation up to certain limits. As of December 31, 2023 and 2022, the Company’s cash held in financial institutions outside of the U.S. amounted to $ i 5.8 million and $ i 3.3 million, respectively.
i
Restricted Cash and Marketable Securities
The amounts held in restricted cash represent principally funds required to be held by certain vendors and regulatory agencies and are classified as restricted cash since such amounts cannot be used by the Company until the restrictions are removed by those vendors and regulatory agencies. These amounts are principally held in certificates of deposit and interest income is recognized when earned.
In order to operate guest tour expedition vessels from U.S. ports, the Company is required to either post a performance bond with the Federal Maritime Commission or escrow all unearned guest deposits plus an additional 10% in restricted accounts, up to a maximum of $ i 32 million. To satisfy this requirement, the Company entered into an agreement with a financial institution to escrow the required amounts.
Restricted cash and marketable securities consist of the following:
i
| As of December 31, | ||||||||
| 2022 | ||||||||
| (In thousands) | ||||||||
| Credit card processor reserves | $ | i 20,250 | $ | i 20,400 | ||||
| Federal Maritime Commission and other escrow | i 8,958 | i 6,882 | ||||||
| Certificates of deposit and other restricted securities | i 1,291 | i 1,565 | ||||||
| Total restricted cash | $ | i 30,499 | $ | i 28,847 | ||||
The Company has classified marketable securities, principally money market funds or other short-term investments, as trading securities which are recorded at market value. Unrealized gains and losses are included in current operations. Gains and losses on the disposition of securities are recognized by the specific identification method in the period in which they occur. Cost of these short-term investments approximates fair value.
/
i
Prepaid Expenses and Other Current Assets
The Company records prepaid expenses and other current assets at cost and expenses them in the period the services are provided or the goods are delivered. Marine operating supplies and inventories are included in prepaid expenses and other current assets and consist primarily of fuel, provisions, gift shop merchandise and other items for resale, other supplies used in the operation of marine expeditions. Fuel, provisions and other supplies are recorded at cost while items for sale are stated at the lower of cost or net realizable value and their cost is determined using the first-in, first-out method. The Company’s prepaid expenses and other current assets consist of the following:
i
| As of December 31, | ||||||||
| 2022 | ||||||||
| (In thousands) | ||||||||
| Prepaid tour expenses | $ | i 26,123 | $ | i 20,605 | ||||
| Marine operating supplies | i 5,438 | i 9,961 | ||||||
| Other | i 25,597 | i 21,173 | ||||||
| Total prepaid expenses and other current assets | $ | i 57,158 | $ | i 53,704 | ||||
/
i
Property and Equipment, net
Property and equipment, net is stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, as follows:
i
| Years | |||||
| Vessels and vessel improvements | i 15 | - | i 25 | ||
| Furniture & equipment | i 5 | ||||
| Computer hardware and software | i 5 | - | i 10 | ||
| Leasehold improvements, including expedition sites and port facilities | Shorter of lease term or related asset life | ||||
The ship-based tour and expedition industry is very capital intensive. As of December 31, 2023, the Company owned and operated i ten expedition vessels. The Company has a capital program for the improvement of its vessels and for asset replacements in order to enhance the effectiveness and efficiency of its operations; comply with, or exceed all relevant legal and statutory requirements related to health, environment, safety, security and sustainability; and gain strategic benefits or provide newer improved product innovations to its guests.
Vessel improvement costs that add value to the Company’s vessels, such as those discussed above, are capitalized and depreciated over the shorter of the improvements, or the vessel’s estimated remaining useful life, while costs of repairs and maintenance, including minor improvement costs and drydock expenses, are charged to expense as incurred and included in cost of tours. Drydock costs primarily represent planned maintenance activities that are incurred when a vessel is taken out of service. For U.S. flagged ships, the statutory requirement traditionally is an annual docking and U.S. Coast Guard inspections, normally conducted in drydock. Internationally flagged ships have scheduled dockings approximately every 12 months, for a period of up to three to six weeks.
/
i
Goodwill
The Company tests for impairment annually as of September 30, or more frequently if warranted. The Company assesses qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of goodwill is less than its carrying amount. The Company completed the annual impairment test as of September 30, 2023 with no indication of goodwill impairment. See Note 5—Goodwill and Intangible Assets for further details on the Company’s goodwill.
i
Intangible Assets, net
Intangible assets include tradenames, customer lists and operating rights. Tradenames are words, symbols, or other devices used in trade or business to indicate the source of products and to distinguish it from other products and are registered with government agencies and are protected legally by continuous use in commerce. Customer lists are established relationships with existing customers that resulted in repeat purchases and customer loyalty. Based on the Company’s analysis, amortization of the tradenames and customer lists were computed using the estimated useful lives of i 15 and i 5 years, respectively. See Note 5—Goodwill and Intangible Assets for further information on the Company’s intangible assets.
The Company operates two vessels year-round in the Galápagos National Park in Ecuador, the National Geographic Endeavour II with 96 berths and the National Geographic Islander II with 48 berths. In order to operate these vessels within the park, the Company is required to have in its possession cupos (licenses) sufficient to cover the total available berths on each vessel. The cupos expire in 2042, and have a renewable i 20-year term, subject to early termination by the Ecuadorean Province of Galápagos government for non-compliance with the terms of the contract and applicable law regulations.
Upon the occurrence of a triggering event, the assessment of possible impairment of the Company’s intangible assets will be based on the Company’s ability to recover the carrying value of its asset, which is determined by using the asset’s estimated undiscounted future cash flows. If these estimated undiscounted future cash flows are less than the carrying value of the asset, an impairment charge is recognized for the excess, if any, of the asset’s carrying value over its estimated fair value. A significant amount of judgment is required in estimating the future cash flows and fair values of its tradenames, customer lists and operating rights. As of and for the year ended December 31, 2023 and 2022, the Company determined that there were no triggering events regarding its intangible assets.
/
i
Long-Lived Asset Impairment Assessment
The Company reviews its long-lived assets, principally its vessels, for impairment whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable. Upon the occurrence of a triggering event, the assessment of possible impairment is based on the Company’s ability to recover the carrying value of its asset, which is determined by using the asset’s estimated undiscounted future cash flows. If these estimated undiscounted future cash flows are less than the carrying value of the asset, an impairment charge is recognized for the excess of the asset’s carrying value over its estimated fair value. A significant amount of judgment is required in estimating the future cash flows and fair values of its vessels. As of and for the years December 31, 2023 and 2022, the Company determined that there were no triggering events regarding its long-lived assets.
i
Accounts Payable and Accrued Expenses
The Company records accounts payable and accrued expenses for the cost of such items when the service is provided or when the related product is delivered. The Company’s accounts payable and accrued expenses consist of the following:
i
| As of December 31, | ||||||||
| 2022 | ||||||||
| (In thousands) | ||||||||
| Accrued other expense | $ | i 48,901 | $ | i 54,418 | ||||
| Accounts payable | i 16,154 | i 16,601 | ||||||
| Total accounts payable and accrued expenses | $ | i 65,055 | $ | i 71,019 | ||||
/
i
Leases
The Company leases office and warehousing space with lease terms ranging from one to ten years, and computer hardware and software and office equipment with lease terms ranging from three to six years.
At the inception of a lease, the Company recognizes right-of-use lease assets and related lease liabilities measured as the present value of future lease payments. The Company's right-of-use lease assets are recorded in other long-term assets and the Company's long-term lease liabilities are recorded in other long-term liabilities. Lease expense is recognized on a straight-line basis over the term of the lease. The Company reviewed its contracts with vendors and customers, determining that its right-to-use lease assets consisted primarily of office space operating leases. In determining the right-to-use lease assets and related lease liabilities, the Company did not recognize any lease extension options and elected to exclude leases with terms of 12-months or less. Short-term leases are accounted for monthly over the lease term.
i
Fair Value Measurements
Fair value is defined as an exit price, representing the amount that would be received upon the sale of an asset or payment to transfer a liability in an orderly transaction between market participants. Fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. A three-tier fair value hierarchy is used to prioritize the inputs in measuring fair value as follows:
| Level 1 | Quoted market prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at measurement date. | |
| Level 2 | Quoted market prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable, either directly or indirectly. Fair value is determined through the use of models or other valuation methodologies. | |
| Level 3 | Significant unobservable inputs for assets or liabilities that cannot be corroborated by market data. Fair value is determined by the reporting entity’s own assumptions utilizing the best information available and includes situations where there is little market activity for the investment. |
Level 3 financial liabilities consist of obligations for which there is no current market for these securities such that the determination of fair value requires significant judgment or estimation. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate.
