XML 32 R13.htm IDEA: XBRL DOCUMENT
v3.23.3

Leases | 9 Months Ended
--- | ---
Sep. 30, 2023
Leases [Abstract] |
Leases | Note 7. 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 sheets as of September 30, 2023 and December 31, 2022. Leases with an initial term of 12 months or less are not recorded on our 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 the fourth quarter of 2023 and Silversea Cruises does not intend to renew the lease. 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 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. 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 Term SOFR 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. I n 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. Finance Leases Our finance leases primarily relate to buildings and surrounding land located at our Miami headquarters and our lease for the Silver Dawn ship. Finance leases are included within Property and Equipment, net and Long-term debt with the current portion of the liability included within Current portion of long-term debt in our consolidated balance sheets as of September 30, 2023 and December 31, 2022. The Company's master lease agreement (“Master Lease”) with Miami-Dade County related to the buildings and surrounding land located at our Miami headquarters is classified as a finance lease in accordance with ASC 842, Leases. The Master Lease includes two five-year options to extend the lease which we are reasonably certain to exercise. The total aggregate amount of the finance lease liabilities recorded for this Master Lease was $56.8 million and $55.5 million as of September 30, 2023 and December 31, 2022, respectively. Silversea Cruises operates Silver Dawn 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 in 2036, 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 total aggregate amount of finance lease liabilities recorded for this ship was $250.6 million and $264.8 million as of September 30, 2023 and December 31, 2022, respectively. The lease payments on the Silver Dawn are subject to adjustments based on the Term SOFR rate. The components of lease expense were as follows (in thousands):
| Consolidated Statement of Comprehensive Income (Loss) Classification | Quarter Ended September 30, 2023 |  | Nine Months Ended September 30, 2023
Lease costs: |  |  |  |
Operating lease costs | Commission, transportation and other | $ | 32,925 |  |  | $ | 127,897 |
Operating lease costs | Other operating expenses | 5,545 |  |  | 16,636 |
Operating lease costs | Marketing, selling and administrative expenses | 5,350 |  |  | 16,354 |
Financial lease costs: |  |  |  |
Amortization of right-of-use-assets | Depreciation and amortization expenses | 5,792 |  |  | 17,374 |
Interest on lease liabilities | Interest expense, net of interest capitalized | 7,658 |  |  | 22,386 |
Total lease costs |  | $ | 57,270 |  |  | $ | 200,647 |
| Consolidated Statement of Comprehensive Income (Loss) Classification | Quarter Ended September 30, 2022 |  | Nine Months Ended September 30, 2022
Lease costs: |  |  |  |
Operating lease costs | Commission, transportation and other | $ | 26,924 |  |  | $ | 77,646 |
Operating lease costs | Other operating expenses | 5,545 |  |  | 16,540 |
Operating lease costs | Marketing, selling and administrative expenses | 4,545 |  |  | 14,191 |
Financial lease costs: |  |  |  |
Amortization of right-of-use-assets | Depreciation and amortization expenses | 6,115 |  |  | 18,311 |
Interest on lease liabilities | Interest expense, net of interest capitalized | 5,942 |  |  | 15,196 |
Total lease costs |  | $ | 49,071 |  |  | $ | 141,884 |
In addition, certain of our berthing agreements include variable lease costs based on the number of passengers berthed. During the quarter and nine months ended September 30, 2023, we had $13.2 million and $72.1 million of variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive income (loss), respectively, compared to $12.6 million and $32.0 million of variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive income (loss) during the quarter and nine months ended September 30, 2022, respectively. The weighted average of the remaining lease terms and weighted average discount rates are as follows:
| As of September 30, 2023 |  | As of December 31, 2022
Weighted average of the remaining lease term in years |  |  |
Operating leases | 17.73 |  | 17.69
Finance leases | 19.49 |  | 19.26
Weighted average discount rate |  |  |
Operating leases | 7.36 | % |  | 6.92 | %
Finance leases | 6.48 | % |  | 6.43 | %
Supplemental cash flow information related to leases is as follows (in thousands):
| Nine Months Ended September 30, 2023 |  | Nine Months Ended September 30, 2022
Cash paid for amounts included in the measurement of lease liabilities: |  |  |
Operating cash flows from operating leases | $ | 130,746 |  |  | $ | 92,859 |
Operating cash flows from finance leases | 22,386 |  |  | 15,196 |
Financing cash flows from finance leases | $ | 25,135 |  |  | $ | 42,791 |
As of September 30, 2023, maturities related to lease liabilities were as follows (in thousands):
Year | Operating Leases |  | Finance Leases
Remainder of 2023 | $ | 33,596 |  |  | $ | 11,892 |
2024 | 116,417 |  |  | 45,318 |
2025 | 108,407 |  |  | 44,827 |
2026 | 96,260 |  |  | 38,838 |
2027 | 76,559 |  |  | 37,358 |
Thereafter | 830,371 |  |  | 707,296 |
Total lease payments | 1,261,610 |  |  | 885,529 |
Less: Interest | (663,290) |  |  | (558,195) |
Present value of lease liabilities | $ | 598,320 |  |  | $ | 327,334 |
Leases | Note 7. 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 sheets as of September 30, 2023 and December 31, 2022. Leases with an initial term of 12 months or less are not recorded on our 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 the fourth quarter of 2023 and Silversea Cruises does not intend to renew the lease. 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 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. 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 Term SOFR 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. I n 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. Finance Leases Our finance leases primarily relate to buildings and surrounding land located at our Miami headquarters and our lease for the Silver Dawn ship. Finance leases are included within Property and Equipment, net and Long-term debt with the current portion of the liability included within Current portion of long-term debt in our consolidated balance sheets as of September 30, 2023 and December 31, 2022. The Company's master lease agreement (“Master Lease”) with Miami-Dade County related to the buildings and surrounding land located at our Miami headquarters is classified as a finance lease in accordance with ASC 842, Leases. The Master Lease includes two five-year options to extend the lease which we are reasonably certain to exercise. The total aggregate amount of the finance lease liabilities recorded for this Master Lease was $56.8 million and $55.5 million as of September 30, 2023 and December 31, 2022, respectively. Silversea Cruises operates Silver Dawn 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 in 2036, 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 total aggregate amount of finance lease liabilities recorded for this ship was $250.6 million and $264.8 million as of September 30, 2023 and December 31, 2022, respectively. The lease payments on the Silver Dawn are subject to adjustments based on the Term SOFR rate. The components of lease expense were as follows (in thousands):
| Consolidated Statement of Comprehensive Income (Loss) Classification | Quarter Ended September 30, 2023 |  | Nine Months Ended September 30, 2023
Lease costs: |  |  |  |
Operating lease costs | Commission, transportation and other | $ | 32,925 |  |  | $ | 127,897 |
Operating lease costs | Other operating expenses | 5,545 |  |  | 16,636 |
Operating lease costs | Marketing, selling and administrative expenses | 5,350 |  |  | 16,354 |
Financial lease costs: |  |  |  |
Amortization of right-of-use-assets | Depreciation and amortization expenses | 5,792 |  |  | 17,374 |
Interest on lease liabilities | Interest expense, net of interest capitalized | 7,658 |  |  | 22,386 |
Total lease costs |  | $ | 57,270 |  |  | $ | 200,647 |
| Consolidated Statement of Comprehensive Income (Loss) Classification | Quarter Ended September 30, 2022 |  | Nine Months Ended September 30, 2022
Lease costs: |  |  |  |
Operating lease costs | Commission, transportation and other | $ | 26,924 |  |  | $ | 77,646 |
Operating lease costs | Other operating expenses | 5,545 |  |  | 16,540 |
Operating lease costs | Marketing, selling and administrative expenses | 4,545 |  |  | 14,191 |
Financial lease costs: |  |  |  |
Amortization of right-of-use-assets | Depreciation and amortization expenses | 6,115 |  |  | 18,311 |
Interest on lease liabilities | Interest expense, net of interest capitalized | 5,942 |  |  | 15,196 |
Total lease costs |  | $ | 49,071 |  |  | $ | 141,884 |
In addition, certain of our berthing agreements include variable lease costs based on the number of passengers berthed. During the quarter and nine months ended September 30, 2023, we had $13.2 million and $72.1 million of variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive income (loss), respectively, compared to $12.6 million and $32.0 million of variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive income (loss) during the quarter and nine months ended September 30, 2022, respectively. The weighted average of the remaining lease terms and weighted average discount rates are as follows:
| As of September 30, 2023 |  | As of December 31, 2022
Weighted average of the remaining lease term in years |  |  |
Operating leases | 17.73 |  | 17.69
Finance leases | 19.49 |  | 19.26
Weighted average discount rate |  |  |
Operating leases | 7.36 | % |  | 6.92 | %
Finance leases | 6.48 | % |  | 6.43 | %
Supplemental cash flow information related to leases is as follows (in thousands):
| Nine Months Ended September 30, 2023 |  | Nine Months Ended September 30, 2022
Cash paid for amounts included in the measurement of lease liabilities: |  |  |
Operating cash flows from operating leases | $ | 130,746 |  |  | $ | 92,859 |
Operating cash flows from finance leases | 22,386 |  |  | 15,196 |
Financing cash flows from finance leases | $ | 25,135 |  |  | $ | 42,791 |
As of September 30, 2023, maturities related to lease liabilities were as follows (in thousands):
Year | Operating Leases |  | Finance Leases
Remainder of 2023 | $ | 33,596 |  |  | $ | 11,892 |
2024 | 116,417 |  |  | 45,318 |
2025 | 108,407 |  |  | 44,827 |
2026 | 96,260 |  |  | 38,838 |
2027 | 76,559 |  |  | 37,358 |
Thereafter | 830,371 |  |  | 707,296 |
Total lease payments | 1,261,610 |  |  | 885,529 |
Less: Interest | (663,290) |  |  | (558,195) |
Present value of lease liabilities | $ | 598,320 |  |  | $ | 327,334 |

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 -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//842-20/tableOfContent + 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 -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//842-20/tableOfContent + Details
Name: | us-gaap_LesseeOperatingLeasesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration