XML 37 R18.htm IDEA: XBRL DOCUMENT
v3.22.0.1

Leases | 12 Months Ended
--- | ---
Dec. 31, 2021
Leases [Abstract] |
Leases | Note 9. Leases Operating leases Our operating leases primarily relate to preferred berthing arrangements, real estate and shipboard equipment and are included within Operating lease right-of-use assets, and Long-term operating lease liabilities with the current portion of the liability included within Current portion of operating lease liabilities in our consolidated balance sheet as of December 31, 2021. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet. We recognize lease expense for these leases on a straight-line basis over the lease term. Our operating leases include Silver Explorer, operated by Silversea Cruises. The operating lease for Silver Explorer will expire in 2023. For some of our real estate leases and berthing agreements, we do have the option to extend our current lease term. For those lease agreements with renewal options, the renewal periods for real estate leases range from one to 10 years and the renewal periods for berthing agreements range from one year to 20 years. Generally, we do not include renewal options as a component of our present value calculation for berthing agreements. However, for certain real estate leases, we include them. In June of 2021, we exercised our option under our operating lease with SMBC Leasing and Finance, Inc (the "Lessor") to purchase Terminal A at PortMiami in July 2021 for the pre-agreed purchase price of $220.0 million. Upon purchase of the terminal lease in July 2021, the underlying asset was recorded as a leasehold improvement within Property and equipment, net. Our July 2021 purchase of the Port of Miami terminal eliminated the residual value guarantee and a requirement under the lease to post $181.1 million of cash collateral. Additionally, we remeasured the ground lease related to the Terminal A lease based on a reassessed lease term resulting from our purchase option exercise. We determined that the ground lease should remain as an operating lease with adjustments to the operating lease liability and the related right-of-use asset in our Consolidated Balance Sheet. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate in determining the present value of lease payments. We estimate our incremental borrowing rates based on LIBOR and U.S. Treasury note rates corresponding to lease terms increased by the Company’s credit risk spread and reduced by the estimated impact of collateral. In addition, we have lease agreements with lease and non-lease components, which are generally accounted for separately. However, for berthing agreements, we account for the lease and non-lease components as a single lease component. Commencing in 2016 when we sold our 51% interest in the Pullmantur brand to Pullmantur Holdings, and continuing through the quarter ended June 30, 2020, we bareboat chartered to Pullmantur Holdings the vessels operated by the Pullmantur brand. On June 22, 2020, Pullmantur S.A., a subsidiary of Pullmantur Holdings, filed for reorganization in Spain, at which time we terminated these bareboat charters. See Note 7. Other Assets for further discussion of Pullmantur Holdings. We accounted for the bareboat charters of these vessels as operating leases for which we were the lessor. Finance Leases Silversea Cruises operates the Silver Dawn under a finance lease. We received delivery of the Silver Dawn in November of 2021 under a sale-leaseback agreement with a bargain purchase option at the end of the 15 year lease term. Due to the bargain purchase option at the end of the lease term, whereby Silversea Cruises is reasonably certain of obtaining ownership of the ship, Silver Dawn is accounted for as a finance lease. The lease includes other purchase options beginning in year three, none of which are reasonably certain of being exercised at this time. The carrying amount of the ship is reported within Property and Equipment, net in our Consolidated Balance Sheet as of December 31, 2021. The ship has a useful life and residual value of 30 years and 15%, respectively. The total aggregate amount of finance lease liabilities recorded for this ship are $283.7 million and are reflected in Current portion of long-term debt and Long-term debt in our Consolidated Balance Sheet as of December 31, 2021. Silversea Cruises operates Silver Whisper under a finance lease. In May 2021, the finance lease for the Silver Whisper expiring in 2022 was amended to extend its expiration by 12 months and will now expire in 2023, subject to an option to purchase the ship. Additionally, certain scheduled payments have been deferred and are reflected in Long-term debt in our Consolidated Balance Sheet as of December 31, 2021. The total aggregate amount of finance lease liabilities recorded for this ship was $24.1 million and $31.5 million at December 31, 2021 and December 31, 2020, respectively. The lease payments on the Silver Whisper are subject to adjustments based on the LIBOR rate. Supplemental balance sheet information for leases was as follows (in thousands):