The asset’s or liability’s fair value measurement within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement.
i
Derivative Instruments and Hedging Activities
Currency Risk. The Company uses currency exchange contracts to manage its exposure to changes in currency exchange rates associated with certain of its non-U.S. dollar denominated receivables and payables. The Company primarily hedges a portion of its current-year currency exposure to several currencies, which normally include, but are not limited to, the Canadian and New Zealand dollars, the euro and the British pound sterling. The fluctuations in the value of these forward contracts largely offset the impact of changes in the value of the underlying risk they economically hedge. The Company also uses foreign exchange forward contracts, designated as cash flow hedges, from time-to-time as necessary, to manage its exposure to foreign denominated contracts.
By entering into derivative instrument contracts, the Company exposes itself, from time to time, to counterparty credit risk. Counterparty credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is in an asset position, the counterparty has a liability to the Company, which creates credit risk for the Company. The Company continues to monitor counterparty credit risk as part of its ongoing derivative assessments.
The Company’s derivative assets and liabilities consist principally of currency exchange contracts, which are carried at fair value based on significant observable inputs (Level 2 inputs). Derivatives entered into by the Company are typically executed over-the-counter and are valued using quoted market prices for similar assets or liabilities when available or internal valuation techniques, when quoted market prices are not readily available. The valuation technique and inputs depend on the type of derivative and the nature of the underlying exposure. The Company principally uses discounted cash flows along with fair value models that primarily use market observable inputs. These models take into account a variety of factors including, where applicable, maturity, currency exchange rates, interest rate yield curves and counterparty credit risks.
The Company records derivatives on a gross basis in other long-term assets and/or other liabilities. The accounting for changes in value of the derivative depends on whether or not the transaction has been designated and qualifies for hedge accounting. Derivatives that are not designated for hedge accounting are reported and measured at fair value through earnings.
The Company applies hedge accounting to interest rate and foreign exchange rate derivatives entered into for risk management purposes. To qualify for hedge accounting, a derivative must be highly effective at reducing the risk associated with the exposure being hedged. In addition, key aspects of achieving hedge accounting are documentation of hedging strategy and hedge effectiveness at the hedge inception and substantiating hedge effectiveness on an ongoing basis. A derivative must be highly effective in accomplishing the hedge objective of offsetting changes in the cash flows of the hedged item for the risk being hedged. The effective portion of changes in the fair value of derivatives designated in a hedge relationship and that qualify as cash flow hedges is recorded in accumulated other comprehensive income, net of tax, and is subsequently reclassified into earnings in the period that the hedged transaction affects earnings. The Company formally documents the relationship between derivatives and hedged items, as well as the risk-management objective and the strategy for undertaking hedge transactions at the inception of the hedging relationship. This documentation includes linking cash flow hedges to specific assets and liabilities on the balance sheet or to specific forecasted transactions. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivative instruments that are used are highly effective in offsetting changes in fair values or cash flows of the hedged items.
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Income Taxes
The Company is subject to income taxes in both the U.S. and the non-U.S. jurisdictions in which it operates. Significant management judgment is required in projecting ordinary income to determine the Company’s estimated effective tax rate.
The Company accounts for income taxes using the asset and liability method, under which it recognizes deferred income taxes for the tax consequences attributable to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities, as well as for tax loss carryforwards and tax credit carryforwards. The Company measures deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recoverable or settled. The Company provides a valuation allowance against deferred tax assets if, based upon the weight of available evidence, the Company does not believe it is “more-likely-than-not” that some or all of the deferred tax assets will be realized. The Company will continue to evaluate the deferred tax asset valuation allowance balances in all of its foreign and U.S. companies to determine the appropriate level of valuation allowances.
The Company regularly assesses the potential outcome of current and future examinations in each of the taxing jurisdictions when determining the adequacy of the provision for income taxes. The Company has only recorded financial statement benefits for tax positions which it believes are “more-likely-than-not” to be sustained.
The Company is subject to tax audits in all jurisdictions for which it files tax returns. Tax audits by their very nature are often complex and can require several years to complete. Currently, there are no U.S. federal, state or foreign jurisdiction tax audits pending. The Company’s corporate U.S. federal and state tax returns for the current year and four prior years remain subject to examination by tax authorities and the Company’s foreign tax returns for the current year and five prior years remain subject to examination by tax authorities.
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Other Long-Term Assets
Other long-term assets include the Company’s right-to-use lease assets, deferred tax assets and long-term prepaid value-added taxes, which include those related to the importation of the National Geographic Islander II and the National Geographic Endeavour II. The Company expects to earn tax credits over time that will reduce the value-added taxes and has applied for such tax credits with the Ecuadorian tax authorities.
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Deferred Financing Costs
Deferred financing costs relate to the issuance costs of debt liabilities and are a direct deduction from the debt carrying amount. Deferred financing costs are amortized over the life of the debt or loan agreement through interest expense, net. See Note 6—Long-term Debt.
i
Foreign Currency Translation
The Company’s functional currency is the U.S. dollar. Any foreign operations and remeasurement adjustments and gains or losses resulting from foreign currency transactions are recorded as foreign exchange gains or losses.
i
Stock-Based Compensation
Stock-based compensation awards issued to employees, non-employee directors or other service providers are recorded at their fair value on the date of grant and amortized over the service period of the award. The Company recognizes stock-based compensation costs on a straight-line basis over the requisite service period of the award, which is generally the vesting term of the equity instrument issued, within general and administrative expenses.
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Series A Redeemable Convertible Preferred Stock
The Company’s Series A redeemable convertible preferred stock (“Preferred Stock”) is accounted for as a temporary equity instrument. The redemption or conversion of the Preferred Stock into shares of the Company’s common stock is not solely controlled by the Company. At the six-year anniversary of the issuance, the holders have the right to require the Company to repurchase their Preferred Stock. The Preferred Stock is convertible into the Company’s common stock (i) any time at the holder’s election, (ii) at the six-year anniversary of the issuance of those shares not redeemed at the request of the holder, or (iii) by the Company under certain circumstances. See Note 11—Stockholders’ Equity.
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Recent Accounting Pronouncements
During November 2023, Financial Accounting Standards Board (“FASB”) issued ASU 2023-07 ― Segment Reporting (Topic 280)–Improvements to Reportable Segment Disclosures. The amendments in this ASU are intended to improve and enhance disclosures about reportable segments’ significant segment expenses. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods beginning after December 15, 2024. The Company will adopt this guidance January 1, 2024 for its annual reporting, and January 1, 2025 for its interim reporting, as required. These amendments will increase the Company’s reportable segment disclosures.
During December 2023, FASB issued ASU 2023-09 ― Income Taxes (Topic 740)–Improvements to Income Tax Disclosures. The amendments in this ASU are intended to enhance the transparency and decision usefulness of income tax disclosures. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. The Company will adopt this guidance January 1, 2025 for its annual reporting, as required. These amendments will increase the Company’s disclosures related to income taxes.
NOTE 3 — EARNINGS PER SHARE
Earnings per common share is computed using the two-class method related to its Preferred Stock. Under the two-class method, undistributed earnings available to stockholders for the period are allocated on a pro rata basis to the common stockholders and to the holders of convertible preferred shares based on the weighted average number of common shares outstanding and number of shares that could be issued upon conversion of the Preferred Stock. Diluted earnings per share is computed using the weighted average number of common shares outstanding and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the dilutive incremental common shares associated with restricted stock awards, shares issuable upon the exercise of stock options, using the treasury stock method, and the potential common shares that could be issued from conversion of the Preferred Stock, using the if-converted method. When a net loss occurs, potential common shares have an anti-dilutive effect on earnings per share and such shares are excluded from the diluted earnings per share calculation.
For the years ended December 31, 2023, 2022 and 2021, the Company incurred a net loss from operations, therefore potential common shares were excluded from the diluted earnings per share calculation. For the year ended December 31, 2023, i 0.8 million restricted shares, i 0.2 million options and 8.0 million common shares issuable upon the conversion of the Preferred Stock were excluded. For the year ended December 31, 2022, 0.7 million restricted shares, 1.5 million options and 7.4 million common shares issuable upon the conversion of the Preferred Stock were excluded, and for the year ended December 31, 2021, 0.8 million restricted shares, 1.5 million options and i 9.1 million common shares issuable upon the conversion of the Preferred Stock were excluded.
For the years ended December 31, 2023, 2022 and 2021, the Company calculated earnings per share as follows:
i
| For the years ended December 31, | ||||||||||||
| 2022 | 2021 | |||||||||||
| (In thousands, except share and per share data) | ||||||||||||
| Net loss attributable to Lindblad Expeditions Holdings, Inc. | $ | ( i 45,610 | ) | $ | ( i 111,381 | ) | $ | ( i 119,206 | ) | |||
| Series A redeemable convertible preferred stock dividend | i 4,373 | i 4,671 | i 5,289 | |||||||||
| Non-cash deemed dividend to preferred share holders | i - | i - | i 170 | |||||||||
| Undistributed loss available to stockholders | $ | ( i 49,983 | ) | $ | ( i 116,052 | ) | $ | ( i 124,665 | ) | |||
| Weighted average shares outstanding: | ||||||||||||
| Total weighted average shares outstanding, basic | i 53,256,513 | i 52,018,987 | i 50,109,426 | |||||||||
| Total weighted average shares outstanding, diluted | i 53,256,513 | i 52,018,987 | i 50,109,426 | |||||||||
| Undistributed loss per share available to stockholders: | ||||||||||||
| Basic | $ | ( i 0.94 | ) | $ | ( i 2.23 | ) | $ | ( i 2.41 | ) | |||
| Diluted | $ | ( i 0.94 | ) | $ | ( i 2.23 | ) | $ | ( i 2.41 | ) | |||
/
NOTE 4 — PROPERTY AND EQUIPMENT, NET
Property and equipment, net are as follows:
i
| As of December 31, | ||||||||
| 2022 | ||||||||
| (In thousands) | ||||||||
| Vessels and improvements | $ | i 776,622 | $ | i 759,981 | ||||
| Furniture and equipment | i 42,055 | i 28,732 | ||||||
| Leasehold improvements | i 1,424 | i 1,426 | ||||||
| Total property and equipment, gross | i 820,101 | i 790,139 | ||||||
| Less: Accumulated depreciation | ( i 294,099 | ) | ( i 250,733 | ) | ||||
| Property and equipment, net | $ | i 526,002 | $ | i 539,406 | ||||
Total depreciation expense of the Company’s property and equipment for the years ended December 31, 2023, 2022 and 2021 was $ i 44.9 million, $ i 41.0 million and $ i 37.6 million, respectively.
For the year ended December 31, 2023, the Company had $ i 30.0 million in capital expenditures, which primarily includes vessel improvement projects and digital investments. For the year ended December 31, 2022, the Company had $ i 38.2 million in capital expenditures and primarily included renovations of the National Geographic Islander II, which launched in the Galápagos Islands during the third quarter of 2022, replacing the National Geographic Islander.
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NOTE 5 — GOODWILL AND INTANGIBLE ASSETS
The Company's goodwill relates to the acquisition of its Land Experiences Segment subsidiaries, see Note 9—Acquisitions. The following is a rollforward of the Company’s goodwill:
i
| (In thousands) | Land Experiences Segment | |||
| Balance as of December 31, 2020 | $ | i 22,105 | ||
| Acquisitions | i 19,912 | |||
| Balance as of December 31, 2021 | i 42,017 | |||
| Activity | - | |||
| Balance as of December 31, 2022 | i 42,017 | |||
| Activity | - | |||
| Balance as of December 31, 2023 | $ | i 42,017 | ||
The Company’s intangible assets consist of finite lived assets related to the acquisition of its Land Experiences Segment subsidiaries and the value of its cupos operating rights. Total amortization expense for the years ended December 31, 2023, 2022 and 2021, was $ i 1.8 million, $ i 2.0 million and $ i 1.9 million, respectively.
The carrying amounts and accumulated amortization of intangibles, net are as follows:
i
| As of December 31, | ||||||||||||||||||||||||||||
| 2022 | ||||||||||||||||||||||||||||
| (In thousands) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Weighted Average Useful Life Remaining (years) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||||
| Tradenames | $ | i 7,069 | $ | ( i 2,222 | ) | $ | i 4,847 | i 10.3 | $ | i 7,069 | $ | ( i 1,751 | ) | $ | i 5,318 | |||||||||||||
| Customer Lists | i 6,182 | ( i 3,209 | ) | i 2,973 | i 2.4 | i 6,182 | ( i 1,961 | ) | i 4,221 | |||||||||||||||||||
| Operating rights | i 6,529 | ( i 4,937 | ) | i 1,592 | i 18.2 | i 6,529 | ( i 4,849 | ) | i 1,680 | |||||||||||||||||||
| Total intangibles, net | $ | i 19,780 | $ | ( i 10,368 | ) | $ | i 9,412 | i 9.1 | $ | i 19,780 | $ | ( i 8,561 | ) | $ | i 11,219 | |||||||||||||
Future expected amortization expense related to these intangibles are as follows:
i| Year | Amount | |||
| (In thousands) | ||||
| 2024 | $ | i 1,795 | ||
| 2025 | i 1,795 | |||
| 2026 | i 1,059 | |||
| 2027 | i 559 | |||
| 2028 | i 559 | |||
| Thereafter | i 3,645 | |||
| $ | i 9,412 | |||
NOTE 6 — LONG-TERM DEBT
6.75% Notes
On February 4, 2022, the Company issued $ i 360.0 million aggregate principal amount of i 6.75% senior secured notes due 2027 (the “6.75% Notes”) in a private offering. The 6.75% Notes bear interest at a rate of 6.75% per year, accruing from February 4, 2022, and interest on the 6.75% Notes is payable semiannually in arrears on February 15 and August 15 of each year. The 6.75% Notes will mature on February 15, 2027, subject to earlier repurchase or redemption. The Company used the net proceeds from the offering to prepay in full all outstanding borrowings under its prior credit agreement, including the term facility, Main Street Expanded Loan Facility, and former revolving credit facility, pay any related premiums and terminate in full its prior credit agreement and the commitments thereunder. The Company incurred $ i 10.9 million in financing fees related to the 6.75% Notes, recorded as deferred financing costs as part of long-term debt. The 6.75% Notes are senior secured obligations of the Company and are guaranteed on a senior secured basis by the Company and certain of the Company’s subsidiaries (collectively, the “Guarantors”) and secured by first-priority pari passu liens, subject to permitted liens and certain exceptions, on substantially all the assets of the Company and the Guarantors. The 6.75% Notes may be redeemed by the Company, at set redemption prices and premiums, plus accrued and unpaid interest, if any.
Revolving Credit Facility
On February 4, 2022, the Company entered into a senior secured revolving credit facility (the “Revolving Credit Facility”), which provides for an aggregate principal amount of commitments of $ i 45.0 million, maturing February 2027, including a letter of credit sub-facility in an aggregate principal amount of up to $ i 5.0 million. The obligations under the Revolving Credit Facility are guaranteed by the Company and the Guarantors and are secured by first-priority pari passu liens, subject to permitted liens and certain exceptions, on substantially all the assets of the Company and the Guarantors. Borrowings under the Revolving Credit Facility, if any, will bear interest at a rate per annum equal to, at the Company’s option, an adjusted Secured Overnight Financing Rate rate plus a spread or a base rate plus a spread. The Company is required to pay a i 0.5% quarterly commitment fee on undrawn amounts under the Revolving Credit Facility. As of December 31, 2023, the Company had i no borrowings under its Revolving Credit Facility.
9.00% Notes
On May 2, 2023, the Company issued $ i 275.0 million aggregate principal amount of i 9.00% senior secured notes due 2028 (the “9.00% Notes”) in a private offering. The 9.00% Notes bear interest at a rate of 9.00% per year, and interest is payable semiannually in arrears on May 15 and November 15 of each year. The 9.00% Notes will mature on May 15, 2028, subject to earlier repurchase or redemption. The Company used the net proceeds from the offering to prepay in full all outstanding borrowings under its prior senior secured credit agreements, to pay any related premiums and to terminate in full its prior senior secured credit agreements and the commitments thereunder. The 9.00% Notes are senior unsecured obligations of the Company and are guaranteed (i) on a senior secured basis by certain of the Company’s subsidiaries (collectively, the “Secured Guarantors”) and secured by a first-priority lien, subject to permitted liens and certain exceptions, on the equity and substantially all the assets of the Secured Guarantors, and (ii) on a senior unsecured basis by certain other subsidiaries of the Company. The 9.00% Notes may be redeemed by the Company, at set redemption prices and premiums, plus accrued and unpaid interest, if any.
Covenants
The 6.75% Notes, 9.00% Notes and Revolving Credit Facility contain covenants that, among other things, restrict the Company’s ability and the ability of its restricted subsidiaries to incur certain additional indebtedness and make certain dividend payments, distributions, investments and other restricted payments. These covenants are subject to a number of important exceptions and qualifications set forth in the 6.75% Notes, 9.00% Notes and Revolving Credit Facility. As of December 31, 2023, the Company was in compliance with the covenants currently in effect.
Other
The Company’s DuVine subsidiary has a EUR i 0.1 million State Assistance Loan related to the financial consequences of the COVID-19 pandemic, for the purpose of employment preservation. This loan matures August 2025, with monthly payments, and bears an annual interest rate of i 0.53%.
The Company’s Off the Beaten Path subsidiary’s original $ i 0.3 million loan for the purchase of guest transportation vehicles was repaid during June 2023 and its $ i 0.8 million loan under the Main Street Expanded Loan Facility, which originated on December 11, 2020, was repaid during May 2023.
Long-Term Debt Outstanding
As of December 31, 2023 and 2022, long-term debt and other borrowing arrangements consisted of:
i
| As of December 31, | ||||||||||||||||||||||||
| 2023 | 2022 | |||||||||||||||||||||||
| (In thousands) | Principal | Deferred Financing Costs, net | Balance | Principal | Deferred Financing Costs, net | Balance | ||||||||||||||||||
| 6.75% Notes | $ | i 360,000 | $ | ( i 6,771 | ) | $ | i 353,229 | $ | i 360,000 | $ | ( i 8,968 | ) | $ | i 351,032 | ||||||||||
| 9.00% Notes | i 275,000 | ( i 6,481 | ) | i 268,519 | i - | i - | i - | |||||||||||||||||
| Other | i 77 | i - | i 77 | i 955 | i - | i 955 | ||||||||||||||||||
| First Export Credit Agreement | i - | i - | i - | i 94,794 | ( i 1,829 | ) | i 92,965 | |||||||||||||||||
| Second Export Credit Agreement | i - | i - | i - | i 110,044 | ( i 2,207 | ) | i 107,837 | |||||||||||||||||
| Total long-term debt | i 635,077 | ( i 13,252 | ) | i 621,825 | i 565,793 | ( i 13,004 | ) | i 552,789 | ||||||||||||||||
| Less current portion | ( i 47 | ) | i - | ( i 47 | ) | ( i 23,337 | ) | i - | ( i 23,337 | ) | ||||||||||||||
| Total long-term debt, non-current | $ | i 635,030 | $ | ( i 13,252 | ) | $ | i 621,778 | $ | i 542,456 | $ | ( i 13,004 | ) | $ | i 529,452 | ||||||||||
Future minimum principal payments of long-term debt are as follows:
i
| Year | Amount | |||
| (In thousands) | ||||
| 2024 | $ | i 47 | ||
| 2025 | i 30 | |||
| 2026 | i - | |||
| 2027 | i 360,000 | |||
| 2028 | i 275,000 | |||
| Thereafter | i - | |||
| $ | i 635,077 | |||
For the years ended December 31, 2023, 2022 and 2021, the Company recorded deferred financing costs of $ i 7.5 million, $ i 10.9 million and $ i 3.0 million, respectively, in long-term debt, amortizing the costs over the term of the financing using the straight-line method. For the years ended December 31, 2023, 2022 and 2021, deferred financing costs charged to interest expense were $ i 3.4 million, $ i 2.7 million and $ i 3.1 million, respectively.
During the year ended December 31, 2023, the Company repaid its prior senior secured credit agreements (the “First Export Credit Agreement” and the “Second Export Credit Agreement”), with the proceeds of the 9.00% Notes and $ i 3.9 million of deferred financing costs were written-off to other expense.
During the year ended December 31, 2022, $ i 9.0 million of deferred financing costs related to the repayment of the Company’s prior credit agreement, including the term facility, Main Street Loan and revolving credit facility were written-off to other expense.
Letters of Credit
As of December 31, 2023 and 2022, the Company had $ i 1.2 million in letters of credit outstanding with financial institutions. The annual fee for letters of credit is i 1.0% of the outstanding balance. The letters of credit are secured by a certificate of deposit maintained at the financial institutions and that mature in November 2024. See Note 9—Commitments and Contingencies for more information.
NOTE 7 — FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
In 2018, the Company entered into interest rate cap agreements to hedge its exposure to interest rate movements and to manage its interest expense related to the previous Term Facility and designated these interest rate caps as a cash flow hedge. Changes in the fair value of this interest rate cap were recorded in accumulated other comprehensive income. The cost of the interest rate cap is amortized to interest expense over its life, from the effective date through termination date. The Term Facility was prepaid and terminated in February 2022. The Company recorded the effective portion of changes in the fair value of its cash flow hedges to other comprehensive income (loss), net of tax, and subsequently reclassified these amounts into earnings in the period during which the hedged transaction was recognized. Any changes in fair values of hedges that would be determined to be ineffective would be immediately reclassified from accumulated other comprehensive income (loss) into earnings. i No gains or losses of the Company’s cash flow hedges were considered to be ineffective and reclassified from other comprehensive income (loss) to earnings for the years ended December 31, 2022 and 2021. The Company reclassified $ i 0.6 million and $ i 2.7 million in losses, net of tax, from other comprehensive income (loss) to earnings for the years ended December 31, 2022 and 2021, respectively, due to the maturity of a cash flow hedge and the hedged item.
The Company held interest rate cap derivative instruments with absolute notional values of $ i 20.3 million as of December 31, 2023.
Estimated fair values (Level 2) of derivative instruments were as follows:
i
| As of December 31, | ||||||||||||||||
| 2022 | ||||||||||||||||
| (In thousands) | Fair Value, Asset Derivatives | Fair Value, Liability Derivatives | Fair Value, Asset Derivatives | Fair Value, Liability Derivatives | ||||||||||||
| Derivative instruments not designated as cash flow hedging instruments: | ||||||||||||||||
| Interest rate cap (a) | $ | i - | $ | i - | $ | i 683 | $ | i - | ||||||||
| Foreign exchange forward (b) | i - | i 39 | i - | i 572 | ||||||||||||
| Total | $ | i - | $ | i 39 | $ | i 683 | $ | i 572 | ||||||||
__________
| (a) | Recorded in prepaid expenses and other current assets. This interest rate cap matured in May 2023. | |
| (b) | Recorded in accounts payable and accrued expenses and prepaid expenses and other current assets, respectively. |
The effects of derivatives recognized in the Company’s consolidated financial statements were as follows:
i
| For the years ended December 31, | ||||||||||||
| (In thousands) | 2023 | 2022 | 2021 | |||||||||
| Derivative instruments designated as cash flow hedging instruments: | ||||||||||||
| Interest rate cap (a) | $ | i - | $ | i - | $ | ( i 363 | ) | |||||
| Foreign exchange forward (b) | i - | i - | ( i 605 | ) | ||||||||
| Derivative instruments not designated as cash flow hedging instruments: | ||||||||||||
| Interest rate cap (a) | $ | ( i 683 | ) | i 40 | i - | |||||||
| Foreign exchange forward (c) | i 751 | ( i 1,236 | ) | i 288 | ||||||||
| Total | $ | i 68 | $ | ( i 1,196 | ) | $ | ( i 680 | ) | ||||
__________
| (a) | For the year ended December 31, 2022, $ i 0.7 million was recognized as income in interest expense, net, and $ i 0.6 million was reclassified from other comprehensive (loss) income to interest expense, net. Amounts for the year ended December 31, 2021 were recognized, net of tax, as a component of accumulated other comprehensive (loss) income. | |
| (b) | For the year ended December 31, 2021, $ i 2.7 million was recognized as a loss on foreign currency and $ i 2.0 million was recognized, net of tax, as a component of accumulated other comprehensive (loss) income. | |
| (c) | Gains (losses) related to derivative instruments are expected to be largely offset by (losses) gains on the underlying exposures being hedged and recognized in gain (loss) on foreign currency. |
As of December 31, 2022, the Company had $ i 15.0 million of investments in fixed income securities measured at fair value based on quoted market prices.
In connection with the acquisition of Classic Journeys during the year ended December 31, 2021, the Company makes recurring fair value measurements of contingent acquisition consideration using level 3 unobservable inputs. As of December 31, 2023, $ i 0.6 million was accrued related to this contingent acquisition consideration as it was determined that earnings targets were achieved.
Based on the terms of the agreements and comparable market data, the Company estimates the fair value of its long-term debt to be $ i 644.5 million as of December 31, 2023.
The carrying amounts of cash and cash equivalents, accounts payable and accrued expenses and unearned passenger revenue approximate fair value, due to the short-term nature of these instruments. As of December 31, 2023 and 2022, other than derivative instruments, investments in securities and contingent acquisition consideration, the Company had no other assets or liabilities that were measured at fair value on a recurring basis.
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NOTE 8 — INCOME TAXES
The Company (a “C” Corporation) provides for income taxes based on the Federal and state statutory rates on taxable income. U.S. and foreign components of income before incomes taxes are presented below:
i
| For the years ended December 31, | ||||||||||||
| (In thousands) | 2023 | 2022 | 2021 | |||||||||
| Domestic | $ | ( i 11,630 | ) | $ | ( i 21,403 | ) | $ | ( i 24,875 | ) | |||
| Foreign | ( i 26,100 | ) | ( i 80,681 | ) | ( i 96,312 | ) | ||||||
| Total | $ | ( i 37,730 | ) | $ | ( i 102,084 | ) | $ | ( i 121,187 | ) | |||
The income tax provisions are comprised of the following:
i
| For the years ended December 31, | ||||||||||||
| (In thousands) | 2023 | 2022 | 2021 | |||||||||
| Current | ||||||||||||
| Federal | $ | i - | $ | i - | $ | i - | ||||||
| State | i 218 | i 244 | ( i 7 | ) | ||||||||
| Foreign - Other | i 209 | i 392 | i 45 | |||||||||
| Total current | i 427 | i 636 | i 38 | |||||||||
| Deferred | ||||||||||||
| Federal | i 1,492 | i 5,709 | ( i 1,894 | ) | ||||||||
| State | i 625 | i 218 | i 928 | |||||||||
| Foreign - Other | i 602 | ( i 487 | ) | ( i 1,091 | ) | |||||||
| Total deferred | i 2,719 | i 5,440 | ( i 2,057 | ) | ||||||||
| Income tax expense (benefit) | $ | i 3,146 | $ | i 6,076 | $ | ( i 2,019 | ) | |||||
A reconciliation of the U.S. federal statutory income tax (benefit) expense to the Company’s effective income tax provision is as follows:
i
| For the years ended December 31, | ||||||||||||
| 2022 | 2021 | |||||||||||
| Tax provision at statutory rate – federal | i 21.0 | % | i 21.0 | % | i 21.0 | % | ||||||
| Tax provision at effective state and local rates | ( i 2.1 | %) | ( i 0.3 | %) | ( i 0.8 | %) | ||||||
| Foreign tax rate differential | ( i 17.1 | %) | ( i 16.6 | %) | ( i 15.2 | %) | ||||||
| Executive compensation | ( i 5.0 | %) | i 0.0 | % | i 0.0 | % | ||||||
| Valuation allowance | ( i 5.9 | %) | ( i 9.4 | %) | ( i 4.1 | %) | ||||||
| Other | i 0.8 | % | ( i 0.7 | %) | i 0.8 | % | ||||||
| Total effective income tax rate | ( i 8.3 | %) | ( i 6.0 | %) | i 1.7 | % | ||||||
The Company, through its subsidiaries and affiliated entities in the U.S., the Cayman Islands and Ecuador are subject to US Federal, US state and Ecuadorian Federal income taxes. The Cayman Islands do not impose federal or local income taxes.
Deferred tax (liabilities) assets, net, are comprised of the following:
i
| As of December 31, | ||||||||
| (In thousands) | 2023 | 2022 | ||||||
| Deferred tax assets: | ||||||||
| Net operating loss carryforward | $ | i 26,086 | $ | i 27,896 | ||||
| Disallowed interest carryforward | i 15,286 | i 12,893 | ||||||
| Stock-based compensation | i 383 | i 351 | ||||||
| Other | i 1,637 | i 1,874 | ||||||
| Valuation allowance | ( i 24,726 | ) | ( i 21,521 | ) | ||||
| Total net deferred assets | i 18,666 | i 21,493 | ||||||
| Deferred tax liabilities: | ||||||||
| Property and equipment | ( i 18,542 | ) | ( i 18,942 | ) | ||||
| Other | ( i 676 | ) | ( i 384 | ) | ||||
| Total net deferred liabilities | ( i 19,218 | ) | ( i 19,326 | ) | ||||
| Deferred tax (liabilities) assets | $ | ( i 552 | ) | $ | i 2,167 | |||
Deferred tax assets and liabilities are recorded on the consolidated balance sheet based on tax jurisdictions. For the years ended December 31, 2023 and 2022, the Company has recorded deferred tax assets of $ i 1.6 million and $ i 2.2 million, respectively, within other long-term assets, and for the year ended December 31, 2023, a deferred tax liability of $ i 2.2 million.
The Company recognizes valuation allowances to reduce deferred tax assets to the amount that is more likely than not to be realized. In assessing the likelihood of realization, management considers: (i) future reversals of existing taxable temporary differences; (ii) future taxable income exclusive of reversing temporary differences and carryforwards; (iii) taxable income in prior carryback year(s) if carryback is permitted under applicable tax law; and (iv) tax planning strategies.
The Company has deferred tax assets related to U.S. federal loss carryforwards of $ i 98.8 million as of December 31, 2023, which begin to expire in 2036. The timing and manner in which the Company will utilize the net operating loss carryforwards in any year, or in total, may be limited in the future as a result of changes in the Company’s ownership and any limitations imposed by the jurisdictions in which the Company operates.
As a result of the transition to the territorial tax regime effectuated by the Tax Cuts and Jobs Act enacted in 2017, any potential dividends from the Company’s foreign subsidiaries would no longer be subject to Federal tax in the United States. The Company continue to assert its prior position regarding the repatriation of historical foreign earnings from its Ecuadorian subsidiaries. The Company currently has no intention to remit any additional undistributed earnings of its Ecuadorian subsidiaries in a taxable manner. The Company no longer remains permanently reinvested in the earnings of its Cayman subsidiary. No taxes have been accrued as a result of this change because no taxes are expected to be imposed by either the United States or the Cayman Islands upon such a remittance.
The Company is subject to income taxes in the U.S. and various state and foreign jurisdictions. The Company establishes liabilities for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes may be due. These liabilities are established when the Company believes that certain positions might be challenged despite its belief that its tax return positions are fully supportable. The Company adjusts these liabilities in light of changing facts and circumstances, such as the outcome of a tax audit. The provision for income taxes includes the impact of changes to these liabilities.
As of December 31, 2023 and 2021, the Company had no unrecognized tax positions. As of December 31, 2022, the Company had $ i 1.4 million of unrecognized tax benefits. The Company has elected an accounting policy to classify interest and penalties related to unrecognized tax benefits as a component of income tax expense. For the years ended December 31, 2023, 2022 and 2021, interest and penalties included in income tax expense related to unrecognized tax benefits and/or uncertain tax positions were insignificant.
The Company is subject to tax audits in all jurisdictions for which it files tax returns. Tax audits by their very nature are often complex and can require several years to complete. Currently, there are no U.S. federal, state or foreign jurisdiction tax audits pending. The Company’s corporate U.S. federal and state tax returns for the current year and the four prior years remain subject to examination by tax authorities and the Company’s foreign tax returns for the current year and the five prior years remain subject to examination by tax authorities.
/
NOTE 9 — COMMITMENTS AND CONTINGENCIES
Redeemable Non-Controlling Interest Contingent Arrangements
The Company has controlling interests in its Natural Habitat, Off the Beaten Path, DuVine and Classic Journeys consolidated subsidiaries. The noncontrolling interests are subject to put/call agreements. The agreements were established to provide formal exit opportunities for the minority interest holders and a path to 100% ownership for the Company. The put options, under certain conditions, enable the minority holders, but do not obligate them, to sell the remaining interests to the Company. The Company has call options which enable it, but does not obligate it, to acquire the remaining interests in the subsidiaries, subject to certain dates, expirations and similar redemption value purchase measurements as the put options.
Mr. Bressler, founder of Natural Habitat, retains a i 19.9% noncontrolling interest in Natural Habitat, which is subject to a put/call arrangement, amended May 2020 and December 2022. Mr. Bressler has a first put option that under certain conditions, and subject to providing notice within 30 days of being provided with valuation, that enables him, but does not obligate him, to sell up to 50% of his remaining interest in Natural Habitat to the Company, valued as of December 31, 2023, and a second put option that under certain conditions, and subject to providing notice by January 31, 2026, that enables him, but does not obligate him, to sell his remaining interest in Natural Habitat to the Company, valued as of December 31, 2025. The Company has a call option, but not an obligation, with an expiration of March 31, 2029, under which it can buy Mr. Bressler’s remaining interest at a similar fair value measure as Mr. Bressler’s put option, subject to a call purchase price minimum.
Mr. Lawrence, President of Off the Beaten Path, through a combination of his original minority interest and the profit interest units he received, retains a i 19.9% noncontrolling interest in Off the Beaten Path, which is subject to a put/call arrangement. Mr. Lawrence has a put option, that under certain conditions and subject to providing notice by October 31, 2025, that enables him, but does not obligate him, to sell his remaining interest in Off the Beaten Path to the Company, valued as of December 31, 2025. The Company has a call option, but not an obligation, on or after October 31, 2025, with an expiration of December 31, 2030, under which it can buy Mr. Lawrence’s remaining interest at a similar fair value measure as Mr. Lawrence’s put option.
Mr. Levine, founder of DuVine, retains a i 30% noncontrolling interest in DuVine, which is subject to a put/call arrangement. Mr. Levine has a put option, that under certain conditions and subject to providing notice by January 31, 2026, that enables him, but does not obligate him, to sell his remaining interest in DuVine to the Company, valued as of December 31, 2025. The Company has a first call option, expiring December 31, 2025, to acquire an additional i 10% of DuVine from Mr. Levine, and a second call option, but not an obligation, on or after December 31, 2025, with an expiration of December 31, 2030, under which it can buy Mr. Levine’s remaining interest at a similar fair value measure as Mr. Levine’s put option, subject to a call purchase price minimum.
Mr. and Mrs. Piegza, founders of Classic Journeys, retain a i 19.9% noncontrolling interest in Classic Journeys, which is subject to a put/call arrangement. Mr. and Mrs. Piegza have a put option that under certain conditions, and subject to providing notice by November 13, 2026, that enables them, but does not obligate them, to sell their remaining interest in Classic Journeys to the Company, valued as of the fiscal quarter prior to the put notice. The Company has a call option, but not an obligation, under which it can buy Mr. and Mrs. Piegza’s remaining interest at a similar fair value measure as Mr. and Mrs. Piegza’s put option.
Since the redemption of these noncontrolling interests is not solely in the Company’s control, the Company is required to record the redeemable noncontrolling interest outside of stockholders’ equity but after its total liabilities. In addition, if it is probable that the instrument will become redeemable, as such solely due to the passage of time, the redeemable noncontrollable interest should be adjusted to the redemption value via one of two measurement methods. The Company elected the income classification-excess adjustment and accretion method for recognizing changes in the redemption value of the put options. Under this methodology, a calculation of the present value of the redemption value is compared to the carrying value of the redeemable noncontrolling interest and the carrying value of the redeemable noncontrolling interest is adjusted to the redemption value’s present value. Any adjustments to the carrying value of the redeemable noncontrolling interest, up to the fair value of the of the noncontrolling interest, are classified to retained earnings. Adjustments in excess of the fair value of the noncontrolling interest, are treated as a decrease to net income available to common stockholders. The fair value of the put options was determined using a discounted cash flow model. The redemption values were adjusted to their present values using the Company’s weighted average cost of capital.
The following is a rollforward of the redeemable noncontrolling interest:
i
| For the years ended December 31, | ||||||||||||
| (In thousands) | 2023 | 2022 | 2021 | |||||||||
| Beginning balance | $ | i 27,886 | $ | i 10,626 | $ | i 7,494 | ||||||
| Net income attributable to noncontrolling interest | i 4,734 | i 3,221 | i 38 | |||||||||
| Redemption value adjustment of put option | i 5,695 | i 14,039 | i 202 | |||||||||
| Distribution | ( i 531 | ) | i - | i - | ||||||||
| Acquired businesses᾽ noncontrolling interest | i - | i - | i 2,892 | |||||||||
| Ending balance | $ | i 37,784 | $ | i 27,886 | $ | i 10,626 | ||||||
Lease Commitments
The Company leases office space and equipment under long-term leases, which are classified as operating leases. As of December 31, 2023, the Company’s remaining weighted average operating lease terms were approximately i 31 months. A reconciliation of operating lease payments undiscounted cash flows to lease liabilities recognized as of December 31, 2023 is as follows:
i
| (In thousands) | Operating Lease Payments | |||
| 2024 | $ | i 1,923 | ||
| 2025 | i 1,193 | |||
| 2026 | i 496 | |||
| 2027 | i 393 | |||
| Present value discount (6% weighted average) | ( i 231 | ) | ||
| Total | $ | i 3,774 | ||
Lease expense was $ i 2.7 million, $ i 2.3 million and $ i 2.0 million for the years ended December 31, 2023, 2022 and 2021, respectively. These amounts are recorded within general and administrative expenses.
Royalty Agreement – National Geographic
The Company is engaged in a brand license agreement with National Geographic through 2040, which allows the Company to use the National Geographic name and logo, as well as other rights. In return for these rights, the Company is charged a royalty fee. The royalty fee is included within selling and marketing expense. The amount is calculated based upon a percentage of certain ticket revenues less travel agent commission, including the revenues received from cancellation fees and any revenues received from the sale of voyage extensions. A voyage extension occurs when a guest extends his or her trip with pre- or post-voyage hotel nights and is included within tour revenues. The royalty expense is recognized at the time of revenue recognition. This royalty expense for the years ended December 31, 2023, 2022 and 2021 was $ i 7.6 million, $ i 5.7 million and $ i 1.7 million, respectively.
Royalty Agreement – World Wildlife Fund
Natural Habitat has a license agreement with World Wildlife Fund, which allows it to use the WWF name and logo. In return for these rights, Natural Habitat is charged a royalty fee and a fee based on annual gross sales. The fees are included within selling and marketing expense. The annual royalty payment and gross sales fees are paid on a quarterly basis. For the years ended December 31, 2023, 2022 and 2021, these fees totaled $ i 1.2 million, $ i 1.1 million and $ i 0.6 million, respectively.
Charter Commitments
From time to time, the Company enters into agreements to charter vessels onto which it holds its tours and expeditions, and with third parties to provide chartered air service for guests and crew on certain of its expeditions.
Future minimum payments on its charter agreements are as follows:
i
| For the years ended December 31, | Amount | |||
| (In thousands) | ||||
| 2024 | $ | i 15,767 | ||
| 2025 | i 12,647 | |||
| Total | $ | i 28,414 | ||
Other Commitments
The Company participates, with other tour operators, in the Consumer Protection Insurance Plan sponsored by the United States Tour Operators Association (“USTOA”). The USTOA requires a $1.0 million performance bond, letter of credit or assigned certificate of deposit from its members to insure this plan. The Company has assigned a $ i 1.0 million letter of credit to the USTOA to satisfy this requirement. This letter of credit will be used only if the Company becomes insolvent and cannot refund its customers’ deposits.
Legal Proceedings
The Company is involved in various claims, legal actions and regulatory proceedings arising from time to time in the ordinary course of business. In the opinion of management, after consulting legal counsel, there are no outstanding proceedings that are expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows.
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NOTE 10 — EMPLOYEE BENEFIT PLAN
The Company has a 401(k)-profit sharing plan and trust for its employees. The Company matched i 30% in 2023, 2022 and 2021, respectively, of employee contributions up to a per employee annual maximum of $ i 2,400 for 2023, 2022 and 2021. The Company’s benefit plan contributions amounted to $ i 0.7 million, $ i 0.6 million and $ i 0.4 million for the years ended December 31, 2023, 2022 and 2021, respectively. The benefit plan contributions are recorded within general and administrative expenses.
/
NOTE 11 — STOCKHOLDERS’ EQUITY
Company Stock
The Company has i 1,000,000 shares of preferred stock authorized, $ i 0.0001 par value and i 200,000,000 shares of common stock authorized, $ i 0.0001 par value.
Preferred Stock
On August 31, 2020, the Company issued and sold i 85,000 shares of Series A Redeemable Convertible Preferred Stock, par value of $ i 0.0001, (“Preferred Stock”) for $ i 1,000 per share for gross proceeds of $ i 85.0 million. As of December 31, 2023, i 62,000 shares of Preferred Stock are outstanding. The Preferred Stock has senior and preferential ranking to the Company’s common stock. The Preferred Stock is entitled to cumulative dividends of i 6.00% per annum, and for the first two years, the dividends were to be paid-in-kind, and through December 31, 2023, the Company has continued to pay dividends in-kind. After the second anniversary of the issuance date, the dividends may be paid-in-kind or be paid in cash at the Company’s option. The Preferred Stock is convertible at any time, at the holder’s election, into a number of shares of common stock of the Company equal to the quotient obtained by dividing the then-current accrued value by the conversion price of $ i 9.50. The Company may, at its option, convert all, but not less than all, of the Preferred Stock into common stock if the closing price of shares of common stock is at least 150% of the conversion price for 20 out of 30 consecutive trading days. The number of shares of common stock received in such conversion shall be equal to the quotient obtained by dividing the then-current accrued value by the conversion price. At the six-year anniversary of the closing date, each investor has the right to require the Company to repurchase their Preferred Stock and any Preferred Stock not requested to be repurchased shall be converted into common shares of the Company equal to the quotient obtained by dividing the then-current accrued value by the conversion price. The Preferred Stock deferred issuance costs was $ i 2.1 million as of December 31, 2023.
During the years ended December 31, 2022 and 2021, i 18,000 and i 5,000 shares, respectively, of Preferred Stock and related accumulated dividends were converted by the holders into i 2,109,561 and i 566,364 shares, respectively, of the Company’s common stock. i No shares of Preferred Stock were converted into shares during 2023.
For the years ended December 31, 2023, 2022 and 2021, the Company recorded $ i 4.4 million, $ i 4.6 million and $ i 5.3 million, respectively, in accrued dividends for Preferred Stock. As of December 31, 2023, the Preferred Stock could be converted at the option of the holders into i 8.0 million shares of the Company’s common stock.
Stock Repurchase Plan
In 2016, the Company’s Board of Directors approved a $ i 15.0 million increase to the Company’s existing stock and warrant repurchase plan (“Repurchase Plan”), to $ i 35.0 million. This Repurchase Plan authorizes the Company to purchase from time to time the Company’s outstanding common stock and previously outstanding warrants. Any shares purchased are retired. The Repurchase Plan has no time deadline and will continue until otherwise modified or terminated at the sole discretion of the Company’s Board of Directors. The repurchases exclude shares repurchased to settle statutory employee tax withholding related to the vesting of stock awards. Since the Repurchase Plan inception, the Company has cumulatively repurchased i 875,218 shares of common stock for $ i 8.3 million and i 6,011,926 warrants for $ i 14.7 million, as of December 31, 2023. All repurchases were made using cash resources. The balance available for the Repurchase Plan as of December 31, 2023 was $ i 12.0 million.
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NOTE 12 — STOCK-BASED COMPENSATION
During 2021, the Company’s compensation committee approved the 2021 Long-Term Incentive Plan, which supersedes the 2015 Long-Term Incentive Plan, and authorizes restricted time and performance awards and stock options to key employees. The Company's stock-based compensation program is a long-term retention program that provides for the grant of options, restricted stock, restricted stock units (“RSUs”), performance-based restricted stock or units (“PSUs”) and/or market stock units (“MSUs”) to attract, retain and provide incentives for directors, officers and employees. The maximum number of shares reserved for the grant of awards under the plan is i 4.7 million, with approximately i 3.7 million shares available as of December 31, 2023. The Company settles stock-based awards with newly issued shares.
Restricted Stock and Restricted Stock Units
Restricted stock is shares of stock granted to an employee, non-employee director or other service providers for which sale is prohibited for a specified period of time. Restricted stock typically vests ratably over a one or three-year period following the date of grant. RSUs represent a promise to deliver shares to the employee, non-employee director or other service providers at a future date if certain vesting conditions are met. RSUs typically vest ratably over a three-year period following the date of grant. The Company does not deliver the shares associated with the RSUs to the employee, non-employee director or other service providers until the vesting conditions are met. The number of shares or units granted are determined based upon the closing price of the Company's common stock on the date of the award.
Market Stock Units
MSUs represent a promise to deliver shares to the employee, non-employee director or other service providers at a future date if certain performance and vesting conditions are met. The MSUs are market-based equity incentive awards based on a performance-multiplier of change in the stock price of the Company’s common stock between the grant date and a determined closing price. Each MSU represents the right to receive one share of Company stock multiplied by a performance multiplier or, at the option of the Company, an amount of cash. The number of shares that will eventually be earned and vest may be more or less than the number of MSUs that are awarded, depending on the Company's common stock price. Awards, if earned, will vest after a determined performance period and may be earned at a level ranging from i 0%- i 150% of the number of MSUs granted, depending on performance. The number of units granted were determined based upon the closing price of the Company's common stock on the date of the award.
The Company assessed the applicable metrics related to the MSU grants, estimating the fair value of employee MSU awards and the amount of stock compensation expense using the Monte-Carlo pricing model.
Performance Stock Units
PSUs represent a promise to deliver shares to the employee, non-employee director or other service providers at a future date if certain performance and vesting conditions are met. PSUs generally vest three years following the date of grant based on the attainment of performance- or market-based goals, all of which are subject to a service condition. The Company does not deliver the shares associated with the PSUs to the employee, non-employee director or other service providers until the performance and vesting conditions are met.
The PSUs granted may be earned based on the Company's performance against metrics relating to annual Adjusted EBITDA and annual revenue. Awards, if earned, will vest after a three-year performance period and may be earned at a level ranging from i 0%- i 200% of the number of PSUs granted, depending on performance. The number of units were determined based upon the closing price of the Company's common stock on the date of the award. The Company assessed the applicable metrics related to the PSU grants, determined the blended probability of achieving the performance metrics and valued the awards based on the fair value at the date of grant with the amount of stock compensation expense determined based on the number of PSU’s expected to vest.
Long-Term Incentive Compensation
See the following table for a summary of PSU, restricted stock, RSU and MSU activity.
i
| Performance-based Stock Units | Restricted Stock and Restricted Stock Units | Market-based Stock Units | ||||||||||||||||||||||
| Number of Shares | Weighted Average Grant Date Fair Value | Number of Shares | Weighted Average Grant Date Fair Value | Number of Shares | Weighted Average Grant Date Fair Value | |||||||||||||||||||
| Balance, December 31, 2022 | i 22,620 | i 5.41 | i 540,723 | i 14.17 | i 131,976 | i 13.66 | ||||||||||||||||||
| Granted | i 96,757 | i 9.56 | i 573,668 | i 9.70 | i 25,517 | i 9.56 | ||||||||||||||||||
| Vested and released | i - | i - | ( i 256,255 | ) | i 12.25 | ( i 76,547 | ) | i 8.51 | ||||||||||||||||
| Forfeited | ( i 52,693 | ) | i 7.78 | ( i 200,929 | ) | i 14.02 | ( i 19,065 | ) | i 15.08 | |||||||||||||||
| Balance, December 31, 2023 | i 66,684 | i 9.56 | i 657,207 | i 11.06 | i 61,881 | i 17.48 | ||||||||||||||||||
Stock Options
i
| Stock Option Grants | |||||||||||
| 2023 | 2022 | 2021 | |||||||||
| Stock price | $ | i 9.56 | $ | i 12.64 - i 14.36 | $ | i 16.38 | |||||
| Exercise price | $ | i 9.56 | $ | i 12.64 - i 14.36 | $ | i 16.38 | |||||
| Dividend yield | i 0.0 | % | i 0.00 |
% | i 0.00 | % | |||||
| Expected volatility | i 64.6 | % | i 57.79 |
% | i 25.61 | % | |||||
| Risk-free interest rate | i 3.63 | % | i 2.75 - i 3.15 | % | i 1.63 |
% | |||||
| Expected term in years | i 6.25 | i 6.25 | i 7.50 | ||||||||
The following table is a summary of stock option activity:
i
| Number of Options | Weighted Average Exercise Price | Weighted Average Contractual Live (Years) | Aggregate Intrinsic Value | |||||||||||||
| Options outstanding as of December 31, 2022 | i 1,388,458 | i 15.10 | i 7.9 | - | ||||||||||||
| Granted | i 500,000 | i 9.56 | ||||||||||||||
| Forfeited | ( i 1,000,000 | ) | i 16.38 | |||||||||||||
| Options outstanding as of December 31, 2023 | i 888,458 | i 10.55 | i 7.7 | - | ||||||||||||
| As of December 31, 2023 | ||||||||||||||||
| Number of Options | Weighted Average Exercise Price | Weighted Average Contractual Live (Years) | Aggregate Intrinsic Value | |||||||||||||
| Options vested and/or expected to vest | i 888,458 | $ | i 10.55 | i 7.7 | $ | i - | ||||||||||
| Options exercisable | i 238,115 | i 10.43 | i 3.9 | i - | ||||||||||||
During the year ended 2022, i 77,500 options with an intrinsic value of $ i 0.3 million were exercised, and during the year ended December 31, 2021, i 12,000 options with an intrinsic value of $ i 0.1 million were exercised. i No options were exercised during the year ended December 31, 2023.
Stock-based Compensation Expense
Stock-based compensation expense for the years ended December 31, 2023, 2022 and 2021 was $ i 13.9 million, $ i 7.0 million and $ i 5.6 million, respectively, and is included in general and administrative expenses. The total income tax benefit recognized for stock-based compensation plans for the years ended December 31, 2023, 2022 and 2021 was $ i 0.0 million. As of December 31, 2023, unrecognized stock-based compensation expense was $ i 16.6 million. This amount is expected to be recognized over a weighted average period of approximately i 2.1 years.
Mr. Bressler has an equity incentive opportunity to earn an award of options based on the financial performance of Natural Habitat, where if the final year equity value of Natural Habitat, as defined in Mr. Bressler's employment agreement, as amended, exceeds $ i 25.0 million, effective as of December 31, 2025, Mr. Bressler will be granted options with a fair value equal to i 10.1% of such excess, subject to certain conditions. Mr. Bressler has a one-time right to elect an early option award of 50% valued as of December 31, 2023, by providing notice within 30 days of being provided with the final value calculation. The actual number of options granted will be determined by the calculated final year equity value of Natural Habitat and the Black-Scholes per share option value, factoring in the Company’s stock price on the date of the grant, its volatility and a discount rate. During the year ended December 31, 2023, the Company determined it was probable the performance condition would be met and therefore, recorded $ i 8.0 million of stock-based compensation expense.
In 2021, Mr. Lawrence, President of Off the Beaten Path, was issued i 1,007 profit interest units in the equity of Off the Beaten Path as part of the 2021 acquisition. The profit interest units had a grant date fair value of $ i 132.86 per share and are considered vested upon issuance.
/
NOTE 13 — SEGMENT INFORMATION
The Company’s chief operating decision maker, or CODM, assesses performance and allocates resources based upon the separate financial information from the Company’s operating segments. In identifying its reportable segments, the Company considered the nature of services provided, the geographical areas in which the segments operated and other relevant factors.
The Company is primarily an experiential travel operator with operations in i two segments, Lindblad and Land Experiences. While both segments have similar characteristics, the i two operating and reporting segments cannot be aggregated because they fail to meet the requirements for aggregation. The Company evaluates the performance of the business based largely on the results of its operating segments. The CODM and management review operating results monthly, and base operating decisions on the total results at a consolidated level, as well as at a segment level. The reports provided to the Board of Directors are at a consolidated level and also contain information regarding the separate results of both reportable segments.
The Company evaluates the performance of its business segments based largely on tour revenues and operating income, without allocating other income and expenses, net, income taxes and interest expense, net. For the years ended December 31, 2023, 2022 and 2021, reportable segment operating results were as follows:
| For the years ended December 31, | ||||||||||||
| 2022 | 2021 | |||||||||||
| (In thousands) | ||||||||||||
| Tour revenues: | ||||||||||||
| Lindblad | $ | i 397,410 | $ | i 278,449 | $ | i 82,842 | ||||||
| Land Experiences | i 172,133 | i 143,051 | i 64,265 | |||||||||
| Total tour revenues | $ | i 569,543 | $ | i 421,500 | $ | i 147,107 | ||||||
| Operating income (loss): | ||||||||||||
| Lindblad | $ | ( i 8,692 | ) | $ | ( i 77,871 | ) | $ | ( i 111,477 | ) | |||
| Land Experiences | i 19,291 | i 14,825 | i 646 | |||||||||
| Total operating income (loss) | $ | i 10,599 | $ | ( i 63,046 | ) | $ | ( i 110,831 | ) | ||||
Intercompany tour revenues between the Lindblad and Land Experiences segments eliminated in consolidation and in the presentation above for the years ended December 31, 2023, 2022 and 2021 were $ i 7.9 million, $ i 6.0 million and $ i 2.2 million, respectively.
Depreciation and amortization expense is included in segment operating income as shown below:
| For the years ended December 31, | ||||||||||||
| 2022 | 2021 | |||||||||||
| (In thousands) | ||||||||||||
| Depreciation and amortization: | ||||||||||||
| Lindblad | $ | i 43,351 | $ | i 41,275 | $ | i 37,516 | ||||||
| Land Experiences | i 3,360 | i 2,767 | i 2,009 | |||||||||
| Total depreciation and amortization | $ | i 46,711 | $ | i 44,042 | $ | i 39,525 | ||||||
The following table presents the Company’s total assets, intangibles, net and goodwill by segment:
| As of December 31, | ||||||||
| 2023 | 2022 | |||||||
| Total Assets: | ||||||||
| Lindblad | $ | i 675,432 | $ | i 662,683 | ||||
| Land Experiences | i 155,865 | i 125,292 | ||||||
| Total assets | $ | i 831,297 | $ | i 787,975 | ||||
| Intangibles, net: | ||||||||
| Lindblad | $ | i 1,592 | $ | i 1,680 | ||||
| Land Experiences | i 7,820 | i 9,539 | ||||||
| Total intangibles, net | $ | i 9,412 | $ | i 11,219 | ||||
| Goodwill: | ||||||||
| Lindblad | $ | i - | $ | i - | ||||
| Land Experiences | i 42,017 | i 42,017 | ||||||
| Total goodwill | $ | i 42,017 | $ | i 42,017 | ||||
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| This ‘10-K/A’ Filing | Date | Other Filings | ||
|---|---|---|---|---|
 | ||||
| 12/31/30 | ||||
| 3/31/29 | ||||
| 5/15/28 | ||||
| 2/15/27 | ||||
| 11/13/26 | ||||
| 1/31/26 | ||||
| 12/31/25 | ||||
| 10/31/25 | ||||
| 1/1/25 | ||||
| 12/15/24 | ||||
| Filed on: | 3/21/24 | |||
| 3/6/24 | 10-K, S-3 | |||
| 2/26/24 | ||||
| 1/1/24 | ||||
| For Period end: | 12/31/23 | 10-K, 4 | ||
| 12/15/23 | ||||
| 9/30/23 | 10-Q, 4 | |||
| 6/30/23 | 10-Q, 4 | |||
| 5/2/23 | 8-K | |||
| 12/31/22 | 10-K, 4, ARS | |||
| 2/28/22 | 10-K | |||
| 2/4/22 | 8-K | |||
| 12/31/21 | 10-K, 4 | |||
| 12/31/20 | 10-K, 4 | |||
| 12/11/20 | ||||
| 8/31/20 | 8-K | |||
| List all Filings | ||||