Norwegian Cruise Line Holdings Ltd. Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements and Derivatives (Tables)

9 Months Ended

Sep. 30, 2021

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


		Assets				Liabilities
		September 30,		December 31,		September 30,		December 31,
	Balance Sheet Location	2021		2020		2021		2020
Derivative Contracts Designated as Hedging Instruments

Fuel contracts
	Prepaid expenses and other assets	$	20,852	$	—	$	—	$	—
	Other long-term assets		22,324		—		—		—
	Accrued expenses and other liabilities		—		—		—		35,973
	Other long-term liabilities		—		—		—		28,947
Foreign currency contracts
	Prepaid expenses and other assets		819		5,779		—		—
	Other long-term assets		10,898		43,250		—		—
	Accrued expenses and other liabilities		—		—		90,954		14,778
	Other long-term liabilities		2,410		6,821		56,775		44,938
Interest rate contracts
	Accrued expenses and other liabilities		—		—		1,281		6,776
	Other long-term liabilities		—		—		—		452
Total derivatives designated as hedging instruments		$	57,303	$	55,850	$	149,010	$	131,864

Derivative Contracts Not Designated as Hedging Instruments

Fuel contracts
	Prepaid expenses and other assets	$	12,283	$	—	$	—	$	—
	Other long-term assets		1,873		—		—		—
	Accrued expenses and other liabilities		—		546		—		6,732
	Other long-term liabilities		—		—		—		3,534

Total derivatives not designated as hedging instruments		$	14,156	$	546	$	—	$	10,266
Total derivatives		$	71,459	$	56,396	$	149,010	$	142,130

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

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


					Location of Gain
					(Loss) Reclassified
					from Accumulated	Amount of Gain (Loss) Reclassified
	Amount of Gain (Loss)				Other Comprehensive	from Accumulated Other
	Recognized in Other				Income (Loss) into	Comprehensive Income
Derivatives	Comprehensive Loss				Income (Expense)	(Loss) into Income (Expense)
	Three Months		Three Months			Three Months		Three Months
	Ended		Ended			Ended		Ended
	September 30, 2021		September 30, 2020			September 30, 2021		September 30, 2020
Fuel contracts	$	19,202	$	(10,958)	Fuel	$	(10,278)	$	(15,091)
Fuel contracts		—		—	Other income (expense), net		(65)		(17,434)
Foreign currency contracts		(64,306)		98,539	Depreciation and amortization		(1,267)		(1,267)
Interest rate contracts		(30)		129	Interest expense, net		(1,338)		(2,280)
Total gain (loss) recognized in other comprehensive loss	$	(45,134)	$	87,710		$	(12,948)	$	(36,072)


					Location of Gain
					(Loss) Reclassified
					from Accumulated	Amount of Gain (Loss) Reclassified
	Amount of Gain (Loss)				Other Comprehensive	from Accumulated Other
	Recognized in Other				Income (Loss) into	Comprehensive Income
Derivatives	Comprehensive Loss				Income (Expense)	(Loss) into Income (Expense)
	Nine Months		Nine Months			Nine Months		Nine Months
	Ended		Ended			Ended		Ended
	September 30, 2021		September 30, 2020			September 30, 2021		September 30, 2020
Fuel contracts	$	68,708	$	(181,666)	Fuel	$	(27,101)	$	(35,186)
Fuel contracts		—		—	Other income (expense), net		(11,793)		(43,718)
Foreign currency contracts		(142,466)		28,346	Depreciation and amortization		(3,800)		(3,662)
Interest rate contracts		261		(10,352)	Interest expense, net		(5,634)		(4,287)
Total gain (loss) recognized in other comprehensive loss	$	(73,497)	$	(163,672)		$	(48,328)	$	(86,853)

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


	Three Months Ended September 30, 2021								Three Months Ended September 30, 2020
			Depreciation								Depreciation
			and		Interest		Other Income				and		Interest		Other Income
	Fuel		Amortization		Expense, net		(Expense), net		Fuel		Amortization		Expense, net		(Expense), net
Total amounts of income and expense line items presented in the consolidated statements of operations in which the effects of cash flow hedges are recorded	$	79,238	$	173,289	$	161,205	$	4,720	$	48,224	$	177,488	$	139,664	$	(23,680)

Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income (expense)
Fuel contracts		(10,278)		—		—		—		(15,091)		—		—		—
Foreign currency contracts		—		(1,267)		—		—		—		(1,267)		—		—
Interest rate contracts		—		—		(1,338)		—		—		—		(2,280)		—

Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income (expense) as a result that a forecasted transaction is no longer probable of occurring
Fuel contracts		—		—		—		(65)		—		—		—		(17,434)

Amount of gain recognized in income as a result of failing effectiveness tests
Fuel contracts		—		—		—		—		—		—		—		5,507


	Nine Months Ended September 30, 2021								Nine Months Ended September 30, 2020
			Depreciation								Depreciation
			and		Interest		Other Income				and		Interest		Other Income
	Fuel		Amortization		Expense, net		(Expense), net		Fuel		Amortization		Expense, net		(Expense), net
Total amounts of income and expense line items presented in the consolidated statements of operations in which the effects of cash flow hedges are recorded	$	175,931	$	517,867	$	1,122,905	$	57,464	$	222,240	$	554,937	$	323,108	$	(32,275)

Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income (expense)
Fuel contracts		(27,101)		—		—		—		(35,186)		—		—		—
Foreign currency contracts		—		(3,800)		—		—		—		(3,662)		—		—
Interest rate contracts		—		—		(5,634)		—		—		—		(4,287)		—

Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income (expense) as a result that a forecasted transaction is no longer probable of occurring
Fuel contracts		—		—		—		(11,793)		—		—		—		(43,718)

Amount of gain recognized in income as a result of failing effectiveness tests
Fuel contracts		—		—		—		—		—		—		—		5,507

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

Amount of Gain (Loss) Recognized in Income

Three Months Ended

Nine Months Ended

September 30,

Location of Gain (Loss)

2021

2020

2021

2020

Derivatives not designated as hedging instruments

Fuel contracts

Other income (expense), net

7,398

(17)

57,505

3,629