| As of December 31, 2021 | As of December 31, 2020
Lease assets: |  |
Finance lease right-of-use assets, net: |  |
Property and equipment, gross | $ | 737,444 |  | $ | 364,910 |
Accumulated depreciation | (94,729) |  | (71,288) |
Property and equipment, net | 642,715 |  | 293,622 |
Operating lease right-of-use assets | 542,128 |  | 599,985 |
Total lease assets | $ | 1,184,843 |  | $ | 893,607 |
Lease liabilities: |  |
Finance lease liabilities: |  |
Current portion of debt | $ | 51,470 |  | $ | 51,856 |
Long-term debt | 420,805 |  | 161,509 |
Total finance lease liabilities | 472,275 |  | 213,365 |
Operating lease liabilities: |  |
Current portion of operating lease liabilities | 68,922 |  | 102,677 |
Long-term operating lease liabilities | 534,726 |  | 563,876 |
Total operating lease liabilities | 603,648 |  | 666,553 |
Total lease liabilities | $ | 1,075,923 |  | $ | 879,918 |
The components of lease expense were as follows (in thousands):
| Consolidated Statement of Comprehensive Income (Loss) Classification | Year ended December 31, 2021 | Year ended December 31, 2020 | Year ended December 31, 2019
Lease costs: |  |  |  |
Operating lease costs | Commission, transportation and other | $ | 18,860 |  | $ | 38,349 |  | $ | 76,226 |
Operating lease costs | Other operating expenses | 23,261 |  | 30,955 |  | 27,868 |
Operating lease costs | Marketing, selling and administrative expenses | 18,027 |  | 21,971 |  | 18,837 |
Finance lease costs: |  |  |  |
Amortization of right-of-use-assets | Depreciation and amortization expenses | 16,814 |  | 6,901 |  | 22,044 |
Interest on lease liabilities | Interest expense, net of interest capitalized | 2,593 |  | 4,429 |  | 8,355 |
Total lease costs |  | $ | 79,555 |  | $ | 102,605 |  | $ | 153,330 |
In addition, certain of our berth agreements include variable lease costs based on the number of passengers berthed. During the twelve months ended December 31, 2021, we had no variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive income (loss). Weighted average of the remaining lease terms and weighted average discount rates are as follows:
| As of December 31, 2021 | As of December 31, 2020
Weighted average of the remaining lease term |  |
Operating leases | 18.18 | 7.8
Finance leases | 23.96 | 41.2
Weighted average discount rate |  |
Operating leases | 6.52 | % | 4.59 | %
Finance leases | 5.54 | % | 6.89 | %
Supplemental cash flow information related to leases is as follows (in thousands):
| Year ended December 31, 2021 | Year ended December 31, 2020 | Year ended December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities: |  |  |
Operating cash flows from operating leases | $ | 42,759 |  | $ | 89,179 |  | $ | 125,307 |
Operating cash flows from finance leases | $ | 2,593 |  | $ | 4,429 |  | $ | 8,355 |
Financing cash flows from finance leases | $ | 23,522 |  | $ | 19,778 |  | $ | 32,090 |
As of December 31, 2021, maturities related to lease liabilities were as follows (in thousands):
Years | Operating Leases | Finance Leases
2022 | $ | 101,445 |  | $ | 72,076 |
2023 | 104,585 |  | 52,340 |
2024 | 85,463 |  | 43,497 |
2025 | 80,182 |  | 43,089 |
2026 | 74,626 |  | 37,900 |
Thereafter | 826,226 |  | 632,709 |
Total lease payments | 1,272,527 |  | 881,611 |
Less: Interest | (668,879) |  | (409,336) |
Present value of lease liabilities | $ | 603,648 |  | $ | 472,275 |
Operating lease payments do not include any costs related to options to extend lease terms as none are reasonably certain of being exercised. Right-of-use assets impairments During the year ended December 31, 2020, we identified that the undiscounted cash flows for certain right-of-use assets were less than their carrying values due to the negative impact of COVID-19. We evaluated these assets pursuant to our long-lived asset impairment test, resulting in an impairment charge of $65.9 million to write down these assets to their estimated fair values during the year ended December 31, 2020. For the year ended December 31, 2021, there were no impairments to right-of-use assets.
Leases | Note 9. Leases Operating leases Our operating leases primarily relate to preferred berthing arrangements, real estate and shipboard equipment and are included within Operating lease right-of-use assets, and Long-term operating lease liabilities with the current portion of the liability included within Current portion of operating lease liabilities in our consolidated balance sheet as of December 31, 2021. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet. We recognize lease expense for these leases on a straight-line basis over the lease term. Our operating leases include Silver Explorer, operated by Silversea Cruises. The operating lease for Silver Explorer will expire in 2023. For some of our real estate leases and berthing agreements, we do have the option to extend our current lease term. For those lease agreements with renewal options, the renewal periods for real estate leases range from one to 10 years and the renewal periods for berthing agreements range from one year to 20 years. Generally, we do not include renewal options as a component of our present value calculation for berthing agreements. However, for certain real estate leases, we include them. In June of 2021, we exercised our option under our operating lease with SMBC Leasing and Finance, Inc (the "Lessor") to purchase Terminal A at PortMiami in July 2021 for the pre-agreed purchase price of $220.0 million. Upon purchase of the terminal lease in July 2021, the underlying asset was recorded as a leasehold improvement within Property and equipment, net. Our July 2021 purchase of the Port of Miami terminal eliminated the residual value guarantee and a requirement under the lease to post $181.1 million of cash collateral. Additionally, we remeasured the ground lease related to the Terminal A lease based on a reassessed lease term resulting from our purchase option exercise. We determined that the ground lease should remain as an operating lease with adjustments to the operating lease liability and the related right-of-use asset in our Consolidated Balance Sheet. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate in determining the present value of lease payments. We estimate our incremental borrowing rates based on LIBOR and U.S. Treasury note rates corresponding to lease terms increased by the Company’s credit risk spread and reduced by the estimated impact of collateral. In addition, we have lease agreements with lease and non-lease components, which are generally accounted for separately. However, for berthing agreements, we account for the lease and non-lease components as a single lease component. Commencing in 2016 when we sold our 51% interest in the Pullmantur brand to Pullmantur Holdings, and continuing through the quarter ended June 30, 2020, we bareboat chartered to Pullmantur Holdings the vessels operated by the Pullmantur brand. On June 22, 2020, Pullmantur S.A., a subsidiary of Pullmantur Holdings, filed for reorganization in Spain, at which time we terminated these bareboat charters. See Note 7. Other Assets for further discussion of Pullmantur Holdings. We accounted for the bareboat charters of these vessels as operating leases for which we were the lessor. Finance Leases Silversea Cruises operates the Silver Dawn under a finance lease. We received delivery of the Silver Dawn in November of 2021 under a sale-leaseback agreement with a bargain purchase option at the end of the 15 year lease term. Due to the bargain purchase option at the end of the lease term, whereby Silversea Cruises is reasonably certain of obtaining ownership of the ship, Silver Dawn is accounted for as a finance lease. The lease includes other purchase options beginning in year three, none of which are reasonably certain of being exercised at this time. The carrying amount of the ship is reported within Property and Equipment, net in our Consolidated Balance Sheet as of December 31, 2021. The ship has a useful life and residual value of 30 years and 15%, respectively. The total aggregate amount of finance lease liabilities recorded for this ship are $283.7 million and are reflected in Current portion of long-term debt and Long-term debt in our Consolidated Balance Sheet as of December 31, 2021. Silversea Cruises operates Silver Whisper under a finance lease. In May 2021, the finance lease for the Silver Whisper expiring in 2022 was amended to extend its expiration by 12 months and will now expire in 2023, subject to an option to purchase the ship. Additionally, certain scheduled payments have been deferred and are reflected in Long-term debt in our Consolidated Balance Sheet as of December 31, 2021. The total aggregate amount of finance lease liabilities recorded for this ship was $24.1 million and $31.5 million at December 31, 2021 and December 31, 2020, respectively. The lease payments on the Silver Whisper are subject to adjustments based on the LIBOR rate. Supplemental balance sheet information for leases was as follows (in thousands):
