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v2.4.0.6
Document and Entity Information Document
3 Months Ended
Mar. 31, 2012
Entity Information [Line Items]
Entity Registrant Name Seven Seas Cruises S. DE R.L.
Entity Central Index Key 0001534814
Current Fiscal Year End Date --12-31
Entity Filer Category Non-accelerated Filer
Document Type 10-Q
Document Period End Date Mar. 31, 2012
Document Fiscal Year Focus 2012
Document Fiscal Period Focus Q1
Amendment Flag false
Entity Common Stock, Shares Outstanding 0
v2.4.0.6
Consolidated Statements of Income and Comprehensive Income (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2012
Mar. 31, 2011
Revenue
Passenger ticket $ 108,572 $ 93,269
Onboard and other 11,288 10,503
Total revenue 119,860 103,772
Cruise operating expense
Commissions, transportation and other 39,266 28,506
Onboard and other 2,256 1,644
Payroll, related and food 18,776 17,487
Fuel 12,113 10,349
Other ship operating 9,331 9,127
Other 1,280 1,040
Total cruise operating expense 83,022 68,153
Other operating expense
Selling and administrative 21,147 21,199
Depreciation and amortization 9,675 8,813
Total operating expense 113,844 98,165
Operating income 6,016 5,607
Non-operating income (expense)
Interest income 103 13
Interest expense (8,085) (8,018)
Other income 2,513 3,929
Total non-operating expense (5,469) (4,076)
Income before income taxes 547 1,531
Income tax expense (189) (58)
Net income 358 1,473
Other comprehensive income, net of tax:
Gain on change in derivative fair value 0 2,814
Total comprehensive income $ 358 $ 4,287
v2.4.0.6
Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2012
Dec. 31, 2011
Current assets
Cash and cash equivalents $ 79,779 $ 68,620
Restricted cash 538 743
Trade and other receivables, net 9,518 8,319
Related party receivables 2,832 748
Inventories 6,161 5,132
Prepaid expenses 19,657 19,149
Other current assets 5,361 4,165
Total current assets 123,846 106,876
Property and equipment, net 650,072 655,360
Goodwill 404,858 404,858
Intangible assets, net 85,479 86,120
Other long-term assets 29,740 30,576
Total assets 1,293,995 1,283,790
Current liabilities
Trade and other payables 3,300 5,752
Accrued expenses 43,705 41,782
Passenger deposits 171,085 159,312
Derivative liabilities 0 112
Current portion of long-term debt 6,250 0
Total current liabilities 224,340 206,958
Long-term debt 512,250 518,500
Other long-term liabilities 12,261 13,694
Total liabilities 748,851 739,152
Commitments and contingencies      
Members' equity
Contributed capital 563,513 563,365
Accumulated deficit (18,369) (18,727)
Total members' equity 545,144 544,638
Total liabilities and members' equity $ 1,293,995 $ 1,283,790
v2.4.0.6
Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2012
Mar. 31, 2011
Cash flows from operating activities
Net income $ 358 $ 1,473
Adjustments:
Depreciation and amortization 9,675 8,813
Amortization of deferred financing costs 785 1,024
Stock-based compensation 148 307
Unrealized loss on derivative contracts (1,262) (2,571)
Other, net 113 17
Changes in operating assets and liabilities:
Trade and other accounts receivable (3,283) 846
Prepaid expenses and other current assets (513) (2,116)
Inventories (1,059) (1,318)
Accounts payable and accrued expenses 477 (6,646)
Passenger deposits 12,480 18,186
Net cash provided by operating activities 17,919 18,015
Cash flows from investing activities
Purchases of property and equipment (4,913) (4,067)
Restricted cash 205 (760)
Acquisition of intangible assets 0 (4,245)
Net cash used in investing activities (4,708) (9,072)
Cash flows from financing activities
Debt related costs (130) (3)
Repayment of debt 0 (6,250)
Deferred intangible asset payment (2,000) 0
Net cash used in financing activities (2,130) (6,253)
Effect of exchange rate changes on cash and cash equivalents 78 353
Net increase in cash and cash equivalents 11,159 3,043
Cash and cash equivalents
Beginning of period 68,620 37,258
End of period $ 79,779 $ 40,301
v2.4.0.6
Basis of Presentation
3 Months Ended
Mar. 31, 2012
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation
Basis of Presentation
Seven Seas Cruises S. DE R.L. (“SSC”, “Company”, “we” or “our”) is a Panamanian sociedad de responsibilidad limitada organized on November 7, 2007, and is owned by Classic Cruises, LLC (“CCL I”) and Classic Cruises II, LLC (“CCL II”). CCL I and CCL II are Delaware companies and each company owns 50% of SSC. Prestige Cruise Holdings, Inc. (“PCH”) owns both CCL I and CCL II. PCH is a wholly-owned subsidiary of our ultimate parent company, Prestige Cruises International, Inc. (“PCI”). PCI is controlled by funds affiliated with Apollo Global Management, LLC.
The accompanying interim consolidated financial statements include the accounts of SSC and its wholly-owned subsidiaries and have been prepared in accordance with generally accepted accounting principles in the United States. The financial information presented as of any date other than December 31 has been prepared from the books and records of the Company without audit. Financial information as of December 31 has been derived from SSC’s audited financial statements, but does not include all disclosures required by generally accepted accounting principles.
The accompanying Consolidated Balance Sheet at March 31, 2012 and the Consolidated Statements of Income and Comprehensive Income for the three months ended March 31, 2012 and 2011 and Consolidated Statements of Cash Flows for the three months ended March 31, 2012 and 2011 are unaudited, and, in the opinion of management, contain all adjustments, consisting of only normal recurring adjustments, necessary for fair presentation. Our interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2011 and notes thereto included in the fifth amendment to our registration statement on Form S-4 (333-178244) filed with the Securities and Exchange Commission on May 7, 2012. Our operations are seasonal, and results from our interim periods are not necessarily indicative of the results to be expected for the entire year.
New Accounting Pronouncements - As of January 1, 2012, we adopted Financial Accounting Standards Board ASU 2011-08, Intangibles - Goodwill and Other (Topic 350). This updated standard allows a company to perform a quantitative analysis prior to its two step impairment test. If this analysis does not result in a more likely than not conclusion that impairment exists, then performing the two step impairment test is no longer required. This change did not have any impact on our consolidated financial condition, results of comprehensive income or cash flows.
As of January 1, 2012, we adopted Financial Accounting Standards Board ASU 2011-05, Presentation of Comprehensive Income (Topic 220). This updated standard has changed the presentation of our financial statements as it required presentation of comprehensive income in either a single continuous statement of comprehensive income or in two separate, but consecutive statements. We have elected to present this information on a single continuous statement. This change did not have any impact on our consolidated financial condition, results of comprehensive income or cash flows.
As of January 1, 2012 we adopted Financial Accounting Standards Board ASU 2011-04, Fair Value Measurement (Topic 820). This standard increased the disclosure requirements for each class of assets and liabilities that is not measured at fair value in the balance sheet, but for which fair value is disclosed within the notes to the financial statements. This change did not have any impact on our consolidated financial condition, results of comprehensive income or cash flows.
As of January 1, 2012 we adopted Financial Accounting Standards Board ASU 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassification of Items Out of Accumulated Other Comprehensive Income in ASU 2011-05. This standard delays the presentation requirements for reclassifying items out of accumulated other comprehensive income as noted in Financial Accounting Standards Board ASU 2011-12. This change did not have any impact on our consolidated financial condition, results of comprehensive income or cash flows.
v2.4.0.6
Property and Equipment, net
3 Months Ended
Mar. 31, 2012
Property, Plant and Equipment [Abstract]
Property and Equipment, net
Property and Equipment, net
During the quarter ended March 31, 2012, property and equipment, net decreased approximately $5.3 million. Capital expenditures totaled $4.9 million and $4.1 million for the quarters ended March 31, 2012 and 2011, respectively. Depreciation expense on assets in service amounted to $8.9 million and $8.2 million for the quarters ended March 31, 2012 and 2011, respectively.
v2.4.0.6
Debt
3 Months Ended
Mar. 31, 2012
Debt Disclosure [Abstract]
Debt
    Debt
 
March 31,
 
December 31,
(in thousands)
2012
 
2011
 
 
 
 
$425 million term loan, currently LIBOR plus 1.75%, due through 2014
$
293,500

 
$
293,500

$225 million senior secured notes, 9.125%, due 2019
225,000

 
225,000

 
518,500

 
518,500

Less: Current portion of long-term debt
6,250

 

Long-term portion
$
512,250

 
$
518,500

Interest expense on third-party bank debt, including interest rate swaps in 2011, was $6.9 million and $6.8 million for the quarters ended March 31, 2012 and 2011, respectively.
v2.4.0.6
Derivative Instruments, Hedging Activities and Fair Value Measurements
3 Months Ended
Mar. 31, 2012
Derivative Instruments, Hedging Activities and Fair Value Measurements [Abstract]
Derivative Instruments and Hedging Activities Disclosure [Text Block]
Derivative Instruments, Hedging Activities and Fair Value Measurements
We are exposed to market risks attributable to changes in interest rates, foreign currency exchange rates and fuel prices. We manage these risks through a combination of our normal operating and financing activities and through the use of derivative financial instruments pursuant to our hedging practices and policies as described below. The financial impacts of these hedging instruments are primarily offset by corresponding changes in the underlying exposures being hedged. We achieve this by closely matching the amount, term and conditions of the derivative instrument with the underlying risk being hedged. We do not hold or issue derivative financial instruments for trading or other speculative purposes. We monitor our derivative positions using techniques including market valuations and sensitivity analyses.
Interest Rate Risk
During 2008, we entered into an interest rate swap agreement with a notional amount of $400.0 million to limit the interest rate exposure related to our term debt. This interest rate swap, which matured on February 14, 2011, was designated as a cash flow hedge and the change in fair value of the effective portion of the interest rate swap was recorded as a component of accumulated other comprehensive loss in the accompanying consolidated balance sheet. There were no interest rate swaps outstanding as of March 31, 2012 and December 31, 2011.




Foreign Currency Exchange Risk
We enter into foreign currency swaps to limit the exposure to foreign currency exchange rates, for euro denominated payments to be made to the shipyard for drydock and other euro denominated operational expenses. During the first quarter of 2012, we entered into foreign currency swaps with an aggregate notional amount of €1.8 million ($2.4 million) to hedge euro denominated payments for an upcoming drydock. The foreign currency swaps do not qualify for hedge accounting; therefore, the changes in fair value of these foreign currency derivatives are recorded in other income (expense) in the accompanying consolidated statements of income and comprehensive income. The total aggregate notional amount of outstanding foreign currency swap agreements as of March 31, 2012 and December 31, 2011 was €5.7 million ($7.5 million) and €3.9 million ($5.2 million), respectively.
Fuel Price Risk
We enter into various fuel derivative swap contracts to manage and limit the exposure to fluctuations in fuel prices related to the consumption of fuel on the ships. As of March 31, 2012, and December 31, 2011, we had fuel-related swap agreements pertaining to 156,300 barrels to be purchased in 2012. The fuel swaps do not qualify for hedge accounting; therefore, the changes in fair value of these fuel derivatives are recorded in other income (expense) in the accompanying consolidated statements of income and comprehensive income. There were no fuel swap contracts entered into during the quarter ended March 31, 2012.
Our fuel derivative contracts are subject to certain margin requirements. On any business day, we may be required to post collateral if our mark-to-market exposure exceeds a specified amount. The amount of collateral required to be posted is an amount equal to the difference between the exposure (cost of liquidating and terminating the derivative position) and a specified amount. As of March 31, 2012 and March 31, 2011, we were not required to post any collateral for our fuel derivative instruments as our exposure was $0 for both periods. To trigger the collateral requirement, we would have had to incur an additional $1.6 million of mark-to-market decline as of March 31, 2012.
At March 31, 2012 and December 31, 2011, the fair values and line item captions of derivative instruments recorded were as follows:
Derivatives not designated as hedging instruments under FASB ASC 815-20
 
 
 
 
 
(in thousands)
 
Fair Value as of
 
Fair Value as of
 
Balance Sheet Location
March 31, 2012
 
December 31, 2011
 
 
 
 
 
Foreign currency swap
Current liabilities - Derivatives
$

 
$
112

 
Total Derivatives Liabilities
$

 
$
112

 
 
 
 
 
Foreign currency swap
Other current assets
$
97

 
$

Fuel hedges
Other current assets
1,542

 
489

 
Total Derivatives Assets
$
1,639

 
$
489



We had no derivative instruments qualifying and designated as hedging instruments on the consolidated financial statements for the quarter ended March 31, 2012.

The effect of derivative instruments qualifying and designated as hedging instruments on the consolidated financial statements for the quarter ended March 31, 2011 was as follows:
(in thousands)
Amount of Gain/(Loss) Recognized in OCI on Derivative (Effective Portion)
 
Location of Gain/(Loss) Reclassified from Accumulated OCI into Income (Effective Portion)
 
Amount of Gain/(Loss) Reclassified from Accumulated OCI into Income (Effective Portion)
 
Location of Gain/(Loss) Recognized in Income on Derivative (Ineffective Portion excluded from Effectiveness Testing)
 
Amount of Gain/(Loss) Recognized in Income on Derivative (Ineffective Portion excluded from Effectiveness Testing)
 
 
 
 
 
 
 
 
 
 
Interest rate swap
$
2,814

 
 Interest expense, net
 
$
(2,814
)
 
N/A
 
$

Total
$
2,814

 
 
 
$
(2,814
)
 
 
 
$


    
The effect of derivative instruments not designated as hedging instruments on the consolidated financial statements for the quarters ended March 31, 2012 and 2011 were as follows:
 
Location of Gain/(Loss) Recognized in Income on Derivative
 
Amount of Gain / (Loss) Recognized in Income on Derivative
 
 
For the Three Months Ended March 31, 2012
(in thousands)
 
2012
 
2011
 
 
 
 
 
 
Foreign currency swap
Other income (expense)
 
$
209

 
$

Fuel hedges
Other income (expense)
 
1,232

 
1,131

Total
 
 
$
1,441

 
$
1,131


Fair Value Measurements
U.S. GAAP establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from independent sources. Unobservable inputs are inputs that reflect our assumptions which market participants would use in pricing the asset or liability based on the best available information under the circumstances. The hierarchy is broken down into three levels based on the reliability of the inputs as follows:
Level 1 Inputs – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access.
Level 2 Inputs – Inputs other than quoted prices included within Level 1 that are observable for the asset and liability, either directly or indirectly.
Level 3 Inputs – Inputs that are unobservable for the asset or liability.
Fair Value of Financial Instruments
We use quoted prices in active markets when available to determine the fair value of our financial instruments. The fair value of our financial instruments that are not measured at fair value on a recurring basis are as follows:
(in thousands)
Carrying Value as of
 
Fair Value as of
 
March 31,
2012
 
December 31,
2011
 
March 31,
2012
 
December 31,
2011
Senior secured notes
$
225,000

 
$
225,000

 
$
230,204

 
$
226,133

Long-term bank debt
293,500

 
293,500

 
281,760

 
275,338

Total
$
518,500

 
$
518,500

 
$
511,964

 
$
501,471

Senior secured notes: the fair value of our Notes was estimated using quoted market prices.
Long-term bank debt: the fair value of our long-term debt was estimated using the present value of expected future cash flows which incorporates our risk profile.
Other financial instruments: due to their short-term maturities and no interest rate, currency or price risk, the carrying amounts of cash and cash equivalents and passenger deposits approximate their fair values as of March 31, 2012 and December 31, 2011. For non-cash items, inputs to determine fair value were third party quotes or invoices. For cash and cash equivalents and passenger deposits, inputs were cash received. We consider these cash and non-cash inputs to be level 1 as all are observable and/or quoted.
The following table presents information about our financial instrument assets and liabilities that are measured at fair value on a recurring basis:
(in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
As of March 31, 2012
 
As of December 31, 2011
Description
Total
 
Level 1
 
Level 2
 
Total
 
Level 1
 
Level 2
Assets
 
 
 
 
 
 
 
 
 
 
 
Derivative financial instruments (a)
$
1,639

 
$

 
$
1,639

 
$
489

 
$

 
$
489

Total Assets
$
1,639

 
$

 
$
1,639

 
$
489

 
$

 
$
489

Liabilities
 
 
 
 
 
 
 
 
 
 
 
Derivative financial instruments (b)
$

 
$

 
$

 
$
112

 
$

 
$
112

Total liabilities
$

 
$

 
$

 
$
112

 
$

 
$
112

 
 
 
 
 
 
 
 
 
 
 
 
(a) Classified as other current assets in the consolidated balance sheets.
(b) Classified as current liabilities-derivatives in the consolidated balance sheets.
Our derivative financial instruments consist of an interest rate swap, foreign currency exchange contracts and fuel hedge swaps. Fair value is derived using the valuation models that utilize the income value approach. These valuation models take into account the contract terms, such as maturity, and inputs, such as forward interest rates, forward fuel prices, discount rates, creditworthiness of the counterparty and us, as well as other data points. The data sources utilized in these valuation models that are significant to the fair value measurement are classified as Level 2 sources in the fair value input level hierarchy.
Non-recurring Measurements of Non-financial Assets
Goodwill and indefinite-lived intangible assets not subject to amortization are reviewed for impairment on an annual basis or earlier if there is an event or change in circumstances that would indicate that the carrying value of these assets could not be fully recovered. If the carrying amount exceeds the estimated discounted future cash flows, we measure the amount of the impairment by comparing the carrying amount of the asset to its fair value.
Other long-lived assets, such as our vessels, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. If the carrying amount of the asset exceeds the estimated expected undiscounted future cash flows, we measure the amount of the impairment by comparing the carrying amount of the asset to its fair value.
The estimation of fair value measured by undiscounted or discounted expected future cash flows would be considered Level 3 inputs. Our impairment tests are performed as of September 30th annually. As of March 31, 2012, there were no events or changes in circumstances that would indicate that the carrying amount of our long-lived assets would not be recoverable.
v2.4.0.6
Commitments and Contingencies
3 Months Ended
Mar. 31, 2012
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies
Commitments and Contingencies
Contingencies – Litigation
On an ongoing basis, we assess the potential liabilities related to any lawsuits or claims brought against us. While it is typically very difficult to determine the timing and ultimate outcome of such actions, we use our judgment to determine if it is probable that we will incur an expense related to the settlement or final adjudication of such matters and whether a reasonable estimation of such probable loss can be made. In assessing probable losses, we take into consideration estimates of the amount of insurance recoveries, if any. We accrue a liability when we believe a loss is probable and the amount of loss can be reasonably estimated.

Other
During February 2012, we made a $2.0 million payment for previously acquired intangible assets related to Regent licensing rights acquired in 2011. As of March 31, 2012, we have a remaining liability of $2.0 million due in February 2013.     
During March 2012, management signed a five-year maintenance agreement with a vendor. The cost of this agreement is expected to range from $15 to $16 million over the five year term. These costs include purchases of capital items, spare parts and monthly maintenance fees. A portion of these costs will be recorded as capital expenditures with the remainder for repair and maintenance expenses.

During April 2012, our Chief Operating Officer was granted 600,000 options to purchase PCI shares according to his employment contract. These options are time based and vest over three years on his employment anniversary date.
v2.4.0.6
Accumulated Other Comprehensive Loss
3 Months Ended
Mar. 31, 2012
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Accumulated Other Comprehensive Loss
Accumulated Other Comprehensive Loss
The following table summarizes activity within accumulated other comprehensive loss:
(in thousands)
 
 
 
 
2012
 
2011
Accumulated other comprehensive loss - January 1
$

 
$
(2,814
)
Quarterly change in derivative fair value

 
2,814

Accumulated other comprehensive loss - March 31
$

 
$

v2.4.0.6
Consolidating FInancial Information
3 Months Ended
Mar. 31, 2012
Guarantor Subsidiaries [Abstract]
Consolidating Financial Information
Consolidating Financial Information
Our Notes are collateralized by our vessels and guaranteed fully and unconditionally, jointly and severally by all our subsidiaries. These subsidiary guarantors are 100% owned subsidiaries of the Company.
The following condensed consolidating financial statements for Seven Seas Cruises S. DE R.L. and the Guarantors present condensed consolidating statements of income and comprehensive income for three months ended March 31, 2012 and 2011, condensed consolidating balance sheets as of March 31, 2012 and December 31, 2011 and condensed consolidating statements of cash flows for the three months ended March 31, 2012 and 2011, using the equity method of accounting, as well as elimination entries necessary to consolidate the parent company and all of its subsidiaries.
Seven Seas Cruises S. DE R.L. has charter hire agreements in place with certain subsidiaries, which own the vessels. These agreements require Seven Seas Cruises S. DE R.L. to pay a daily hire fee to the subsidiary to administratively manage the vessel. The costs incurred by the vessel owning subsidiaries include deck and engine crew payroll and expenses, vessel insurance, depreciation and interest related to the terms loans. In addition to the vessel owning subsidiaries, we have a sales and marketing office that is also a subsidiary guarantor.
Our vessel owning subsidiaries are parties to our first lien term loan as both borrowers and guarantors. The applicable outstanding debt related to the first lien term loan is included in the Guarantor accounts as well as the related interest expense and deferred financing costs. In 2011, Seven Seas Cruises S. DE R.L repaid the second lien term loan. As the loan was repaid by the Parent, each subsidiary remains responsible for its portion of the related debt to Seven Seas Cruises S. DE R.L. and such obligation was recorded as an intercompany payable at the subsidiary level and eliminated within the 2011 condensed consolidated balance sheet.
Each subsidiary guarantee will be automatically released upon any one or more of the following circumstances: the subsidiary is sold or sells all of its assets; the subsidiary is declared “unrestricted” for covenant purposes; the subsidiary’s guarantee of other indebtedness is terminated or released; the requirements for legal defeasance or covenant defeasance or to discharge the indenture have been satisfied; or the subsidiary transfers ownership of a mortgaged vessel in connection with a permitted reflagging transaction.
Condensed Consolidating Balance Sheets
 
As of March 31, 2012
(in thousands)
Parent 'Issuer'
 
Subsidiaries Guarantors
 
Eliminations
 
Consolidated
Assets
 
 
 
 
 
 
 
Current assets
 
 
 
 
 
 
 
Cash and cash equivalents
$
79,088

 
$
691

 
$

 
$
79,779

Restricted cash
538

 

 

 
538

Trade and other receivable, net
9,350

 
168

 

 
9,518

Related party receivables
2,888

 
(56
)
 

 
2,832

Inventories
4,259

 
1,902

 

 
6,161

Prepaid expenses
18,464

 
1,193

 

 
19,657

Intercompany receivable
163,877

 
29,097

 
(192,974
)
 

Other current assets
3,367

 
1,994

 

 
5,361

Total current assets
281,831

 
34,989

 
(192,974
)
 
123,846

Property and equipment, net
63,838

 
586,234

 

 
650,072

Goodwill
404,858

 

 

 
404,858

Intangible assets, net
85,479

 

 

 
85,479

Other long-term assets
27,059

 
2,681

 

 
29,740

Investment in subsidiaries
213,241

 

 
(213,241
)
 

Total assets
$
1,076,306

 
$
623,904

 
$
(406,215
)
 
$
1,293,995

 
 
 
 
 
 
 
 
Liabilities and Members' Equity
 
 
 
 
 
 
 
Current liabilities
 
 
 
 
 
 
 
Trade and other payables
$
3,205

 
$
95

 
$

 
$
3,300

Intercompany payables
29,097

 
163,877

 
(192,974
)
 

Accrued expenses
41,269

 
2,436

 

 
43,705

Passenger deposits
171,085

 

 

 
171,085

Current portion of long-term debt
1,049

 
5,201

 

 
6,250

Total current liabilities
245,705

 
171,609

 
(192,974
)
 
224,340

Long-term debt
273,196

 
239,054

 

 
512,250

Other long-term liabilities
12,261

 

 

 
12,261

Total liabilities
531,162

 
410,663

 
(192,974
)
 
748,851

Commitments and Contingencies
 
 
 
 
 
 
 
Members' equity
 
 
 
 
 
 
 
Contributed capital
563,513

 
134,036

 
(134,036
)
 
563,513

Accumulated deficit
(18,369
)
 
79,205

 
(79,205
)
 
(18,369
)
Total members' equity
545,144

 
213,241

 
(213,241
)
 
545,144

Total liabilities and members' equity
$
1,076,306

 
$
623,904

 
$
(406,215
)
 
$
1,293,995




Condensed Consolidating Balance Sheets
 
As of December 31, 2011
(in thousands)
Parent 'Issuer'
 
Subsidiaries Guarantors
 
Eliminations
 
Consolidated
Assets
 
 
 
 
 
 
 
Current assets
 
 
 
 
 
 
 
Cash and cash equivalents
$
67,771

 
$
849

 
$

 
$
68,620

Restricted cash
743

 

 

 
743

Trade and other receivable, net
8,242

 
77

 

 
8,319

Related party receivables
748

 

 

 
748

Inventories
3,284

 
1,848

 

 
5,132

Prepaid expenses
17,637

 
1,512

 

 
19,149

Intercompany receivable
176,672

 
30,849

 
(207,521
)
 

Other current assets
2,171

 
1,994

 

 
4,165

Total current assets
277,268

 
37,129

 
(207,521
)
 
106,876

Property and equipment, net
66,446

 
588,914

 

 
655,360

Goodwill
404,858

 

 

 
404,858

Intangible assets, net
86,120

 

 

 
86,120

Other long-term assets
27,416

 
3,160

 

 
30,576

Investment in subsidiaries
205,634

 

 
(205,634
)
 

Total assets
$
1,067,742

 
$
629,203

 
$
(413,155
)
 
$
1,283,790

 
 
 
 
 
 
 
 
Liabilities and Members' Equity
 
 
 
 
 
 
 
Current liabilities
 
 
 
 
 
 
 
Trade and other payables
$
5,250

 
$
502

 
$

 
$
5,752

Intercompany payables
30,849

 
176,672

 
(207,521
)
 

Accrued expenses
39,642

 
2,140

 

 
41,782

Passenger deposits
159,312

 

 

 
159,312

Derivative liabilities
112

 

 

 
112

Total current liabilities
235,165

 
179,314

 
(207,521
)
 
206,958

Long-term debt
274,245

 
244,255

 

 
518,500

Other long-term liabilities
13,694

 

 

 
13,694

Total liabilities
523,104

 
423,569

 
(207,521
)
 
739,152

Commitments and Contingencies
 
 
 
 
 
 
 
Members' equity
 
 
 
 
 
 
 
Contributed capital
563,365

 
129,702

 
(129,702
)
 
563,365

Accumulated deficit
(18,727
)
 
75,932

 
(75,932
)
 
(18,727
)
Total members' equity
544,638

 
205,634

 
(205,634
)
 
544,638

Total liabilities and members' equity
$
1,067,742

 
$
629,203

 
$
(413,155
)
 
$
1,283,790





Condensed Consolidating Statements of Income and Comprehensive Income
 
Three Months Ended March 31, 2012
(in thousands)
Parent 'Issuer'
 
Subsidiaries Guarantors
 
Eliminations
 
Consolidated
Revenue
 
 
 
 
 
 
 
Passenger ticket
$
108,572

 
$

 
$

 
$
108,572

Onboard and other
11,288

 

 

 
11,288

Related party revenue

 
23,250

 
(23,250
)
 

Total revenue
119,860

 
23,250

 
(23,250
)
 
119,860

Cruise operating expense
 
 
 
 
 
 
 
Commissions, transportation and other
37,274

 
1,992

 

 
39,266

Onboard and other
2,256

 

 

 
2,256

Payroll, related and food
15,720

 
3,056

 

 
18,776

Fuel
12,113

 

 

 
12,113

Other ship operating
7,273

 
2,058

 

 
9,331

Other
23,144

 
1,386

 
(23,250
)
 
1,280

Total cruise operating expense
97,780

 
8,492

 
(23,250
)
 
83,022

Selling and administrative
19,329

 
1,818

 

 
21,147

Depreciation and amortization
1,934

 
7,741

 

 
9,675

Total operating expense
119,043

 
18,051

 
(23,250
)
 
113,844

Operating income
817


5,199




6,016

Non-operating income (expense)
 
 
 
 
 
 
 
Interest expense
(6,149
)
 
(1,936
)
 

 
(8,085
)
Interest income
102

 
1

 

 
103

Other income
2,492

 
21

 

 
2,513

Equity in earnings of subsidiaries
3,273

 

 
(3,273
)
 

Total non-operating income (expense)
(282
)
 
(1,914
)
 
(3,273
)
 
(5,469
)
Income before income taxes
535

 
3,285

 
(3,273
)
 
547

Income tax expense, net
(177
)
 
(12
)
 

 
(189
)
Net income
358

 
3,273

 
(3,273
)
 
358

Comprehensive Income
$
358

 
$
3,273

 
$
(3,273
)
 
$
358








Condensed Consolidating Statements of Income and Comprehensive Income
 
Three Months Ended March 31, 2011
(in thousands)
Parent 'Issuer'
 
Subsidiaries Guarantors
 
Eliminations
 
Consolidated
Revenue
 
 
 
 
 
 
 
Passenger ticket
$
93,269

 
$

 
$

 
$
93,269

Onboard and other
10,503

 

 

 
10,503

Related party revenue

 
22,037

 
(22,037
)
 

Total revenue
103,772

 
22,037

 
(22,037
)
 
103,772

Cruise operating expense
 
 
 
 
 
 
 
Commissions, transportation and other
27,261

 
1,245

 

 
28,506

Onboard and other
1,644

 

 

 
1,644

Payroll, related and food
14,752

 
2,735

 

 
17,487

Fuel
10,349

 

 

 
10,349

Other ship operating
6,942

 
2,185

 

 
9,127

Other
21,971

 
1,106

 
(22,037
)
 
1,040

Total cruise operating expense
82,919

 
7,271

 
(22,037
)
 
68,153

Selling and administrative
19,233

 
1,966

 

 
21,199

Depreciation and amortization
2,587

 
6,226

 

 
8,813

Total operating expense
104,739

 
15,463

 
(22,037
)
 
98,165

Operating (loss) income
(967
)
 
6,574

 

 
5,607

Non-operating income (expense)
 
 
 
 
 
 
 
Interest expense
(2,789
)
 
(5,229
)
 

 
(8,018
)
Interest income
12

 
1

 

 
13

Other income
3,921

 
8

 

 
3,929

Equity in earnings of subsidiaries
1,354

 

 
(1,354
)
 

Total non-operating income (expense)
3,430

 
(5,228
)
 
(2,278
)
 
(4,076
)
Income before income taxes
1,531

 
1,354

 
(1,354
)
 
1,531

Income tax expense, net
(58
)
 

 

 
(58
)
Net income
1,473

 
1,354

 
(1,354
)
 
1,473

Other comprehensive income, net of tax:
 
 
 
 
 
 
 
Gain on change in derivative fair value
2,814

 

 

 
2,814

Comprehensive Income
$
4,287

 
$
1,354

 
$
(1,354
)
 
$
4,287






Condensed Consolidated Statements of Cash Flows
 
Three Months Ended March 31, 2012
(in thousands)
Parent 'Issuer'
 
Subsidiaries Guarantors
 
Eliminations
 
Consolidated
Net cash provided by (used in) operating activities
$
18,119

 
$
(200
)
 
$

 
$
17,919

Cash flows from investing activities
 
 
 
 
 
 
 
Purchases of property and equipment
(4,913
)
 

 

 
(4,913
)
Restricted cash
205

 

 

 
205

Net cash used in investing activities
(4,708
)
 

 

 
(4,708
)
Cash flows from financing activities
 
 
 
 
 
 
 
Debt related costs
(130
)
 

 

 
(130
)
Deferred payment for intangible asset
(2,000
)
 

 

 
(2,000
)
Net cash used in financing activities
(2,130
)
 

 

 
(2,130
)
Effect of exchange rate changes on cash and cash equivalents
78

 

 

 
78

Net increase (decrease) in cash and cash equivalents
11,359

 
(200
)
 

 
11,159

Cash and cash equivalents
 
 
 
 
 
 
 
Cash and cash equivalents at beginning of period
67,771

 
849

 

 
68,620

Cash and cash equivalents at end of period
$
79,130

 
$
649

 
$

 
$
79,779


Condensed Consolidated Statements of Cash Flows
 
Three Months Ended March 31, 2011
(in thousands)
Parent 'Issuer'
 
Subsidiaries Guarantors
 
Eliminations
 
Consolidated
Net cash provided by operating activities
$
13,834

 
$
4,181

 
$

 
$
18,015

Cash flows from investing activities
 
 
 
 
 
 
 
Purchases of property and equipment
(4,067
)
 

 

 
(4,067
)
Restricted cash
(760
)
 

 

 
(760
)
Acquisition of intangible assets
(4,245
)
 

 

 
(4,245
)
Net cash used in investing activities
(9,072
)
 

 

 
(9,072
)
Cash flows from financing activities
 
 
 
 
 
 
 
Debt related costs
(3
)
 

 

 
(3
)
Repayment of debt
(1,757
)
 
(4,493
)
 

 
(6,250
)
Net cash used in financing activities
(1,760
)
 
(4,493
)
 

 
(6,253
)
Effect of exchange rate changes on cash and cash equivalents
353

 

 

 
353

Net increase (decrease) in cash and cash equivalents
3,355

 
(312
)
 

 
3,043

Cash and cash equivalents
 
 
 
 
 
 
 
Cash and cash equivalents at beginning of period
36,093

 
1,165

 

 
37,258

Cash and cash equivalents at end of period
$
39,448

 
$
853

 
$

 
$
40,301