| As of December 31, 2021 | As of December 31, 2020
Lease assets: |  |
Finance lease right-of-use assets, net: |  |
Property and equipment, gross | $ | 737,444 |  | $ | 364,910 |
Accumulated depreciation | (94,729) |  | (71,288) |
Property and equipment, net | 642,715 |  | 293,622 |
Operating lease right-of-use assets | 542,128 |  | 599,985 |
Total lease assets | $ | 1,184,843 |  | $ | 893,607 |
Lease liabilities: |  |
Finance lease liabilities: |  |
Current portion of debt | $ | 51,470 |  | $ | 51,856 |
Long-term debt | 420,805 |  | 161,509 |
Total finance lease liabilities | 472,275 |  | 213,365 |
Operating lease liabilities: |  |
Current portion of operating lease liabilities | 68,922 |  | 102,677 |
Long-term operating lease liabilities | 534,726 |  | 563,876 |
Total operating lease liabilities | 603,648 |  | 666,553 |
Total lease liabilities | $ | 1,075,923 |  | $ | 879,918 |
The components of lease expense were as follows (in thousands):
| Consolidated Statement of Comprehensive Income (Loss) Classification | Year ended December 31, 2021 | Year ended December 31, 2020 | Year ended December 31, 2019
Lease costs: |  |  |  |
Operating lease costs | Commission, transportation and other | $ | 18,860 |  | $ | 38,349 |  | $ | 76,226 |
Operating lease costs | Other operating expenses | 23,261 |  | 30,955 |  | 27,868 |
Operating lease costs | Marketing, selling and administrative expenses | 18,027 |  | 21,971 |  | 18,837 |
Finance lease costs: |  |  |  |
Amortization of right-of-use-assets | Depreciation and amortization expenses | 16,814 |  | 6,901 |  | 22,044 |
Interest on lease liabilities | Interest expense, net of interest capitalized | 2,593 |  | 4,429 |  | 8,355 |
Total lease costs |  | $ | 79,555 |  | $ | 102,605 |  | $ | 153,330 |
In addition, certain of our berth agreements include variable lease costs based on the number of passengers berthed. During the twelve months ended December 31, 2021, we had no variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive income (loss). Weighted average of the remaining lease terms and weighted average discount rates are as follows:
| As of December 31, 2021 | As of December 31, 2020
Weighted average of the remaining lease term |  |
Operating leases | 18.18 | 7.8
Finance leases | 23.96 | 41.2
Weighted average discount rate |  |
Operating leases | 6.52 | % | 4.59 | %
Finance leases | 5.54 | % | 6.89 | %
Supplemental cash flow information related to leases is as follows (in thousands):
| Year ended December 31, 2021 | Year ended December 31, 2020 | Year ended December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities: |  |  |
Operating cash flows from operating leases | $ | 42,759 |  | $ | 89,179 |  | $ | 125,307 |
Operating cash flows from finance leases | $ | 2,593 |  | $ | 4,429 |  | $ | 8,355 |
Financing cash flows from finance leases | $ | 23,522 |  | $ | 19,778 |  | $ | 32,090 |
As of December 31, 2021, maturities related to lease liabilities were as follows (in thousands):
Years | Operating Leases | Finance Leases
2022 | $ | 101,445 |  | $ | 72,076 |
2023 | 104,585 |  | 52,340 |
2024 | 85,463 |  | 43,497 |
2025 | 80,182 |  | 43,089 |
2026 | 74,626 |  | 37,900 |
Thereafter | 826,226 |  | 632,709 |
Total lease payments | 1,272,527 |  | 881,611 |
Less: Interest | (668,879) |  | (409,336) |
Present value of lease liabilities | $ | 603,648 |  | $ | 472,275 |
Operating lease payments do not include any costs related to options to extend lease terms as none are reasonably certain of being exercised. Right-of-use assets impairments During the year ended December 31, 2020, we identified that the undiscounted cash flows for certain right-of-use assets were less than their carrying values due to the negative impact of COVID-19. We evaluated these assets pursuant to our long-lived asset impairment test, resulting in an impairment charge of $65.9 million to write down these assets to their estimated fair values during the year ended December 31, 2020. For the year ended December 31, 2021, there were no impairments to right-of-use assets.

X
- References No definition available. + Details
Name: | us-gaap_LeasesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
Name: | us-gaap_LesseeFinanceLeasesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
Name: | us-gaap_LesseeOperatingLeasesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration