10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

☐ 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 001-35898

LINDBLAD EXPEDITIONS HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware	27-4749725
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

96 Morton Street, 9th Floor, New York, New York, 10014	(212) 261-9000
(Address of principal executive offices) (Zip Code)	(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	LIND	The NASDAQ Stock Exchange LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ 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	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of October 29, 2019, 49,716,067 shares of common stock, par value $0.0001 per share, were issued and outstanding.

LINDBLAD EXPEDITIONS HOLDINGS, IN

Quarterly Report On Form 10-Q

For The Quarter Ended September 30, 2019

Table of Contents

		Page(s)
PART I. FINANCIAL INFORMATION
ITEM 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets as of September 30, 2019 (Unaudited) and December 31, 2018	1
	Condensed Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2019 and 2018 (Unaudited)	2
	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2019 and 2018 (Unaudited)	3
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2019 and 2018 (Unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2019 and 2018 (Unaudited)	6
	Notes to the Condensed Consolidated Financial Statements (Unaudited)	7
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	28
ITEM 4.	Controls and Procedures	28
PART II. OTHER INFORMATION
ITEM 1.	Legal Proceedings	28
ITEM 1A.	Risk Factors	28
ITEM 2.	Unregistered Sale of Equity Securities and Use of Proceeds	29
ITEM 3.	Defaults Upon Senior Securities	29
ITEM 4.	Mine Safety Disclosures	29
ITEM 5.	Other Information	29
ITEM 6.	Exhibits	30
SIGNATURES		31

PART 1.	FINANCIAL INFORMATION
Item 1.	FINANCIAL STATEMENTS

LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

	As of September 30, 2019			As of December 31, 2018
ASSETS	(unaudited)
Current Assets:
Cash and cash equivalents	$	104,135		$	113,396
Restricted cash		7,995			8,755
Marine operating supplies		5,479			5,165
Inventories		1,910			1,604
Prepaid expenses and other current assets		24,044			21,263
Total current assets		143,563			150,183
Property and equipment, net		345,280			285,979
Goodwill		22,105			22,105
Intangibles, net		6,791			7,975
Right-to-use lease assets		6,357			-
Other long-term assets		5,517			7,167
Total assets	$	529,613		$	473,409
LIABILITIES
Current Liabilities:
Unearned passenger revenues	$	124,605		$	123,489
Accounts payable and accrued expenses		32,914			33,944
Lease liabilities - current		1,302			-
Long-term debt - current		2,000			2,000
Total current liabilities		160,821			159,433
Long-term debt, less current portion		216,117			188,089
Deferred tax liabilities		6,964			2,787
Lease liabilities		5,272			-
Other long-term liabilities		5,083			554
Total liabilities		394,257			350,863
COMMITMENTS AND CONTINGENCIES
REDEEMABLE NONCONTROLLING INTEREST		7,336			6,502
STOCKHOLDERS’ EQUITY
Preferred stock, $0.0001 par value, 1,000,000 shares authorized; no shares issued and outstanding		-			-
Common stock, $0.0001 par value, 200,000,000 shares authorized; 49,716,067 and 45,814,925 issued, 49,625,043 and 45,442,728 outstanding as of September 30, 2019 and December 31, 2018, respectively		5			5
Additional paid-in capital		45,377			41,539
Retained earnings		90,339			75,171
Accumulated other comprehensive income		(7,701	)		(671	)
Total stockholders' equity		128,020			116,044
Total liabilities, stockholders' equity and redeemable noncontrolling interest	$	529,613		$	473,409

 The accompanying notes are an integral part of these condensed consolidated financial statements.

1

LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(In thousands, except share and per share data)

(unaudited)

	For the three months ended September 30,						For the nine months ended September 30,
	2019			2018			2019			2018
Tour revenues	$	100,983		$	87,242		$	267,294		$	239,125
Operating expenses:
Cost of tours		48,294			44,964			124,831			114,645
General and administrative		15,266			14,718			47,615			45,647
Selling and marketing		15,531			12,255			42,100			34,911
Depreciation and amortization		6,233			5,024			18,603			15,062
Total operating expenses		85,324			76,961			233,149			210,265
Operating income		15,659			10,281			34,145			28,860
Other (expense) income:
Interest expense, net		(3,214	)		(2,409	)		(9,391	)		(8,013	)
(Loss) gain on foreign currency		(2,338	)		163			(1,181	)		(1,430	)
Other (expense) income		(30	)		1			(79	)		(118	)
Total other expense		(5,582	)		(2,245	)		(10,651	)		(9,561	)
Income before income taxes		10,077			8,036			23,494			19,299
Income tax expense		7,351			2,690			4,838			3,194
Net income		2,726			5,346			18,656			16,105
Net income attributable to noncontrolling interest		565			279			834			107
Net income attributable to Lindblad Expeditions Holdings, Inc		2,161			5,067			17,822			15,998
Non-cash deemed dividend to warrant holders		2,654			-			2,654			-
Net (loss) income available to common stockholders	$	(493	)	$	5,067		$	15,168		$	15,998
Weighted average shares outstanding
Basic		48,863,506			45,423,127			46,704,634			45,356,438
Diluted		48,863,506			47,690,395			49,091,370			45,963,669
Net (loss) income per share available to common stockholders
Basic	$	(0.01	)	$	0.11		$	0.32		$	0.35
Diluted	$	(0.01	)	$	0.11		$	0.31		$	0.35

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(In thousands)

(unaudited)

	For the three months ended September 30,					For the nine months ended September 30,
	2019			2018		2019			2018
Net income	$	2,726		$	5,346	$	18,656		$	16,105
Other comprehensive income:
Cash flow hedges:
Net unrealized (loss) gain		(7,393	)		157		(8,654	)		230
Reclassification adjustment, net of tax		1,624			-		1,624			-
Total other comprehensive (loss) income		(5,769	)		157		(7,030	)		230
Total comprehensive (loss) income		(3,043	)		5,503		11,626			16,335
Less: comprehensive income attributive to non-controlling interest		565			279		834			107
Comprehensive (loss) income attributable to common shareholders	$	(3,608	)	$	5,224	$	10,792		$	16,228

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share data)

(unaudited)

	Common Stock				Additional Paid-In			Retained			Accumulated Other Comprehensive			Total Stockholders'
	Shares		Amount		Capital			Earnings			Loss			Equity
Balance as of June 30, 2019		45,801,025	$	5	$	41,617		$	90,832		$	(1,932	)	$	130,522
Stock-based compensation		-		-		917			-			-			917
Issuance of stock for equity compensation plans, net		19,391		-		(95	)		-			-			(95	)
Warrants		3,895,651		-		2,938			(2,654	)		-			284
Other comprehensive income, net		-		-		-			-			(5,769	)		(5,769	)
Net income attributable to Lindblad Expeditions Holdings, Inc		-		-		-			2,161			-			2,161
Balance as of September 30, 2019		49,716,067	$	5	$	45,377		$	90,339		$	(7,701	)	$	128,020

	Common Stock					Additional Paid-In			Retained			Accumulated Other Comprehensive			Total Stockholders'
	Shares			Amount		Capital			Earnings			Loss			Equity
Balance as of January 1, 2019		45,814,925		$	5	$	41,539		$	75,171		$	(671	)	$	116,044
Stock-based compensation		-			-		2,671			-			-			2,671
Issuance of stock for equity compensation plans, net		4,786			-		(1,778	)		-			-			(1,778	)
Repurchase of shares and warrants		(1,895	)		-		(23	)		-			-			(23	)
Warrants		3,898,251			-		2,968			(2,654	)		-			314
Other comprehensive income, net		-			-		-			-			(7,030	)		(7,030	)
Net income attributable to Lindblad Expeditions Holdings, Inc		-			-		-			17,822			-			17,822
Balance as of September 30, 2019		49,716,067		$	5	$	45,377		$	90,339		$	(7,701	)	$	128,020

The accompanying notes are an integral part of these condensed consolidated financial statements. 

4

LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share data)

(unaudited)

	Common Stock				Additional Paid-In			Retained		Accumulated Other Comprehensive		Total Stockholders'
	Shares		Amount		Capital			Earnings		Loss		Equity
Balance as of June 30, 2018		45,775,648	$	5	$	39,172		$	74,750	$	73	$	114,000
Stock-based compensation		-		-		1,271			-		-		1,271
Issuance of stock for equity compensation plans, net		39,777		-		(52	)		-		-		(52	)
Other comprehensive income, net		-		-		-			-		157		157
Net income available to common stockholders		-		-		-			5,067		-		5,067
Balance as of September 30, 2018		45,815,425	$	5	$	40,391		$	79,817	$	230	$	120,443

	Common Stock					Additional Paid-In			Retained		Accumulated Other Comprehensive		Total Stockholders'
	Shares			Amount		Capital			Earnings		Loss		Equity
Balance as of January 1, 2018		45,427,030		$	5	$	42,498		$	63,819	$	-	$	106,322
Stock-based compensation		-			-		3,256			-		-		3,256
Issuance of stock for equity compensation plans, net		397,425			-		(4,509	)		-		-		(4,509	)
Other comprehensive income, net		-			-		-			-		230		230
Repurchase of shares and warrants		(9,030	)		-		(854	)		-		-		(854	)
Net income available to common stockholders		-			-		-			15,998		-		15,998
Balance as of September 30, 2018		45,815,425		$	5	$	40,391		$	79,817	$	230	$	120,443

The accompanying notes are an integral part of these condensed consolidated financial statements. 

5

LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(unaudited)

	For the nine months ended September 30,
	2019			2018
Cash Flows From Operating Activities
Net income	$	18,656		$	16,105
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		18,603			15,062
Amortization of National Geographic fee		2,181			2,181
Amortization of deferred financing costs and other, net		1,392			1,477
Stock-based compensation		2,671			3,256
Deferred income taxes		4,177			2,653
Loss on foreign currency		1,181			1,430
Write-off of unamortized issuance costs related to debt refinancing		-			359
Loss on write-off of assets		-			129
Changes in operating assets and liabilities
Marine operating supplies and inventories		(620	)		169
Prepaid expenses and other current assets		(2,780	)		(1,806	)
Right-to-use lease assets		(6,357	)		-
Lease liabilities		6,574			-
Unearned passenger revenues		1,116			449
Other long-term assets		(7,561	)		(1,981	)
Other long-term liabilities		4,530			22
Accounts payable and accrued expenses		(2,213	)		(247	)
Net cash provided by operating activities		41,550			39,258
Cash Flows From Investing Activities
Purchases of property and equipment		(76,720	)		(45,510	)
Net cash used in investing activities		(76,720	)		(45,510	)
Cash Flows From Financing Activities
Proceeds from long-term debt		30,476			200,000
Repayments of long-term debt		(1,500	)		(171,125	)
Payment of deferred financing costs		(2,340	)		(6,486	)
Repurchase under stock-based compensation plans and related tax impacts		(1,778	)		(4,509	)
Warrants exercised		314			-
Repurchase of warrants and common stock		(23	)		(854	)
Net cash provided by financing activities		25,149			17,026
Effect of exchange rate changes on cash		-			7
Net (decrease) increase in cash, cash equivalents and restricted cash		(10,021	)		10,781
Cash, cash equivalents and restricted cash at beginning of period		122,151			103,500
Cash, cash equivalents and restricted cash at end of period	$	112,130		$	114,281
Supplemental disclosures of cash flow information:
Cash paid during the period:
Interest	$	10,651		$	9,952
Income taxes	$	1,893		$	468
Non-cash investing and financing activities:
Additional paid-in capital exercise proceeds of option shares	$	225		$	1,682
Additional paid-in capital exchange proceeds used for option shares	$	(225	)	$	(1,682	)
Non-cash deemed dividend to warrant holders	$	2,654		$	-

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

Lindblad Expeditions Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

NOTE 1 – BUSINESS AND BASIS OF PRESENTATION

Business

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 eight owned expedition ships and five seasonal charter vessels under the Lindblad brand and operates eco-conscious expeditions and nature-focused, small-group tours under the Natural Habitat, Inc. (“Natural Habitat”) brand.

The Company operates the following reportable business segments:

Lindblad – primarily 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. Many of these 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’s Sea of Cortez, Costa Rica and Panama, and foster active engagement by guests. Each expedition ship is designed to be comfortable and inviting, while being fully equipped with state-of-the-art tools for in-depth exploration. The Company has an alliance with National Geographic Partners (“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.

Natural Habitat – primarily land-based adventure travel expeditions around the globe, as well as select itineraries on small chartered vessels for parts of the year, with unique itineraries designed to offer intimate encounters with nature and our planet's wild destinations. Natural Habitat creates opportunities for adventure and discovery that transform lives with expeditions that include polar bear tours in Churchill, Canada, Alaskan grizzly bear adventures, small-group Galápagos 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.

The Company’s common stock is listed on the NASDAQ Capital Market under the symbol “LIND”.

 Basis of Presentation

The accompanying unaudited condensed consolidated financial statements and 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”) regarding unaudited interim financial information and include the accounts and transactions of the Company. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s financial statements for the periods presented. Operating results for the periods presented are not necessarily indicative of the results of operations to be expected for the full year due to seasonality and other factors. Certain information and footnote disclosures normally included in the consolidated financial statements in accordance with U.S. GAAP have been omitted in accordance with the rules and regulations of the SEC for interim reporting. All intercompany balances and transactions have been eliminated in these unaudited condensed consolidated financial statements. These unaudited condensed consolidated financial statements and footnotes should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto for the year ended December 31, 2018 contained in the Company’s Annual Report on Form 10-K filed with the SEC on February 28, 2019 (the “2018 Annual Report”).

The presentation of certain prior year items in the notes to the condensed consolidated financial statements of the Company have been reclassified to conform to the 2019 presentation. The reclassifications had no effect on previously reported results of operations or retained earnings.

There have been no significant changes to the Company’s accounting policies from those disclosed in the 2018 Annual Report other than those noted below.

7

The Company accounts for its various operating leases in accordance with Accounting Standards Codification (“ASC”) 842-Leases, as updated by Accounting Standards Update (“ASU”) 2016-02. 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 on its balance sheet. 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. During the three and nine months ended September 30, 2019, the Company recognized $0.4 million and $1.1 million, respectively, in operating lease expense. During the three and nine months ended September 30, 2018, the Company recognized $0.4 million and $1.1 million, respectively, in operating lease expense. As of September 30, 2019, the Company’s remaining weighted average operating lease terms were approximately 67 months. A reconciliation of operating lease payments undiscounted cash flows to lease liabilities recognized as of September 30, 2019 is as follows:

(In thousands)	Operating Lease Payments
	(unaudited)
Remainder of 2019	$	303
2020		1,335
2021		1,372
2022		1,437
2023		1,324
Thereafter		1,922
Present value discount (6% weighted average)		(1,119	)
Total lease liability	$	6,574

Accounting Pronouncements Recently Adopted

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842) and in July 2018 issued ASU 2018-11, Leases (Topic 842): Targeted Improvements. The guidance requires the recognition of lease right-of-use assets and lease liabilities by lessees for those leases previously classified as operating. This guidance was issued to increase transparency and comparability among organizations by disclosing key information about leasing arrangements and requiring the recognition of current and non-current right-of-use assets and lease liabilities on the balance sheet. Most prominent among the changes in the standard is the recognition of right-of-use assets and lease liabilities by lessees for those leases classified as operating leases. ASU 2016-02 was effective for fiscal years beginning after December 15, 2018. The Company adopted this guidance on January 1, 2019, as required, electing to apply retrospectively at the period of adoption with practical expedients. The adoption of this guidance had a material impact on the Company’s balance sheet by virtue of including the present value of its future operating lease payments as a liability of $6.2 million and related right-to-use lease assets as of January 1, 2019.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. This amendment is intended to improve the effectiveness of fair value measurement disclosures by adding and modifying a few disclosure requirements, as well as eliminating several disclosures. ASU 2018-13 was effective for fiscal years beginning after December 15, 2018. The Company adopted this guidance on January 1, 2019, as required, and it did not have a material impact on the Company’s financial position or results of operations.

In August 2018, the FASB issued ASU 2018-15 Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. The amendments in this ASU align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software, and hosting arrangements that include an internal-use software license. ASU 2018-15 was effective for fiscal years beginning after December 15, 2019 and early adoption was permitted. The Company adopted this guidance on January 1, 2019, and it did not have a material impact on the Company's financial statements.

8

NOTE 2 – EARNINGS PER SHARE

Earnings per Common Share

Earnings per common share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. 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 and previously outstanding warrants, using the treasury stock method. 

For the three and nine months ended September 30, 2019 and 2018, the Company calculated earnings per share as follows:

	For the three months ended September 30,					For the nine months ended September 30,
(In thousands, except share and per share data)	2019			2018		2019		2018
	(unaudited)			(unaudited)		(unaudited)		(unaudited)
Net income attributable to Lindblad Expeditions Holdings, Inc	$	2,161		$	5,067	$	17,822	$	15,998
Non-cash deemed dividend to warrant holders		2,654			-		2,654		-
Net (loss) income available to common stockholders	$	(493	)	$	5,067	$	15,168	$	15,998
Weighted average shares outstanding:
Total weighted average shares outstanding, basic		48,863,506			45,423,127		46,704,634		45,356,438
Dilutive potential common shares		-			2,267,268		2,386,736		607,231
Total weighted average shares outstanding, diluted		48,863,506			47,690,395		49,091,370		45,963,669
Net (loss) income per share available to common stockholders
Basic	$	(0.01	)	$	0.11	$	0.32	$	0.35
Diluted	$	(0.01	)	$	0.11	$	0.31	$	0.35

For the three months ended September 30, 2019, diluted weighted average shares outstanding equals basic weighted average shares outstanding as the Company incurred a net loss available to common stockholders. For the nine months ended September 30, 2019, 0.1 million restricted shares are excluded from dilutive potential common shares as performance conditions have not been met. For the three and nine months ended September 30, 2018, 0.2 million restricted shares are excluded from dilutive potential common shares as performance conditions have not been met.

On July 17, 2019, the Company completed a consent solicitation and exchange offer relating to the Company’s previously outstanding warrants (see Note 7 – Stockholders' Equity for more information). 

NOTE 3 – REVENUES

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 air transportation to and from the ships. Guest deposits represent unearned revenues and are reported as unearned passenger revenues in the condensed consolidated balance sheets when received and are subsequently recognized as tour revenue over the duration of the expedition. Accounting Standards Codification, Revenue from Contracts with Customers (Topic 606) defines a “contract liability” as an entity’s obligation to transfer goods or services to a customer for which the entity has received consideration from the customer. 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. 

 The change in contract liabilities within unearned passenger revenues presented in the Company's condensed consolidated balance sheets are as follows:

	Contract Liabilities
(In thousands)	(unaudited)
Balance as of January 1, 2019	$	70,903
Recognized in tour revenues during the period		(204,935	)
Additional contract liabilities in period		192,864
Balance as of September 30, 2019	$	58,832

The following table disaggregates total revenues by revenue type:

	For the three months ended September 30,				For the nine months ended September 30,
	2019		2018		2019		2018
(In thousands)	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Guest ticket revenues	$	94,100	$	80,265	$	244,171	$	218,010
Other tour revenue		6,883		6,977		23,123		21,115
Tour revenues	$	100,983	$	87,242	$	267,294	$	239,125

9

NOTE 4 – FINANCIAL STATEMENT DETAILS

The following is a reconciliation of cash, cash equivalents and restricted cash to the statement of cash flows:

	For the nine months ended September 30,
(In thousands)	2019		2018
	(unaudited)		(unaudited)
Cash and cash equivalents	$	104,135	$	105,688
Restricted cash		7,995		8,593
Total cash, cash equivalents and restricted cash as presented in the statement of cash flows	$	112,130	$	114,281

Restricted cash consists of the following:

(In thousands)		As of September 30, 2019		As of December 31, 2018
	(unaudited)
Federal Maritime Commission escrow	$	6,476	$	5,823
Certificates of deposit and other restricted securities		1,519		1,402
Credit card processor reserves		-		1,530
Total restricted cash	$	7,995	$	8,755

Prepaid expenses and other current assets consist of the following:

(In thousands)	As of September 30, 2019		As of December 31, 2018
	(unaudited)
Prepaid tour expenses	$	13,358	$	10,617
Prepaid air expense		3,386		2,973
Prepaid corporate insurance		2,358		1,158
Prepaid client insurance		2,223		2,436
Prepaid marketing, commissions and other expenses		2,064		2,622
Prepaid port agent fees		382		1,433
Prepaid income taxes		273		24
Total prepaid expenses	$	24,044	$	21,263

Accounts payable and accrued expenses consist of the following:

(In thousands)	As of September 30, 2019		As of December 31, 2018
	(unaudited)
Accrued other expense	$	9,849	$	11,464
Accounts payable		6,122		9,326
Bonus compensation liability		4,875		5,195
Employee liability		3,505		2,943
Foreign currency forward contract liability		3,048		387
Royalty payable		1,859		1,005
Income tax liabilities		1,352		576
Travel certificate liability		977		1,088
Refunds and commissions payable		850		1,533
Accrued travel insurance expense		477		427
Total accounts payable and accrued expenses	$	32,914	$	33,944

10

NOTE 5 – LONG-TERM DEBT

	As of September 30, 2019									As of December 31, 2018
	(unaudited)
(In thousands)	Principal			Deferred Financing Costs, net			Balance			Principal			Deferred Financing Costs, net			Balance
Note payable	$	2,525		$	-		$	2,525		$	2,525		$	-		$	2,525
Credit Facility		197,500			(10,155	)		187,345			199,000			(11,436	)		187,564
Senior Secured Credit Agreement		30,476			(2,229	)		28,247			-			-			-
Total long-term debt		230,501			(12,384	)		218,117			201,525			(11,436	)		190,089
Less current portion		(2,000	)		-			(2,000	)		(2,000	)		-			(2,000	)
Total long-term debt, non-current	$	228,501		$	(12,384	)	$	216,117		$	199,525		$	(11,436	)	$	188,089

For the three and nine months ended September 30, 2019, deferred financing costs charged to interest expense was $0.5 million and $1.4 million, respectively. For the three and nine months ended September 30, 2018, deferred financing costs charged to interest expense was $0.4 million and $1.5 million, respectively.

Credit Facility

In March 2018, the Company entered into the Third Amended and Restated Credit Agreement (the “Amended Credit Agreement”), providing for a $200.0 million senior secured first lien term loan facility (the “Term Facility”), maturing March 2025, and a $45.0 million senior secured incremental revolving credit facility (the “Revolving Facility”), which includes a $5.0 million letter of credit sub-facility. The Term Facility bears interest at an adjusted Intercontinental Exchange Benchmark administration LIBOR plus a spread of 3.250%, for an aggregated rate of 5.266% as of September 30, 2019. Borrowings under the Revolving Facility may be used for general corporate and working capital purposes and related fees and expenses. As of September 30, 2019, the Company had no borrowings under the Revolving Facility.

Senior Secured Credit Agreements

In January 2018, the Company entered into a senior secured credit agreement (the “Export Credit Agreement”) with Citibank, N.A., London Branch (“Citi”) and Eksportkreditt Norge AS (“EK” and together with Citi, the “Lenders”), to make available to the Company a loan in an aggregate principal amount not to exceed $107.7 million for the purpose of providing financing for up to 80% of the purchase price of the Company’s new ice class vessel, the National Geographic Endurance, targeted to be completed in the first quarter of 2020. If drawn upon, the loan will be made at the time of delivery of the vessel. The Export Credit Agreement, at the Company's election, will bear interest either at a fixed interest rate effectively equal to 5.78% or a floating interest rate equal to three-month LIBOR plus a margin of 3.00% per annum.

On April 8, 2019, the Company entered into a senior secured credit agreement (the “Second Export Credit Agreement”) with the Lenders. Pursuant to the Second Export Credit Agreement, the Lenders have agreed to make available to the Company, at the Company's option and subject to certain conditions, a loan in an aggregate principal amount not to exceed $122.8 million for the purpose of providing pre- and post- delivery financing for up to 80% of the purchase price of the Company’s new expedition ice-class cruise vessel, the National Geographic Resolution, scheduled to be delivered in the fourth quarter of 2021. The Second Export Credit Agreement bears a variable interest rate equal to three-month LIBOR plus a margin of 3.00% per annum, or 5.09% as of September 30, 2019. After completion of the vessel, the Second Export Credit Agreement, at the Company’s option, will bear an interest rate of either a fixed rate of 6.36% or a variable rate equal to three-month LIBOR plus a margin of 3.00% per annum. 30% of the borrowing will mature over five years from drawdown, and 70% of the borrowing will mature over twelve years from drawdown. Additionally, 70% percent of the loan will be guaranteed by Garantiinstituttet for eksportkreditt, the official export credit agency of Norway. The Company incurred approximately $2.3 million in financing fees related to the Second Export Agreement, recorded as deferred financing costs as part of long-term debt. During September 2019, the Company drew approximately $30.5 million against the Second Export Credit Agreement for the second contracted installment payment on the National Geographic Resolution.

Note Payable

In connection with the Natural Habitat acquisition in May 2016, Natural Habitat issued an unsecured promissory note to Benjamin L. Bressler, the founder of Natural Habitat, with an outstanding principal amount of $2.5 million due at maturity on December 31, 2020. The promissory note accrues interest at a rate of 1.44% annually, with interest payable every six months.

Covenants

The Company’s Amended Credit Agreement, Export Credit Agreement and Second Export Credit Agreement contain financial and restrictive covenants that include among others, net leverage ratios, limits on additional indebtedness and limits on certain investments. As of September 30, 2019, the Company was in compliance with its covenants.

11

NOTE 6 – FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Derivative Instruments and Hedging Activities

The Company’s derivative assets and liabilities consist principally of foreign exchange forward contracts and interest rate caps and 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 internal valuation techniques, as 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.

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 the Canadian and New Zealand dollars, the Brazilian Real, South African Rand, Indian Rupee, 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.

In March 2019, the Company entered into foreign exchange forward contracts, designated as cash flow hedges, to hedge its exposure to Norwegian Kroner ("NOK"), related to the Company’s contract to purchase the new polar ice-class vessel, the National Geographic Resolution (see Note 11 – Commitments and Contingencies). The cost of the foreign exchange forward contracts will be amortized to interest expense over their lives, from the effective date through settlement dates.

Interest Rate Risk. The Company uses interest rate caps, designated as cash flow hedges, to manage the risk related to its floating rate corporate debt.

The Company records the effective portion of changes in the fair value of its cash flow hedges to other comprehensive income (loss), net of tax, and subsequently reclassifies these amounts into earnings in the period during which the hedged transaction is recognized. Any changes in fair values of hedges that are determined to be ineffective are immediately reclassified from accumulated other comprehensive income (loss) into earnings. 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 nine-month period ended September 30, 2019. The Company estimates that approximately $2.2 million of losses currently recorded in accumulated other comprehensive income (loss) will be recognized in earnings over the next 12 months due to the maturity of the cash flow hedge and the hedged item. The Company will continue to assess the effectiveness of the hedges on an ongoing basis. During the three and nine months ended September 30, 2019, a $1.6 million loss was reclassified from other comprehensive income and recognized as a loss on foreign currency due to the maturity of a foreign exchange forward contract that was designated as a cash flow hedge.

The Company held the following derivative instruments with absolute notional values as of September 30, 2019:

(in thousands)	Absolute Notional Value
Interest rate caps	$	100,000
Foreign exchange contracts		130,744

12

Estimated fair values (Level 2) of derivative instruments were as follows:

	As of September 30, 2019				As of December 31, 2018
	(unaudited)
(in thousands)	Fair Value, Asset Derivatives		Fair Value, Liability Derivatives		Fair Value, Asset Derivatives		Fair Value, Liability Derivatives
Derivative instruments designated as cash flow hedging instruments:
Foreign exchange forward (a)	$	-	$	7,157	$	-	$	-
Interest rate cap (b)		123		-		710		-
Total	$	123	$	7,157	$	710	$	-
Derivative instruments not designated as cash flow hedging instruments:
Foreign exchange forward (c)	$	-	$	886	$	-	$	1,328
Total	$	-	$	886	$	-	$	1,328

_________

^(a) Recorded in accounts payable and accrued expenses and other long-term liabilities.

^(b) Recorded in prepaid expenses and other current assets and other long-term assets.

^(c) Recorded in accounts payable and accrued expenses.

Changes in the fair value of the Company’s hedging instruments are recorded in accumulated other comprehensive income, pursuant to the guidelines of cash flow hedge accounting as outlined in ASC 815.

The effects of derivatives recognized in the Company’s condensed consolidated financial statements were as follows:

	Three Months Ended September 30,					Nine Months Ended September 30,
(In thousands)	2019			2018		2019			2018
	(unaudited)			(unaudited)		(unaudited)			(unaudited)
Derivative instruments designated as cash flow hedging instruments:
Foreign exchange forward contracts (a)	$	(7,094	)	$	-	$	(8,066	)	$	-
Interest rate caps (b)		(298	)		157		(587	)		230
Derivative instruments not designated as cash flow hedging instruments(c):
Foreign exchange forward contracts		(715	)		163		442			(1,430	)
Total	$	(8,107	)	$	320	$	(8,211	)	$	(1,200	)

__________

^(a) For the three and nine months ended September 30, 2019, $1.6 million was recognized as a loss on foreign currency in the condensed consolidated statements of income, and $5.5 million and $6.4 million, respectively, was recognized, net of tax, as a component of other comprehensive income (loss) within stockholders’ equity.

(b)

Recognized, net of tax, as a component of other comprehensive income (loss) within stockholders’ equity.

(c)

Gains (losses) related to derivative instruments are expected to be largely offset by (losses) gains on the underlying exposures being hedged. During the three and nine months ended September 30, 2019, a loss of $0.7 million and a gain of $0.4 million, respectively, was recognized in gain (loss) on foreign currency. During the three and nine months ended September 30, 2018, a gain of $0.2 million and a loss of $1.4 million, respectively, was recognized in gain (loss) on foreign currency.

Fair Value Measurements

The carrying amounts of cash and cash equivalents, accounts payable and accrued expenses, approximate fair value due to the short-term nature of these instruments. The carrying value of long-term debt approximates fair value given that the terms of the agreement were comparable to the market as of September 30, 2019. As of September 30, 2019 and December 31, 2018, the Company had no other significant liabilities that were measured at fair value on a recurring basis.

13

NOTE 7 – STOCKHOLDERS’ EQUITY

Stock and Warrant Repurchase Plan

The Company’s Board of Directors approved a stock and warrant repurchase plan (“Repurchase Plan”) in November 2015 and increased the repurchase plan to $35.0 million in November 2016. The Repurchase Plan authorizes the Company to purchase, from time to time, the Company’s outstanding common stock. Any shares purchased will be 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. These repurchases exclude shares repurchased to settle statutory employee tax withholding related to the exercise of stock options and vesting of stock awards. All repurchases were made using cash resources. During the nine months ended September 30, 2019, the Company repurchased 1,895 shares of common stock for approximately $23,000. The Company has cumulatively repurchased 866,701 shares of common stock for $8.2 million and 6,011,926 warrants for $14.7 million, since plan inception. The available balance for the Repurchase Plan was $12.1 million as of September 30, 2019.

Warrants

During the nine months ended September 30, 2019, 27,311 warrants to purchase the Company's common stock were exercised for cash.  

On June 14, 2019, the Company launched an offer to exchange all warrants to purchase common stock of the Company (the "Warrant Exchange"). The Warrant Exchange provided (i) an offer to each holder of the Company's outstanding warrants to receive 0.385 shares of common stock in exchange for each warrant tendered by the holder and exchanged pursuant to the Warrant Exchange, and (ii) the solicitation of consents (the "Consent Solicitation") from holders of the warrants to amend the warrant agreement that governs all of the warrants to permit the Company to require that each outstanding warrant not tendered in the Warrant Exchange be converted into 0.36575 shares of common stock. The Warrant Exchange and Consent Solicitation closed on July 17, 2019, with 9,935,000 warrants tendered via the Warrant Exchange for an aggregate of 3,824,959 shares of Company common stock, and approval was received for the Consent Solicitation. The remaining 125,763 warrants not tendered via the Warrant Exchange were converted, per the Consent Solicitation, into 45,981 shares of Company common stock. Following the Warrant Exchange and Consent Solicitation, no warrants remain outstanding. 

As the fair value of the warrants tendered in the Warrant Exchange offer was less than the fair value of the common stock issued, the Company recorded a non-cash deemed dividend of approximately $2.7 million for the incremental fair value provided to the warrant holders. The fair value of the Company's common stock and warrants were determined using the closing market prices on August 17, 2019, Level 1 fair value inputs.

NOTE 8 – STOCK-BASED COMPENSATION

The Company is authorized to issue up to 2.5 million shares of common stock under the 2015 Long-Term Incentive Plan to key employees, and as of September 30, 2019, approximately 1.3 million shares were available to be granted.

As of September 30, 2019, and December 31, 2018, options to purchase an aggregate of 200,000 and 220,000 shares, respectively, of the Company’s common stock, with a weighted average exercise price of $9.47 and $9.63, respectively, were outstanding. As of September 30, 2019, 150,000 options were exercisable.

The Company recorded stock-based compensation expense of $0.9 million and $2.7 million during the three and nine months ended September 30, 2019, respectively, and $1.3 million and $3.3 million during the three and nine months ended September 30, 2018, respectively.

2019 Long-Term Incentive Compensation

During the nine months ended September 30, 2019, the Company granted 109,357 restricted stock units with a weighted average grant price of $15.30. The restricted stock units will vest in equal installments on each of the first three anniversaries of the grant date, subject to the recipient’s continued employment or service with the Company on the applicable vesting date.

During the nine months ended September 30, 2019, the Company granted 23,706 restricted shares with a weighted average grant price of $18.98. The restricted shares will vest on the first anniversary of the grant date, subject to the recipient's continued service or employment with the Company on the applicable vesting date. 

During the nine months ended September 30, 2019, the Company awarded 61,631 targeted performance stock units ("PSUs") with a weighted average grant price of $15.25. The PSUs are performance-vesting equity incentive awards that 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 0%-200% of the number of PSUs granted, depending on performance. The number of shares were determined based upon the closing price of the Company's common stock on the date of the award.

NOTE 9 – RELATED PARTY TRANSACTIONS

The Company and National Geographic Society collaborate on exploration, research, technology and conservation in order to provide travel experiences and disseminate geographic knowledge around the globe. The Lindblad/National Geographic Society alliance is set forth in (i) an Alliance and License Agreement and (ii) a Tour Operator Agreement. The extension of the agreements, entered into July 2015, between the Company and National Geographic Society was contingent on the execution by Mr. Lindblad, the Company's Chief Executive Officer, of an option agreement granting National Geographic Society the right to purchase from Mr. Lindblad, for a per share price of $10.00 per share, five percent of the issued and outstanding shares of the Company’s common stock as of July 8, 2015, including all outstanding options, warrants or other derivative securities (excluding options granted under the 2015 Plan and shares issuable upon the exercise of warrants). During March 2019, National Geographic Society exercised its rights in full under the option agreement to acquire the shares, and in a cashless transaction acquired shares from Mr. Lindblad.

14

NOTE 10 – INCOME TAXES

Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The measurement of net deferred tax assets is reduced by the amount of any tax benefit that, based on available evidence, is not expected to be realized, and a corresponding valuation allowance is established. The determination of the required valuation allowance against net deferred tax assets was made without taking into account the deferred tax liabilities created from the book and tax differences on indefinite-lived assets.

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 recognizes the effect on deferred taxes of a change in tax rates in income in the period that includes the enactment date. 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 is subject to income taxes in both the U.S. and the non-U.S. jurisdictions in which it operates. 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 reflect the “more-likely-than-not” criteria of FASB’s authoritative guidance on accounting for uncertainty in income taxes, and it has established income tax reserves in accordance with this guidance where necessary. Once a financial statement benefit for a tax position is recorded or a tax reserve is established, the Company adjusts it only when there is more information available or when an event occurs necessitating a change. While the Company believes that the amount of the recorded financial statement benefits and tax reserves reflect the more-likely-than-not criteria, it is possible that the ultimate outcome of current or future examinations may result in a reduction to the tax benefits previously recorded on its condensed consolidated financial statements or may exceed the current income tax reserves in amounts that could be material. As of September 30, 2019, and December 31, 2018, the Company had a liability for unrecognized tax benefits of $0.1 million and $0.6 million, respectively, which was included in other long-term liabilities. The Company’s policy is to record interest and penalties on uncertain tax positions as a component of income tax expense. During the three and nine months ended September 30, 2019 and 2018, interest and penalties related to uncertain tax positions included in income tax expense are not significant. The Company's effective tax rate for the nine months ended September 30, 2019 and 2018 was an expense of 20.6% and 16.6%, respectively.

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 three prior years remain subject to examination by tax authorities and the Company’s foreign tax returns for the current year and four prior years remain subject to examination by tax authorities (except for the Ecuador entities, where the Company's foreign tax returns for the current year and three prior years remain subject to examination by tax authorities).

15

NOTE 11 – COMMITMENTS AND CONTINGENCIES

Fleet Expansion

In 2017, the Company entered into an agreement with Ulstein Verft to construct a polar ice class vessel, the National Geographic Endurance, with a total purchase price of 1,066.0 million NOK. Subsequently, the Company exercised its right to make payments in United States Dollars, which resulted in a purchase price of $134.6 million, including hedging costs. The purchase price is subject to potential adjustments from contract specifications for variations in speed, dead weight, fuel consumption and delivery date, and is due in installments. The first twenty percent of the purchase price was paid shortly after execution of the agreement with the remaining eighty percent due upon delivery and acceptance of the vessel. The vessel is targeted to be delivered in the first quarter of 2020.

During February 2019, the Company entered into an agreement with Ulstein Verft, to construct a second polar ice class vessel, the National Geographic Resolution, a sister ship of the National Geographic Endurance, with a total purchase price of 1,291.0 million NOK. The purchase price is subject to potential adjustments from contract specifications for variations in speed, dead weight, fuel consumption and delivery date. The purchase price is due in installments, with the first 20% paid shortly after execution of the agreement, 50% to be paid over the duration of the build and the final 30% due upon delivery and acceptance of the vessel. The vessel is scheduled to be delivered in the fourth quarter of 2021. During March 2019, the Company entered into foreign exchange forward contracts to lock in a purchase price for the National Geographic Resolution of $153.5 million, subject to potential contract specification adjustments.

Royalty Agreement – National Geographic

The Company is party to an alliance and license agreement with National Geographic, which allows the Company to use the National Geographic name and logo. In return for these rights, the Company is charged a royalty fee. The royalty fee is included within selling and marketing expense on the accompanying condensed consolidated statements of income. The amount is calculated based upon a percentage of certain ticket revenues less travel agent commission, including the revenues received from certain cancellation fees and any certain revenues received from the sale of pre- and post-expedition extensions. A pre- and post-expedition extension occurs when a guest extends his or her trip with pre- or post-voyage hotel nights. Royalty expense was $1.7 million and $4.8 million, for the three and nine months ended September 30, 2019, respectively, and $1.2 million and $3.3 million, for the three and nine months ended September 30, 2018, respectively.

The royalty balance outstanding to National Geographic as of September 30, 2019 and December 31, 2018 was $1.7 million and $1.0 million, respectively, and are included in accounts payable and accrued expenses on the accompanying condensed consolidated balance sheets.

Royalty Agreement – World Wildlife Fund

Natural Habitat has a license agreement with WWF, 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 on the accompanying condensed consolidated statements of income. This royalty fee expense was $0.3 million and $0.7 million for the three and nine months ended September 30, 2019, respectively, and $0.3 million and $0.6 million for the three and nine months ended September 30, 2018, respectively.

Charter Commitments

From time to time, the Company enters into agreements to charter vessels onto which it holds its tours and expeditions. Future minimum payments on its charter agreements as of September 30, 2019 are as follows:

For the years ended December 31,	Amount
(In thousands)	(unaudited)
Remainder of 2019	$	3,223
2020		12,472
2021		7,280
2022		1,850
Total	$	24,825

Legal Proceedings

From time to time, the Company is party to litigation and regulatory matters and claims. The Company expenses legal fees as incurred. The Company records a provision for contingent losses when it is both probable that a liability will be incurred and the amount or range of the loss can be reasonably estimated. The results of complex proceedings and reviews are difficult to predict and the Company’s view of these matters may change in the future as events related thereto unfold. An unfavorable outcome to any legal or regulatory matter, if material, could have an adverse effect on the Company’s operations or its financial position, liquidity or results of operations.

16

NOTE 12 – SEGMENT INFORMATION

The Company is primarily a specialty cruise and adventure expedition operator with operations in two segments, Lindblad and Natural Habitat. The Company evaluates the performance of the business based largely on the results of its operating segments. The chief operating decision maker 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 segments. While both segments have similar characteristics, the two operating and reporting segments cannot be aggregated because they fail to meet the requirements for aggregation.

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 three and nine months ended September 30, 2019 and 2018, operating results were as follows:

	For the three months ended September 30,									For the nine months ended September 30,
	2019		2018		Change		%			2019		2018		Change		%
(In thousands)	(unaudited)		(unaudited)							(unaudited)		(unaudited)
Tour revenues:
Lindblad	$	76,581	$	64,507	$	12,074		19	%	$	217,549	$	194,516	$	23,033		12	%
Natural Habitat		24,402		22,735		1,667		7	%		49,745		44,609		5,136		12	%
Total tour revenues	$	100,983	$	87,242	$	13,741		16	%	$	267,294	$	239,125	$	28,169		12	%
Operating Income:
Lindblad	$	12,570	$	8,209	$	4,361		53	%	$	31,514	$	26,755	$	4,759		18	%
Natural Habitat		3,089		2,072		1,017		49	%		2,631		2,105		526		25	%
Total operating income	$	15,659	$	10,281	$	5,378		52	%	$	34,145	$	28,860	$	5,285		18	%

Depreciation and amortization are included in segment operating income as shown below:

	For the three months ended September 30,									For the nine months ended September 30,
	2019		2018		Change		%			2019		2018		Change		%
(In thousands)	(unaudited)		(unaudited)							(unaudited)		(unaudited)
Depreciation and amortization:
Lindblad	$	5,812	$	4,645	$	1,167		25	%	$	17,380	$	13,954	$	3,426		25	%
Natural Habitat		421		379		42		11	%		1,223		1,108		115		10	%
Total depreciation and amortization	$	6,233	$	5,024	$	1,209		24	%	$	18,603	$	15,062	$	3,541		24	%

The following table presents the total assets, intangibles, net and goodwill by segment:

	As of September 30, 2019		As of December 31, 2018
(In thousands)	(unaudited)
Total Assets:
Lindblad	$	453,176	$	409,622
Natural Habitat		76,437		63,787
Total assets	$	529,613	$	473,409
Intangibles, net:
Lindblad	$	3,506	$	4,050
Natural Habitat		3,285		3,925
Total intangibles, net	$	6,791	$	7,975
Goodwill:
Lindblad	$	-	$	-
Natural Habitat		22,105		22,105
Total goodwill	$	22,105	$	22,105

For the three and nine months ended September 30, 2019 there were $1.3 million and $3.8 million in intercompany tour revenues between the Lindblad and Natural Habitat segments eliminated in consolidation, respectively. For the three and nine months ended September 30, 2018 there were $1.2 million and $2.6 million in intercompany tour revenues between the Lindblad and Natural Habitat segments eliminated in consolidation, respectively.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION

The following discussion and analysis addresses material changes in the financial condition and results of operations of the Company for the periods presented. This discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q (“Form 10-Q”), as well as the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 28, 2019.

Cautionary Note Regarding Forward-Looking Statements

Any statements in this Form 10-Q about our expectations, beliefs, plans, objectives, prospects, financial condition, assumptions or future events or performance are not historical facts and are “forward-looking statements” as that term is defined under the federal securities laws. These statements are often, but not always, made through the use of words or phrases such as “believe,” “anticipate,” “should,” “intend,” “plan,” “will,” “expects,” “estimates,” “projects,” “positioned,” “strategy,” “outlook” and similar words. You should read the statements that contain these types of words carefully. Such forward-looking statements are subject to a number of risks, uncertainties and other factors that could cause actual results to differ materially from what is expressed or implied in such forward-looking statements. There may be events in the future that we are not able to predict accurately or over which we have no control. Potential risks and uncertainties include, but are not limited to:

● general economic conditions;

● unscheduled disruptions in our business due to weather events, mechanical failures, or other events;

● changes adversely affecting the business in which we are engaged;

● management of our growth and our ability to execute on our planned growth;

● our business strategy and plans;

● our ability to maintain our relationship with National Geographic;

● compliance with new and existing laws and regulations, including environmental regulations;

● compliance with the financial and/or operating covenants in our debt arrangements;

● adverse publicity regarding the cruise industry in general;

● loss of business due to competition;

● the result of future financing efforts;

● delays and costs overruns with respect to the construction and delivery of newly constructed vessels;

● the inability to meet revenue and Adjusted EBITDA projections; and

● those risks discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC on February 28, 2019 (the “2018 Annual Report”).

We urge you not to place undue reliance on these forward-looking statements, which speak only as of the date of this Form 10-Q. We do not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect events or uncertainties after the date hereof or to reflect the occurrence of unanticipated events.

Unless the context otherwise requires, in this Form 10-Q, “Company,” “Lindblad,” “we,” “us,” “our,” and “ours” refer to Lindblad Expeditions Holdings, Inc., and its subsidiaries.

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Business Overview

Lindblad provides expedition cruising and land-based adventure travel experiences, using itineraries that feature up-close encounters with wildlife, nature, history and culture, and promote guest empowerment and interactivity. Our mission is to offer life-changing adventures and wildlife experiences around the world and pioneer innovative ways to allow our guests to connect with exotic and remote places. Many of these expeditions involve travel to remote places, such as the Arctic, Antarctica, the Galápagos Islands, Alaska, Baja's Sea of Cortez, Costa Rica, Panama, polar bear tours in Churchill, Canada, Alaskan grizzly bear adventures and African safaris.

We operate a fleet of eight owned expedition ships and have contracted for two new polar ice class vessels, the National Geographic Endurance targeted to be completed in the first quarter of 2020, and the National Geographic Resolution, a sister ship of the National Geographic Endurance, scheduled to be delivered in the fourth quarter of 2021. In addition, we operate five seasonal charter vessels under the Lindblad brand. We deploy chartered vessels for various seasonal offerings and continually seek to optimize our charter fleet to balance our inventory with demand and maximize yields. We use our charter inventory as a mechanism to both increase travel options for our existing and prospective guests and also to test demand for certain areas and seasons to understand the potential for longer term deployments and additional vessel needs. 

We have a longstanding relationship with the National Geographic Society dating back to 2004, which is based on a shared interest in exploration, research, technology and conservation. This relationship includes co-selling, co-marketing and branding arrangements with National Geographic Partners, LLC (“National Geographic”) whereby our owned vessels carry the National Geographic name and National Geographic sells our expeditions through their internal travel divisions. We collaborate with National Geographic on expedition planning to enhance the guest experience by having National Geographic experts, including photographers, writers, marine biologists, naturalists, field researchers and film crews, join our expeditions. Guests have the ability to interface with these experts through lectures, excursions, dining and other experiences throughout their expedition.

2019 Highlights

During February 2019, we entered into an agreement to construct a second polar ice class vessel the National Geographic Resolution, a sister ship of the National Geographic Endurance, with a total purchase price of 1,291.0 million Norwegian Kroner. In March 2019, we entered into a foreign exchange forward contract hedge to lock in a purchase price of approximately $153.5 million. The purchase price is subject to potential adjustments from contract specifications for variations in speed, deadweight, fuel consumption and delivery date. The purchase price is due in installments, with the first 20% paid shortly after execution of the agreement, 50% to be paid over the duration of the build and the final 30% due upon delivery and acceptance of the vessel. The vessel is scheduled to be delivered in the fourth quarter of 2021. 

During April 2019, we entered into a senior secured credit agreement (the “Second Export Credit Agreement”) with Citibank, N.A., London Branch (“Citi”) and Eksportkreditt Norge AS (“EK” and together with Citi, the “Lenders”). Pursuant to the Second Export Credit Agreement, the Lenders have agreed to make available to us, at our option and subject to certain conditions, a loan in an aggregate principal amount not to exceed $122.8 million for the purpose of providing pre- and post- delivery financing for up to 80% of the purchase price of the National Geographic Resolution. The Second Export Credit Agreement, at our option, will bear an interest rate of either a fixed rate of 6.36% or a variable rate equal to three-month LIBOR plus a margin of 3.00% per annum. During September 2019, we drew approximately $30.5 million against the Second Export Credit Agreement for the second contracted installment payment on the National Geographic Resolution.

On June 14, 2019, we launched an offer to exchange all warrants to purchase our common stock (the "Warrant Exchange"). The Warrant Exchange provided (i) an offer to each holder of our outstanding warrants to receive 0.385 shares of common stock in exchange for each warrant tendered by the holder and exchanged pursuant to the Warrant Exchange, and (ii) the solicitation of consents (the "Consent Solicitation") from holders of the warrants to amend the warrant agreement that governs all of the warrants to permit us to require that each outstanding warrant not tendered in the Warrant Exchange be converted into 0.36575 shares of common stock. The Warrant Exchange and Consent Solicitation closed on July 17, 2019, with 9,935,000 warrants tendered via the Warrant Exchange for an aggregate of 3,824,959 shares of our common stock, and approval was received for the Consent Solicitation. The remaining 125,763 warrants not tendered via the Warrant Exchange were converted, per the Consent Solicitation, into 45,981 shares of our common stock. Following the Warrant Exchange and Consent Solicitation, no warrants remain outstanding. As the fair value of the warrants tendered in the Warrant Exchange offer was less than the fair value of the common stock issued, the Company recorded a non-cash deemed dividend of approximately $2.7 million for the incremental fair value provided to the warrant holders. The Company's common stock and warrants were determined using the closing market prices on August 17, 2019, Level 1 fair value inputs.

The discussion and analysis of our results of operations and financial condition are organized as follows:

● a description of certain line items and operational and financial metrics we utilize to assist us in managing our business;

● results and a comparable discussion of our consolidated and segment results of operations for the three and nine months ended September 30, 2019 and 2018;

● a discussion of our liquidity and capital resources, including future capital and contractual commitments and potential funding sources; and

● a review of our critical accounting policies.

Financial Presentation

Description of Certain Line Items

Tour revenues

Tour revenues consist of the following:

● Guest ticket revenues recognized from the sale of guest tickets; and

● Other tour revenues from the sale of pre- or post-expedition excursions, hotel accommodations, air transportation to and from the ships, goods and services rendered onboard that are not included in guest ticket prices, trip insurance, and cancellation fees.

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Cost of tours

Cost of tours includes the following:

● Direct costs associated with revenues, including cost of pre- or post-expedition excursions, hotel accommodations, and land-based expeditions, air and other transportation expenses, and cost of goods and services rendered onboard;

● Payroll costs and related expenses for shipboard and expedition personnel;

● Food costs for guests and crew, including complimentary food and beverage amenities for guests;

● Fuel costs and related costs of delivery, storage and safe disposal of waste; and

● Other tour expenses, such as land costs, port costs, repairs and maintenance, equipment expense, drydock, ship insurance, and charter hire costs.

Selling and marketing

Selling and marketing expenses include commissions, royalties and a broad range of advertising, promotional and customer relationship technology expenses.

General and administrative

General and administrative expenses include the cost of shoreside vessel support, reservations and other administrative functions, including salaries and related benefits, credit card commissions, professional fees and rent.

Operational and Financial Metrics

We use a variety of operational and financial metrics, including non-GAAP financial measures, such as Adjusted EBITDA, Net Yields, Occupancy and Net Cruise Costs, to enable us to analyze our performance and financial condition. We utilize these financial measures to manage our business on a day-to-day basis and believe that they are the most relevant measures of performance. Some of these measures are commonly used in the cruise and tourism industry to evaluate performance. We believe these non-GAAP measures provide expanded insight to assess revenue and cost performance, in addition to the standard GAAP-based financial measures. There are no specific rules or regulations for determining non-GAAP measures, and as such, they may not be comparable to measures used by other companies within the industry.

The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. You should read this discussion and analysis of our financial condition and results of operations together with the condensed consolidated financial statements and the related notes thereto also included within.

Adjusted EBITDA is net income (loss) excluding depreciation and amortization, net interest expense, other income (expense), income tax (expense) benefit, (gain) loss on foreign currency, (gain) loss on transfer of assets, reorganization costs, and other supplemental adjustments. Other supplemental adjustments include certain non-operating items such as stock-based compensation, the National Geographic fee amortization, debt refinancing costs and certain other items. We believe Adjusted EBITDA, when considered along with other performance measures, is a useful measure as it reflects certain operating drivers of the business, such as sales growth, operating costs, selling and administrative expense, and other operating income and expense. We believe Adjusted EBITDA helps provide a more complete understanding of the underlying operating results and trends and an enhanced overall understanding of our financial performance and prospects for the future. Adjusted EBITDA is not intended to be a measure of liquidity or cash flows from operations or a measure comparable to net income as it does not take into account certain requirements, such as unearned passenger revenues, capital expenditures and related depreciation, principal and interest payments, and tax payments. Our use of Adjusted EBITDA may not be comparable to other companies within the industry.

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The following metrics apply to our Lindblad segment:

Adjusted Net Cruise Cost represents Net Cruise Cost adjusted for Non-GAAP other supplemental adjustments which include certain non-operating items such as stock-based compensation, the National Geographic fee amortization, and certain other items.

Available Guest Nights is a measurement of capacity and represents double occupancy per cabin (except single occupancy for a single capacity cabin) multiplied by the number of cruise days for the period. We also record the number of guest nights available on our limited land programs in this definition.

Gross Cruise Cost represents the sum of cost of tours plus, selling and marketing expenses, and general and administrative expenses.

Gross Yield represents tour revenues less insurance proceeds divided by Available Guest Nights.

Guest Nights Sold represents the number of guests carried for the period multiplied by the number of nights sailed within the period.

Maximum Guests is a measure of capacity and represents the maximum number of guests in a period and is based on double occupancy per cabin (except single occupancy for a single capacity cabin).

Net Cruise Cost represents Gross Cruise Cost excluding commissions and certain other direct costs of guest ticket revenues and other tour revenues.

Net Cruise Cost Excluding Fuel represents Net Cruise Cost excluding fuel costs.

Net Revenue represents tour revenues less insurance proceeds, commissions and direct costs of other tour revenues.

Net Yield represents Net Revenue divided by Available Guest Nights.

Number of Guests represents the number of guests that travel with us in a period.

Occupancy is calculated by dividing Guest Nights Sold by Available Guest Nights.

Voyages represent the number of ship expeditions completed during the period.

Foreign Currency Translation

The U.S. dollar is the functional currency in our foreign operations and re-measurement adjustments and gains or losses resulting from foreign currency transactions are recorded as foreign exchange gains or losses in the condensed consolidated statements of income.

Seasonality

Our tour revenues from the sale of guest tickets are mildly seasonal, historically larger in the first and third quarters. The seasonality of our operating results fluctuates due to our vessels being taken out of service for scheduled maintenance or drydocking, which is typically during nonpeak demand periods, in the second and fourth quarters. Our drydock schedules are subject to cost and timing differences from year to year due to the availability of shipyards for certain work, drydock locations based on ship itineraries, operating conditions experienced especially in the polar regions and the applicable regulations of class societies in the maritime industry, which require more extensive reviews periodically. Drydocking impacts operating results by reducing tour revenues and increasing cost of tours. Natural Habitat is a seasonal business, with the majority of its tour revenue recorded in the third and fourth quarters from its summer season departures and polar bear tours.

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Results of Operations - Consolidated

	For the three months ended September 30,											For the nine months ended September 30,
(In thousands)	2019			2018		Change			%			2019		2018		Change			%
Tour revenues	$	100,983		$	87,242	$	13,741			16	%	$	267,294	$	239,125	$	28,169			12	%
Cost of tours		48,294			44,964		3,330			7	%		124,831		114,645		10,186			9	%
General and administrative		15,266			14,718		548			4	%		47,615		45,647		1,968			4	%
Selling and marketing		15,531			12,255		3,276			27	%		42,100		34,911		7,189			21	%
Depreciation and amortization		6,233			5,024		1,209			24	%		18,603		15,062		3,541			24	%
Operating income	$	15,659		$	10,281	$	5,378			52	%	$	34,145	$	28,860	$	5,285			18	%
Net income	$	2,726		$	5,346	$	(2,620	)		(49	%)	$	18,656	$	16,105	$	2,551			16	%
Net (loss) income per share available to common stockholders
Basic	$	(0.01	)	$	0.11	$	(0.12	)				$	0.32	$	0.35	$	(0.03	)
Diluted	$	(0.01	)	$	0.11	$	(0.12	)				$	0.31	$	0.35	$	(0.04	)

Comparison of the Three and Nine Months Ended September 30, 2019 to Three and Nine Months Ended September 30, 2018 - Consolidated

Tour Revenues

Tour revenues for the three months ended September 30, 2019 increased $13.7 million, or 16%, to $101.0 million, compared to $87.2 million for the three months ended September 30, 2018. The Lindblad segment tour revenues increased by $12.1 million, primarily driven by an increase in Available Guest Nights during 2019, due to the addition of the National Geographic Venture to our fleet in the fourth quarter of 2018. At the Natural Habitat segment, tour revenues increased $1.7 million over the prior year period, primarily due to additional departures and increased pricing.

Tour revenues for the nine months ended September 30, 2019 increased $28.2 million, or 12%, to $267.3 million, compared to $239.1 million for the nine months ended September 30, 2018. The Lindblad segment tour revenues increased by $23.0 million, primarily driven by an increase in Available Guest Nights during 2019, mainly due to the addition of the National Geographic Venture to our fleet in the fourth quarter of 2018. At the Natural Habitat segment, tour revenues increased $5.1 million over the prior year period, primarily due to additional departures and increased pricing.

Cost of Tours

Total cost of tours for the three months ended September 30, 2019 increased $3.3 million, or 7%, to $48.3 million, compared to $45.0 million for the three months ended September 30, 2018. At the Lindblad segment, cost of tours increased $3.4 million, primarily due to incremental costs related to the National Geographic Venture. At the Natural Habitat segment, cost of tours decreased $0.1 million.

Total cost of tours for the nine months ended September 30, 2019 increased $10.2 million, or 9%, to $124.8 million, compared to $114.6 million for the nine months ended September 30, 2018. At the Lindblad segment, cost of tours increased $8.6 million, primarily due to incremental costs related to the National Geographic Venture, partially offset by lower drydock expense. At the Natural Habitat segment, cost of tours increased $1.6 million, primarily due to additional departures.

General and Administrative

General and administrative expenses for the three months ended September 30, 2019 increased $0.5 million, or 4% to $15.3 million, compared to $14.7 million for the three months ended September 30, 2018. At the Lindblad segment, general and administrative expenses increased $0.1 million over the prior year period, as costs incurred related to the Warrant Exchange and increased personnel costs were partially offset by lower value-added tax ("VAT") expense and stock-based compensation. At the Natural Habitat segment, general and administrative expenses increased $0.4 million, primarily due to an increase in personnel costs.

General and administrative expenses for the nine months ended September 30, 2019 increased $2.0 million, or 4%, to $47.6 million, compared to $45.6 million for the nine months ended September 30, 2018. At the Lindblad segment, general and administrative expenses were in line with a year ago as lower VAT expense and stock-based compensation, as well as the absence of debt financing costs incurred in 2018, were offset by the costs incurred related to the Warrant Exchange, increased personnel costs and credit card commissions. At the Natural Habitat segment, general and administrative expenses increased $1.8 million, primarily due to an increase in personnel costs.

 Selling and Marketing

Selling and marketing expenses for the three months ended September 30, 2019 increased $3.3 million, or 27%, to $15.5 million, compared to $12.3 million for the three months ended September 30, 2018. At the Lindblad segment, selling and marketing expenses increased $3.1 million, primarily due to higher advertising spend and increased commission expenses. At the Natural Habitat segment, selling and marketing expenses increased $0.2 million, primarily driven by an increase in advertising spend and commission expense.

Selling and marketing expenses for the nine months ended September 30, 2019 increased $7.2 million, or 21%, to $42.1 million, compared to $34.9 million for the nine months ended September 30, 2018. At the Lindblad segment, selling and marketing expenses increased $6.2 million, primarily due to higher advertising spend and increased commission and customer relationship technology expenses. At the Natural Habitat segment, selling and marketing expenses increased $1.1 million, primarily driven by an increase in advertising expenditures.

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Depreciation and Amortization

Depreciation and amortization expenses for the three months ended September 30, 2019 increased $1.2 million, or 24%, to $6.2 million, compared to $5.0 million for the three months ended September 30, 2018, primarily due to the addition of the National Geographic Venture to the Lindblad segment in December 2018.

Depreciation and amortization expenses for the nine months ended September 30, 2019 increased $3.5 million, or 24%, to $18.6 million, compared to $15.1 million for the nine months ended September 30, 2018, primarily due to the addition of the National Geographic Venture to the Lindblad segment in December 2018.

Other Expense

Other expenses, for the three months ended September 30, 2019, increased $3.4 million to $5.6 million, compared to $2.2 million for the three months ended September 30, 2018, primarily due to the following:

● The $2.3 million loss in foreign currency translation in 2019, primarily related to the $1.6 million loss on a foreign exchange hedge that matured during the quarter, as well as, the weakening of the U.S dollar primarily in relation to the Canadian dollar, South African Rand and the Euro in the same period a year ago.

● A $0.8 million increase in interest expense, net, due to commitment fees and foreign currency hedge expenses associated with our senior secured credit agreement entered into in April of 2019. 

Other expenses, for the nine months ended September 30, 2019, increased $1.1 million to $10.7 million, compared to $9.6 million for the nine months ended September 30, 2018, primarily due to the following:

● A $1.2 million loss in foreign currency translation in 2019 compared to a loss of $1.4 million in 2018, primarily related to the $1.6 million loss on a foreign exchange hedge that matured during the quarter, partially offset by the strengthening of the U.S dollar primarily in relation to the Canadian dollar, South African Rand and the Euro year-over-year.

● A $1.4 million increase in interest expense, net, due to the increased borrowings related to the debt refinancing in 2018 and commitment fees and foreign currency hedge expenses associated with our senior secured credit agreement entered into in April of 2019. 

Income Taxes

During the three months ended September 30, 2019, the Company recognized an income tax expense of $7.4 million, compared to an expense of $2.7 million in the prior year. The increase is due to changes in certain itineraries and the improved operating performance of the Company.

During the nine months ended September 30, 2019, the Company recognized an income tax expense of $4.8 million, compared to an expense of $3.2 million in the prior year. The change is due to itinerary timing and the release of certain uncertain tax positions.

Results of Operations – Segments

Selected information for our segments is below. The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP

	For the three months ended September 30,									For the nine months ended September 30,
(In thousands)	2019		2018		Change		%			2019		2018		Change		%
	(unaudited)		(unaudited)							(unaudited)		(unaudited)
Tour revenues:
Lindblad	$	76,581	$	64,507	$	12,074		19	%	$	217,549	$	194,516	$	23,033		12	%
Natural Habitat		24,402		22,735		1,667		7	%		49,745		44,609		5,136		12	%
Total tour revenues	$	100,983	$	87,242	$	13,741		16	%	$	267,294	$	239,125	$	28,169		12	%
Operating Income:
Lindblad	$	12,570	$	8,209	$	4,361		53	%	$	31,514	$	26,755	$	4,759		18	%
Natural Habitat		3,089		2,072		1,017		49	%		2,631		2,105		526		25	%
Total operating income	$	15,659	$	10,281	$	5,378		52	%	$	34,145	$	28,860	$	5,285		18	%
Adjusted EBITDA:
Lindblad	$	20,600	$	14,668	$	5,932		40	%	$	54,802	$	47,538	$	7,264		15	%
Natural Habitat		3,510		2,451		1,059		43	%		3,854		3,213		641		20	%
Total adjusted EBITDA	$	24,110	$	17,119	$	6,991		41	%	$	58,656	$	50,751	$	7,905		16	%

Results of Operations – Lindblad Segment

The following table sets forth our Available Guest Nights, Guest Nights Sold, Occupancy, Maximum Guests, Number of Guests and Voyages:

	For the three months ended September 30,						For the nine months ended September 30,
(In thousands)	2019			2018			2019			2018
Available Guest Nights		63,386			55,741			176,038			160,575
Guest Nights Sold		59,682			50,993			161,511			145,714
Occupancy		94	%		92	%		92	%		91	%
Maximum Guests		7,721			7,137			21,863			20,388
Number of Guests		7,294			6,582			20,095			18,553
Voyages		98			93			278			269

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The following table shows the calculations of Gross Yield and Net Yield. Gross Yield is calculated by dividing Tour Revenues by Available Guest Nights and Net Yield is calculated by dividing Net Revenue by Available Guest Nights:

Calculation of Gross Yield and Net Yield	For the three months ended September 30,						For the nine months ended September 30,
(In thousands, except for Available Guest Nights, Gross and Net Yield)	2019			2018			2019			2018
Guest ticket revenues	$	70,319		$	58,187		$	195,845		$	174,699
Other tour revenue		6,262			6,320			21,704			19,817
Tour Revenues		76,581			64,507			217,549			194,516
Less: Commissions		(5,716	)		(5,055	)		(16,475	)		(14,977	)
Less: Other tour expenses		(4,051	)		(4,673	)		(14,155	)		(12,952	)
Net Revenue	$	66,814		$	54,779		$	186,919		$	166,587
Available Guest Nights		63,386			55,741			176,038			160,575
Gross Yield	$	1,208		$	1,157		$	1,236		$	1,211
Net Yield		1,054			983			1,062			1,037

The following table shows the calculations of Gross Cruise Cost per Available Guest Night and Net Cruise Costs per Available Guest Night:

Calculation of Gross Cruise Cost and Net Cruise Cost	For the three months ended September 30,						For the nine months ended September 30,
(In thousands, except for Available Guest Nights, Gross and Net Cruise Cost per Avail. Guest Night)	2019			2018			2019			2018
Cost of tours	$	33,031		$	29,647		$	94,470		$	85,837
Plus: Selling and marketing		13,804			10,754			37,767			31,699
Plus: General and administrative		11,364			11,252			36,416			36,271
Gross Cruise Cost		58,199			51,653			168,653			153,807
Less: Commissions		(5,716	)		(5,055	)		(16,475	)		(14,977	)
Less: Other tour expenses		(4,051	)		(4,673	)		(14,155	)		(12,952	)
Net Cruise Cost		48,432			41,925			138,023			125,878
Less: Fuel Expense		(2,251	)		(2,168	)		(7,397	)		(6,876	)
Net Cruise Cost Excluding Fuel		46,181			39,757			130,626			119,002
Non-GAAP Adjustments:
Stock-based compensation		(917	)		(1,271	)		(2,671	)		(3,256	)
National Geographic fee amortization		(727	)		(727	)		(2,181	)		(2,181	)
Warrant exchange fees		(504	)		-			(970	)		-
Executive severance costs		-			215			-			(71	)
Reorganization costs		(70	)		(31	)		(86	)		(324	)
Debt refinancing costs		-			-			-			(997	)
Adjusted Net Cruise Cost Excluding Fuel	$	43,963		$	37,943		$	124,718		$	112,173
Adjusted Net Cruise Cost	$	46,214		$	40,111		$	132,115		$	119,049
Available Guest Nights		63,386			55,741			176,038			160,575
Gross Cruise Cost per Available Guest Night	$	918		$	927		$	958		$	958
Net Cruise Cost per Available Guest Night		764			752			784			784
Net Cruise Cost Excluding Fuel per Available Guest Night		729			713			742			741
Adjusted Net Cruise Cost Excluding Fuel per Available Guest Night		694			681			708			699
Adjusted Net Cruise Cost per Available Guest Night		729			720			750			741

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Comparison of Three and Nine Months Ended September 30, 2019 to Three and Nine Months Ended September 30, 2018 at the Lindblad Segment

Tour Revenues

Tour revenues for the three months ended September 30, 2019 increased $12.1 million, or 19%, to $76.6 million, compared to $64.5 million for the three months ended September 30, 2018. The increase was primarily driven by higher guest ticket revenue, predominantly due to a 14% increase in Available Guest Nights mainly from the addition of the National Geographic Venture to our fleet in the fourth quarter of 2018. Net Yield increased 7% for the three months ended September 30, 2019 to $1,054, compared to $983 for the three months ended September 30, 2018, due primarily to higher pricing and itinerary changes. In addition, Occupancy increased to 94% for the three months ended September 30, 2019, compared to 92% in the same period a year ago.

Tour revenues for the nine months ended September 30, 2019 increased $23.0 million, or 12%, to $217.5 million, compared to $194.5 million for the nine months ended September 30, 2018. The increase was primarily driven by higher guest ticket revenue, predominantly due to a 10% increase in Available Guest Nights mainly from the addition of the National Geographic Venture to our fleet in the fourth quarter of 2018. Net Yield increased 2% for the nine months ended September 30, 2019 to $1,062, compared to $1,037 for the nine months ended September 30, 2018 due primarily to higher pricing and itinerary changes. In addition, occupancy rates increased to 92% for the nine months ended September 30, 2019, compared to 91% in the same period a year ago.

Operating Income

Operating income increased $4.4 million to $12.6 million, for the three months ended September 30, 2019, compared to $8.2 million for the three months ended September 30, 2018. The increase was primarily driven by the addition of the National Geographic Venture, as well as lower VAT expense, partially offset by increased marketing spend, commission costs, costs related to the Warrant Exchange and higher personnel expenses.

Operating income increased $4.8 million to $31.5 million, for the nine months ended September 30, 2019, compared to $26.8 million for the nine months ended September 30, 2018. The increase was primarily driven by the addition of the National Geographic Venture, and lower drydock and VAT expense, as well as the absence of the debt financing costs incurred in 2018, partially offset by increased marketing spend, commission costs, costs related to the Warrant Exchange and higher personnel expenses.

Results of Operations – Natural Habitat Segment

Comparison of Three and Nine Months Ended September 30, 2019 to Three and Nine Months Ended September 30, 2018

Tour Revenues

Tour revenues for the three months ended September 30, 2019 increased $1.7 million, or 7%, to $24.4 million compared to $22.7 million for the three months ended September 30, 2018, due to additional departures, increased travelers and itinerary changes that drove higher average pricing.

Tour revenues for the nine months ended September 30, 2019 increased $5.1 million, or 12%, to $49.7 million compared to $44.6 million for the nine months ended September 30, 2018, due to additional departures and itinerary changes that drove higher average pricing.

Operating income

Operating income for the three months ended September 30, 2019 increased $1.0 million to $3.1 million compared to $2.1 million for the three months ended September 30, 2018, due to growth in tour revenue, partially offset by higher operating costs related to additional departures, as well as higher personnel and marketing costs to support future growth initiatives.

Operating income for the nine months ended September 30, 2019 increased $0.5 million to $2.6 million compared to $2.1 million for the nine months ended September 30, 2019, due to growth in tour revenue, partially offset by higher operating costs related to additional departures, as well as higher personnel and marketing costs to support future growth initiatives.

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Adjusted EBITDA – Consolidated

The following table outlines the reconciliation to net income and calculation of consolidated Adjusted EBITDA. The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

Consolidated	For the three months ended September 30,					For the nine months ended September 30,
(In thousands)	2019		2018			2019		2018
Net income	$	2,726	$	5,346		$	18,656	$	16,105
Interest expense, net		3,214		2,409			9,391		8,013
Income tax expense		7,351		2,690			4,838		3,194
Depreciation and amortization		6,233		5,024			18,603		15,062
Loss (gain) on foreign currency		2,338		(163	)		1,181		1,430
Other expense (income)		30		(1	)		79		118
Stock-based compensation		917		1,271			2,671		3,256
National Geographic fee amortization		727		727			2,181		2,181
Warrant exchange fees		504		-			970		-
Executive severance costs		-		(215	)		-		71
Reorganization costs		70		31			86		324
Debt refinancing costs		-		-			-		997
Adjusted EBITDA	$	24,110	$	17,119		$	58,656	$	50,751

The following tables outline the reconciliation for each segment from operating income to Adjusted EBITDA.

Lindblad Segment	For the three months ended September 30,					For the nine months ended September 30,
(In thousands)	2019		2018			2019		2018
Operating income	$	12,570	$	8,209		$	31,514	$	26,755
Depreciation and amortization		5,812		4,645			17,380		13,954
Stock-based compensation		917		1,271			2,671		3,256
National Geographic fee amortization		727		727			2,181		2,181
Warrant exchange fees		504		-			970		-
Executive severance costs		-		(215	)		-		71
Reorganization costs		70		31			86		324
Debt refinancing costs		-		-			-		997
Adjusted EBITDA	$	20,600	$	14,668		$	54,802	$	47,538

Natural Habitat Segment	For the three months ended September 30,				For the nine months ended September 30,
(In thousands)	2019		2018		2019		2018
Operating income	$	3,089	$	2,072	$	2,631	$	2,105
Depreciation and amortization		421		379		1,223		1,108
Adjusted EBITDA	$	3,510	$	2,451	$	3,854	$	3,213

Liquidity and Capital Resources

Sources and Uses of Cash for the Nine Months Ended September 30, 2019 and 2018

Net cash provided by operating activities was $41.6 million in 2019 compared to $39.3 million in 2018. The $2.3 million increase was primarily due to improved operating results and higher bookings for future travel.

Net cash used in investing activities was $76.7 million in 2019 compared to $45.5 million in 2018. The $31.2 million increase was due to an increase in purchases of property and equipment primarily related to the spend on the two new polar ice-class vessels in 2019.

Net cash provided by financing activities was $25.1 million in 2019 compared to $17.0 million in 2018. The $8.1 million increase in cash provided was primarily due to the borrowing under the Second Export Credit Agreement for our second ice-class vessel, the National Geographic Resolution, along with lower deferred financing costs and stock and warrant repurchases in 2019, compared to the 2018. 2018 included the refinancing of our credit facility, which was partially offset by the $170.6 million repayment of the previous senior debt.

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Funding Sources

Debt Facilities 

Credit Facility

Our Third Amended and Restated Credit Agreement (the “Amended Credit Agreement”), provides a $200.0 million senior secured first lien term loan facility (the “Term Facility”), maturing March 2025, and a $45.0 million senior secured incremental revolving credit facility (the “Revolving Facility”), which includes a $5.0 million letter of credit sub-facility. The Term Facility bears interest at an adjusted Intercontinental Exchange Benchmark administration LIBOR plus a spread of 3.25%. In 2018, we entered into interest rate cap agreements to hedge a portion of our exposure to interest rate movements and manage our interest rate expense related to the Term Facility.

Senior Secured Credit Agreements

Our senior secured credit agreement (the “Export Credit Agreement”) makes available a loan in an aggregate principal amount not to exceed $107.7 million for the purpose of providing financing for up to 80% of the purchase price of our new polar ice class vessel, the National Geographic Endurance, targeted to be completed in the first quarter of 2020. If drawn upon, the loan will be made at the time of delivery of the vessel. The Export Credit Agreement, at our election, will bear interest either at a fixed interest rate effectively equal to 5.78% or a floating interest rate equal to three-month LIBOR plus a margin of 3.00% per annum. 

Our Second Export Credit Agreement makes available to us a loan in an aggregate principal amount not to exceed $122.8 million for the purpose of providing pre- and post- delivery financing for up to 80% of the purchase price of the National Geographic Resolution, scheduled to be delivered in the fourth quarter of 2021. The Second Export Credit Agreement bears a variable interest rate equal to three-month LIBOR plus a margin of 3.00% per annum, or 5.09% as of September 30, 2019. After completion of the vessel, the Second Export Credit Agreement, at our option, will bear an interest rate of either a fixed rate of 6.36% or a variable rate equal to three-month LIBOR plus a margin of 3.00% per annum. During September 2019, we drew approximately $30.5 million against the Second Export Credit Agreement for the contracted installment payment on the National Geographic Resolution. 

The Amended Credit Agreement, the Export Credit Agreement and the Second Export Credit Agreement contain financial and restrictive covenants. As of September 30, 2019, we were in compliance with our covenants.

Funding Needs

We generally rely on a combination of cash flows provided by operations and the incurrence of additional debt to fund obligations. A vast majority of guest ticket receipts are collected in advance of the applicable expedition date. These advance passenger receipts remain a current liability until the expedition date and the cash generated from these advance receipts is used interchangeably with cash on hand from other cash from operations. The cash received as advanced receipts can be used to fund operating expenses for the applicable future expeditions or otherwise, pay down credit facilities, make long-term investments or any other general corporate expenses. As of September 30, 2019 and December 31, 2018, we had a working capital deficit of $17.3 million and $9.3 million, respectively. As of September 30, 2019 and December 31, 2018, we had cash and cash equivalents, excluding restricted cash of $104.1 million and $113.4 million, respectively.

Our Board of Directors approved a stock and warrant repurchase plan (“Repurchase Plan”) in November 2015 and increased the repurchase plan to $35.0 million in November 2016. The Repurchase Plan authorizes us to purchase from time to time our outstanding common stock. Any shares purchased will be retired. The Repurchase Plan has no time deadline and will continue until otherwise modified or terminated at the sole discretion of our Board of Directors. These repurchases exclude shares repurchased to settle statutory employee tax withholding related to the exercise of stock options and vesting of stock awards. All repurchases were made using cash resources. During the nine months ended September 30, 2019, we repurchased 1,895 shares of common stock for approximately $23,000. We have cumulatively repurchased 866,701 shares of common stock for $8.2 million and 6,011,926 warrants for $14.7 million, since plan inception. The balance for the Repurchase Plan was $12.1 million as of September 30, 2019. 

In 2017, we executed a contract with Ulstein Verft to build a polar ice class vessel, the National Geographic Endurance, targeted to be competed in the first quarter of 2020, with a total purchase price of 1,066.0 million Norwegian Kroner. Subsequently, we exercised our right to make payments in United States Dollars, which resulted in a purchase price of $134.6 million, including hedging costs. The purchase price is subject to potential adjustments from contract specifications for variations in speed, deadweight, fuel consumption and delivery date. The first twenty percent of the purchase price was paid shortly after execution of the contract with the remaining eighty percent due upon delivery and acceptance of the vessel. The remaining purchase price of the vessel will be funded through a combination of cash available on our balance sheet, our Export Credit Agreement, our Revolving Facility and excess cash flows generated by our existing operations.

In February 2019, we entered into an agreement with Ulstein Verft to construct a second polar ice-class vessel, the National Geographic Resolution a sister ship of the National Geographic Endurance, with a total purchase price of 1,291.0 million Norwegian Kroner. During March 2019, we entered into foreign exchange forward contract hedges to lock in a purchase price of $153.5 million, including hedging costs. The purchase price is subject to potential adjustments from contract specifications for variations in speed, deadweight, fuel consumption and delivery date. The purchase price is due in installments, with the first 20% paid shortly after execution of the agreement, 50% to be paid over the duration of the build and the final 30% due upon delivery and acceptance of the vessel. The vessel is scheduled to be delivered in the fourth quarter of 2021. During September 2019, we drew approximately $30.5 million against the Second Export Credit Agreement for the contracted installment payment on the National Geographic Resolution. The remaining purchase price of the vessel will be funded through a combination of cash available on our balance sheet, our Second Export Credit Agreement, our Revolving Facility and excess cash flows generated by our existing operations. 

The 2019 agreement to construct the National Geographic Resolution and the borrowing through the Second Export Credit Agreement created material changes in our future obligations from those reported in our 2018 Annual Report. The additional related obligations as of September 30, 2019 are as follows: 

(In thousands)	Total		Current		1-2 years
National Geographic Resolution construction contract	$	92,851	$	30,645	$	62,206
Long-term debt		30,476		-		30,476

As of September 30, 2019, we had approximately $230.5 million in long-term debt obligations, including the current portion of long-term debt. We believe that our cash on hand, our revolving credit facility, our senior secured credit agreements and expected future operating cash inflows will be sufficient to fund operations, debt service requirements, capital expenditures for our newbuilds and other assets, acquisitions, and our Repurchase Plan. However, there can be no assurance that cash flows from operations will be available in the future to fund future obligations.

Off-Balance Sheet Arrangements

We entered into an Export Credit Agreement and a Second Export Credit Agreement as described above.

Critical Accounting Policies

For a detailed discussion of the Critical Accounting Policies, please see our 2018 Annual Report.

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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in our exposure to market risks from the information set forth in the “Quantitative and Qualitative Disclosures About Market Risk” sections contained in our 2018 Annual Report, with the exception of foreign currency denominated agreement for the construction of our polar ice class vessel and the foreign exchange forward contracts that we entered into and designated as a cash flow hedge for the purchase of the contracted polar ice class vessel scheduled to be delivered in the fourth quarter of 2021.

As of September 30, 2019, we had foreign currency forward contracts to hedge our exposure to foreign currency exchange rate risk related to our ship construction contracts denominated in Norwegian Kroner ("NOK"). As of September 30, 2019 we recorded in other comprehensive income a loss of approximately $6.4 million related to these foreign exchange derivatives. The strengthening of the NOK at September 30, 2019 by a hypothetical 10%, would result in an approximately $9.5 million gain being recorded in other comprehensive income. The weakening of the NOK at September 30, 2019 by a hypothetical 10%, would result in an approximately $7.7 million loss being recorded in other comprehensive income.

We are exposed to a market risk for interest rates related to our variable rate debt. We assess our market risks based on changes in interest rates utilizing a sensitivity analysis that measures the potential impact on earnings and cash flows based on a hypothetical 1.0% change (increase and decrease) in interest rates. For additional information regarding our long-term borrowings see Note 5 to our Condensed Consolidated Financial Statements. As of September 30, 2019, we had interest rate cap agreements to hedge a portion of our exposure to interest rate movements of our variable rate debt and to manage our interest expense. The notional amount of outstanding debt associated with interest rate cap agreements as of September 30, 2019 was $100.0 million. Based on our September 30, 2019 outstanding variable rate debt balance, a hypothetical 1.0% change in the one-month LIBOR interest rates would impact our annual interest expense by approximately $1.0 million.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the quarter ended September 30, 2019, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that as of September 30, 2019, our disclosure controls and procedures were effective.

Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the quarter covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Part 2. OTHER INFORMATION

Item 1. 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. We have protection and indemnity insurance that would be expected to cover any damages.

ITEM 1A. RISK FACTORS

We operate in a rapidly changing environment that involves a number of risks that could materially affect our business, financial condition or future results, some of which are beyond our control. The risks and uncertainties that we believe are most important for you to consider are discussed under the heading “Risk Factors” in the 2018 Annual Report filed on February 28, 2019.

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Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Recent Sales by the Company of Unregistered Securities

There were no unregistered sales of equity securities during the quarter ended September 30, 2019.

Repurchases of Securities

The Company’s Board of Directors approved a stock and warrant repurchase plan (“Repurchase Plan”) in November 2015 and increased the repurchase plan to $35.0 million in November 2016. The Repurchase Plan authorizes the Company to purchase from time to time the Company’s outstanding common stock. Any shares purchased will be 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. During the three months ended September 30, 2019, no shares were repurchased. We have cumulatively repurchased 866,701 shares of common stock for $8.2 million and 6,011,926 warrants for $14.7 million, since plan inception. The balance for the Repurchase Plan was $12.1 million as of September 30, 2019.

The following table represents information with respect to shares of common stock withheld from vesting of stock-based compensation awards for employee income taxes, for the periods indicated:

Period	Total number of shares purchased		Average price paid per share		Dollar value of shares purchased as part of publicly announced plans or programs		Maximum dollar value of warrants and shares that may be purchased under approved plans or programs
July 1 through July 30, 2019 (a)		185	$	17.93	$	-	$	12,102,046
August 1 through August 31, 2019 (a)		144		18.80		-		12,102,046
September 1 through September 30, 2019 (a)		4,897		18.33		-		12,102,046
Total		5,226			$	-

 __________

^(a) Amount relates to shares withheld from vesting’s of stock-based compensation awards for employee income tax withholding.

Item 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

Item 5. Other information

Not applicable

29

Item 6. exhibits

Number	Description	Included	Form	Filing Date
31.1	Certification of Chief Executive Officer of Lindblad Expeditions Holdings, Inc. pursuant to Rule 13a-14(a) or Rule 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended.	Herewith
31.2	Certification of Chief Financial Officer of Lindblad Expeditions Holdings, Inc. pursuant to Rule 13a-14(a) or Rule 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended.	Herewith
32.1	Certification of Chief Executive Officer of Lindblad Expeditions Holdings, Inc. pursuant to Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Herewith
32.2	Certification of Chief Financial Officer of Lindblad Expeditions Holdings, Inc. pursuant to Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Herewith
101.INS	XBRL Instance Document	Herewith
101.SCH	XBRL Taxonomy extension schema document	Herewith
101.CAL	XBRL Taxonomy extension calculation link base document	Herewith
101.LAB	XBRL Taxonomy extension label link base document	Herewith
101.PRE	XBRL Taxonomy extension presentation link base document	Herewith
101.DEF	XBRL Taxonomy Extension Definition Link base	Herewith

30

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on October 30, 2019.

LINDBLAD EXPEDITIONS HOLDINGS, INC.
(Registrant)
By	/s/ Sven-Olof Lindblad
	Sven-Olof Lindblad
	Chief Executive Officer and President

31

EX-31.1

Exhibit 31.1

Certification

I, Sven-Olof Lindblad, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Lindblad Expeditions Holdings, Inc. (the “Registrant”);
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
4.	The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as identified in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
5.	The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: October 30, 2019

/s/ Sven-Olof Lindblad

Sven-Olof Lindblad

Chief Executive Officer and President

EX-31.2

Exhibit 31.2

Certification

I, Craig I. Felenstein, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Lindblad Expeditions Holdings, Inc. (the “Registrant”);
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
4.	The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as identified in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
5.	The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: October 30, 2019

/s/ Craig I. Felenstein

Craig I. Felenstein

Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of CEO Pursuant To

18 U.S.C. Section 1350,

As Adopted Pursuant To

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q for the period ended September 30, 2019 of Lindblad Expeditions Holdings, Inc., a Delaware corporation (the “Company”), as filed with the Securities and Exchange commission on the date hereof (the “Report”), I, Sven-Olof Lindblad, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, based on my knowledge:

1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: October 30, 2019
	/s/ Sven-Olof Lindblad
	Sven-Olof Lindblad
	Chief Executive Officer and President

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

Certification of CFO Pursuant To

18 U.S.C. Section 1350,

As Adopted Pursuant To

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q for the period ended September 30, 2019 of Lindblad Expeditions Holdings, Inc., a Delaware corporation (the “Company”), as filed with the Securities and Exchange commission on the date hereof (the “Report”), I, Craig I. Felenstein, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, based on my knowledge:

1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: October 30, 2019
	/s/ Craig I. Felenstein
	Craig I. Felenstein
	Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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Note 11 - Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Shcedule of Future Minimum Payments for Charter Commitments [Table Text Block]

For the years ended December 31,	Amount
(In thousands)	(unaudited)
Remainder of 2019	$	3,223
2020		12,472
2021		7,280
2022		1,850
Total	$	24,825

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Note 3 - Revenues (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Contract with Customer, Asset and Liability [Table Text Block]

	Contract Liabilities
(In thousands)	(unaudited)
Balance as of January 1, 2019	$	70,903
Recognized in tour revenues during the period		(204,935	)
Additional contract liabilities in period		192,864
Balance as of September 30, 2019	$	58,832

Disaggregation of Revenue [Table Text Block]

	For the three months ended September 30,				For the nine months ended September 30,
	2019		2018		2019		2018
(In thousands)	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Guest ticket revenues	$	94,100	$	80,265	$	244,171	$	218,010
Other tour revenue		6,883		6,977		23,123		21,115
Tour revenues	$	100,983	$	87,242	$	267,294	$	239,125

XML

Note 6 - Financial Instruments and Fair Value Measurements (Details Textual) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Gain (Loss) from Components Excluded from Assessment of Cash Flow Hedge Effectiveness, Net, Total			$ 0
Cash Flow Hedge Gain (Loss) to be Reclassified within Twelve Months			2,200
Foreign Currency Transaction Gain (Loss), before Tax, Total	$ (2,338)	$ 163	(1,181)	$ (1,430)
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification, after Tax	(7,393)	$ 157	(8,654)	$ 230
Foreign Exchange Forward [Member] | AOCI Attributable to Parent [Member]
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification, after Tax	(5,500)		(6,400)
Reclassification out of Accumulated Other Comprehensive Income [Member] | Foreign Exchange Forward [Member] | Designated as Hedging Instrument [Member]
Foreign Currency Transaction Gain (Loss), before Tax, Total	(1,600)		(1,600)
Reclassification out of Accumulated Other Comprehensive Income [Member] | Foreign Exchange Forward [Member] | Not Designated as Hedging Instrument [Member]
Foreign Currency Transaction Gain (Loss), before Tax, Total	$ (700)		$ (400)

XML

Note 7 - Stockholders' Equity (Details Textual) - USD ($)		3 Months Ended		9 Months Ended		35 Months Ended
	Jul. 17, 2019	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Nov. 30, 2016
Stock Repurchased During Period, Value				$ 23,000	$ 854,000
Class of Warrant or Right, Exercised				27,311
Class of Warrant or Right, Outstanding		0		0		0
Temporary Equity, Dividends, Adjustment		$ 2,654,000		$ 2,654,000
Warrant Exchange [Member]
Warrant Exchange, Common Stock to be Received	0.385
Class of Warrant or Right, Outstanding	9,935,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights	3,824,959
Temporary Equity, Dividends, Adjustment	$ 2,700,000
Warrants Exchanged in Consent Solicitation [Member]
Non Warrant Exchange, Common Stock to be Received	0.36575
Class of Warrant or Right, Outstanding	125,763
Class of Warrant or Right, Number of Securities Called by Warrants or Rights	45,981
Common Stock [Member]
Stock Repurchased During Period, Shares				1,895	9,030
Stock Repurchased During Period, Value
Stock and Warrant Repurchase Plan [Member]
Stock Repurchase Program, Number of Shares Authorized to be Repurchased							35,000,000
Warrants Repurchased During Period						6,011,926
Warrants Repurchased During Period, Value						$ 14,700,000
Stock Repurchase Program, Remaining Authorized Repurchase Amount		$ 12,100,000		$ 12,100,000		$ 12,100,000
Stock and Warrant Repurchase Plan [Member] | Common Stock [Member]
Warrants Repurchased During Period				1,895
Warrants Repurchased During Period, Value				$ 23,000
Stock Repurchased During Period, Shares						866,701
Stock Repurchased During Period, Value						$ 8,200,000

XML

Note 12 - Segment Information - Segment Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Tour revenues	$ 100,983	$ 87,242	$ 267,294	$ 239,125
Tour revenues, change	$ 13,741		$ 28,169
Tour revenues, percentage change	16.00%		12.00%
Operating income	$ 15,659	10,281	$ 34,145	28,860
Operating income, change	$ 5,378		$ 5,285
Operating income, percentage change	52.00%		18.00%
Depreciation and amortization	$ 6,233	5,024	$ 18,603	15,062
Total depreciation and amortization, change	$ 1,209		$ 3,541
Total depreciation and amortization, percentage change	24.00%		24.00%
Assets	$ 529,613		$ 529,613		$ 473,409
Intangibles, net	6,791		6,791		7,975
Goodwill	22,105		22,105		22,105
Lindblad Segment [Member]
Tour revenues	76,581	64,507	217,549	194,516
Tour revenues, change	$ 12,074		$ 23,033
Tour revenues, percentage change	19.00%		12.00%
Operating income	$ 12,570	8,209	$ 31,514	26,755
Operating income, change	$ 4,361		$ 4,759
Operating income, percentage change	53.00%		18.00%
Depreciation and amortization	$ 5,812	4,645	$ 17,380	13,954
Total depreciation and amortization, change	$ 1,167		$ 3,426
Total depreciation and amortization, percentage change	25.00%		25.00%
Assets	$ 453,176		$ 453,176		409,622
Intangibles, net	3,506		3,506		4,050
Goodwill
Natural Habitat Segment [Member]
Tour revenues	24,402	22,735	49,745	44,609
Tour revenues, change	$ 1,667		$ 5,136
Tour revenues, percentage change	7.00%		12.00%
Operating income	$ 3,089	2,072	$ 2,631	2,105
Operating income, change	$ 1,017		$ 526
Operating income, percentage change	49.00%		25.00%
Depreciation and amortization	$ 421	$ 379	$ 1,223	$ 1,108
Total depreciation and amortization, change	$ 42		$ 115
Total depreciation and amortization, percentage change	11.00%		10.00%
Assets	$ 76,437		$ 76,437		63,787
Intangibles, net	3,285		3,285		3,925
Goodwill	$ 22,105		$ 22,105		$ 22,105

XML

Note 2 - Earnings Per Share (Details Textual) - shares shares in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Restricted Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	0.1	0.2	0.1	0.2

XML

Note 4 - Financial Statement Details - Reconciliation of Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018	Dec. 31, 2017
Cash and cash equivalents	$ 104,135	$ 113,396	$ 105,688
Restricted cash	7,995	8,755	8,593
Total cash, cash equivalents and restricted cash as presented in the statement of cash flows	$ 112,130	$ 122,151	$ 114,281	$ 103,500

XML

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Total
Balance (in shares) at Dec. 31, 2017	45,427,030
Balance at Dec. 31, 2017	$ 5	$ 42,498	$ 63,819		$ 106,322
Stock-based compensation		3,256			3,256
Issuance of stock for equity compensation plans, net (in shares)	397,425
Issuance of stock for equity compensation plans, net		(4,509)			(4,509)
Other comprehensive income, net				230	230
Net income attributable to Lindblad Expeditions Holdings, Inc			15,998		15,998
Repurchase of shares and warrants (in shares)	(9,030)
Repurchase of shares and warrants		(854)			(854)
Stock-based compensation (in shares)
Balance (in shares) at Sep. 30, 2018	45,815,425
Balance at Sep. 30, 2018	$ 5	40,391	79,817	230	120,443
Balance (in shares) at Jun. 30, 2018	45,775,648
Balance at Jun. 30, 2018	$ 5	39,172	74,750	73	114,000
Stock-based compensation		1,271			1,271
Issuance of stock for equity compensation plans, net (in shares)	39,777
Issuance of stock for equity compensation plans, net		(52)			(52)
Other comprehensive income, net				157	157
Net income attributable to Lindblad Expeditions Holdings, Inc			5,067		5,067
Balance (in shares) at Sep. 30, 2018	45,815,425
Balance at Sep. 30, 2018	$ 5	40,391	79,817	230	120,443
Balance (in shares) at Dec. 31, 2018	45,814,925
Balance at Dec. 31, 2018	$ 5	41,539	75,171	(671)	116,044
Stock-based compensation		2,671			2,671
Issuance of stock for equity compensation plans, net (in shares)	4,786
Issuance of stock for equity compensation plans, net		(1,778)			(1,778)
Warrants (in shares)	3,898,251
Warrants		2,968	(2,654)		314
Other comprehensive income, net				(7,030)	(7,030)
Net income attributable to Lindblad Expeditions Holdings, Inc			17,822		17,822
Repurchase of shares and warrants (in shares)	(1,895)
Repurchase of shares and warrants		(23)			(23)
Balance (in shares) at Sep. 30, 2019	49,716,067
Balance at Sep. 30, 2019	$ 5	45,377	90,339	(7,701)	128,020
Balance (in shares) at Jun. 30, 2019	45,801,025
Balance at Jun. 30, 2019	$ 5	41,617	90,832	(1,932)	130,522
Stock-based compensation		917			917
Issuance of stock for equity compensation plans, net (in shares)	19,391
Issuance of stock for equity compensation plans, net		(95)			(95)
Warrants (in shares)	3,895,651
Warrants		2,938	(2,654)		284
Other comprehensive income, net				(5,769)	(5,769)
Net income attributable to Lindblad Expeditions Holdings, Inc			2,161		2,161
Balance (in shares) at Sep. 30, 2019	49,716,067
Balance at Sep. 30, 2019	$ 5	$ 45,377	$ 90,339	$ (7,701)	$ 128,020

XML

Note 12 - Segment Information

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

NOTE

12

 – SEGMENT INFORMATION

The Company is primarily a specialty cruise and adventure expedition operator with operations in

two

segments, Lindblad and Natural Habitat. The Company evaluates the performance of the business based largely on the results of its operating segments. The chief operating decision maker 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 segments. While both segments have similar characteristics, the

two

operating and reporting segments cannot be aggregated because they fail to meet the requirements for aggregation.

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

three

and

nine

months ended

September 

30,

2019

and

2018,

operating results were as follows:

	For the three months ended September 30,									For the nine months ended September 30,
	2019		2018		Change		%			2019		2018		Change		%
(In thousands)	(unaudited)		(unaudited)							(unaudited)		(unaudited)
Tour revenues:
Lindblad	$	76,581	$	64,507	$	12,074		19	%	$	217,549	$	194,516	$	23,033		12	%
Natural Habitat		24,402		22,735		1,667		7	%		49,745		44,609		5,136		12	%
Total tour revenues	$	100,983	$	87,242	$	13,741		16	%	$	267,294	$	239,125	$	28,169		12	%
Operating Income:
Lindblad	$	12,570	$	8,209	$	4,361		53	%	$	31,514	$	26,755	$	4,759		18	%
Natural Habitat		3,089		2,072		1,017		49	%		2,631		2,105		526		25	%
Total operating income	$	15,659	$	10,281	$	5,378		52	%	$	34,145	$	28,860	$	5,285		18	%

Depreciation and amortization are included in segment operating income as shown below:

	For the three months ended September 30,									For the nine months ended September 30,
	2019		2018		Change		%			2019		2018		Change		%
(In thousands)	(unaudited)		(unaudited)							(unaudited)		(unaudited)
Depreciation and amortization:
Lindblad	$	5,812	$	4,645	$	1,167		25	%	$	17,380	$	13,954	$	3,426		25	%
Natural Habitat		421		379		42		11	%		1,223		1,108		115		10	%
Total depreciation and amortization	$	6,233	$	5,024	$	1,209		24	%	$	18,603	$	15,062	$	3,541		24	%

The following table presents the total assets, intangibles, net and goodwill by segment:

	As of September 30, 2019		As of December 31, 2018
(In thousands)	(unaudited)
Total Assets:
Lindblad	$	453,176	$	409,622
Natural Habitat		76,437		63,787
Total assets	$	529,613	$	473,409
Intangibles, net:
Lindblad	$	3,506	$	4,050
Natural Habitat		3,285		3,925
Total intangibles, net	$	6,791	$	7,975
Goodwill:
Lindblad	$	-	$	-
Natural Habitat		22,105		22,105
Total goodwill	$	22,105	$	22,105

For the

three

and

nine

months ended

September 30, 2019

there were

$1.3

million and

$3.8

million in intercompany tour revenues between the Lindblad and Natural Habitat segments eliminated in consolidation, respectively. For the

three

and

nine

months ended

September 30, 

2018

there were

$1.2

million and

$2.6

million in intercompany tour revenues between the Lindblad and Natural Habitat segments eliminated in consolidation, respectively.

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Current Assets:
Cash and cash equivalents	$ 104,135	$ 113,396
Restricted cash	7,995	8,755
Marine operating supplies	5,479	5,165
Inventories	1,910	1,604
Prepaid expenses and other current assets	24,044	21,263
Total current assets	143,563	150,183
Property and equipment, net	345,280	285,979
Goodwill	22,105	22,105
Intangibles, net	6,791	7,975
Right-to-use lease assets	6,357
Other long-term assets	5,517	7,167
Total assets	529,613	473,409
Current Liabilities:
Unearned passenger revenues	124,605	123,489
Accounts payable and accrued expenses	32,914	33,944
Lease liabilities - current	1,302
Long-term debt - current	2,000	2,000
Total current liabilities	160,821	159,433
Long-term debt, less current portion	216,117	188,089
Deferred tax liabilities	6,964	2,787
Lease liabilities	5,272
Other long-term liabilities	5,083	554
Total liabilities	394,257	350,863
COMMITMENTS AND CONTINGENCIES
REDEEMABLE NONCONTROLLING INTEREST	7,336	6,502
STOCKHOLDERS’ EQUITY
Preferred stock, $0.0001 par value, 1,000,000 shares authorized; no shares issued and outstanding
Common stock, $0.0001 par value, 200,000,000 shares authorized; 49,716,067 and 45,814,925 issued, 49,625,043 and 45,442,728 outstanding as of September 30, 2019 and December 31, 2018, respectively	5	5
Additional paid-in capital	45,377	41,539
Retained earnings	90,339	75,171
Accumulated other comprehensive income	(7,701)	(671)
Total stockholders' equity	128,020	116,044
Total liabilities, stockholders' equity and redeemable noncontrolling interest	$ 529,613	$ 473,409

XML

Note 8 - Stock-based Compensation

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

NOTE

8

– STOCK-BASED COMPENSATION

The Company is authorized to issue up to

2.5

million shares of common stock under the

2015

Long-Term Incentive Plan to key employees, and as of

September 30, 2019,

approximately

1.3

million shares were available to be granted.

As of

September 30, 2019,

and

December 31, 2018,

options to purchase an aggregate of

200,000

and

220,000

shares, respectively, of the Company’s common stock, with a weighted average exercise price of

$9.47

and

$9.63,

respectively, were outstanding. As of

September 30, 2019,

150,000

 options were exercisable.

The Company recorded stock-based compensation expense of 

$0.9

million and 

$2.7

million during the

three

and

nine

months ended 

September 30, 2019,

respectively, and

$1.3

 million and

$3.3

million during the

three

and

nine

months ended

September 30, 2018,

respectively.

2019

Long-Term Incentive Compensation

During the

nine

 months ended

September 30, 2019,

the Company granted

109,357

 restricted stock units with a weighted average grant price of

$15.30.

The restricted stock units will vest in equal installments on each of the

first

three

anniversaries of the grant date, subject to the recipient’s continued employment or service with the Company on the applicable vesting date.

During the

nine

months ended

September 30, 2019,

the Company granted

23,706

restricted shares with a weighted average grant price of

$18.98.

The restricted shares will vest on the

first

anniversary of the grant date, subject to the recipient's continued service or employment with the Company on the applicable vesting date. 

During the

nine

 months ended

September 30, 2019,

the Company awarded

61,631

 targeted performance stock units ("PSUs") with a weighted average grant price of

$15.25.

The PSUs are performance-vesting equity incentive awards that

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

0%

-

200%

of the number of PSUs granted, depending on performance. The number of shares were determined based upon the closing price of the Company's common stock on the date of the award.

XML

Note 4 - Financial Statement Details

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Condensed Financial Statements [Text Block]

NOTE

4

– FINANCIAL STATEMENT DETAILS

The following is a reconciliation of cash, cash equivalents and restricted cash to the statement of cash flows:

	For the nine months ended September 30,
(In thousands)	2019		2018
	(unaudited)		(unaudited)
Cash and cash equivalents	$	104,135	$	105,688
Restricted cash		7,995		8,593
Total cash, cash equivalents and restricted cash as presented in the statement of cash flows	$	112,130	$	114,281

Restricted cash consists of the following:

(In thousands)		As of September 30, 2019		As of December 31, 2018
	(unaudited)
Federal Maritime Commission escrow	$	6,476	$	5,823
Certificates of deposit and other restricted securities		1,519		1,402
Credit card processor reserves		-		1,530
Total restricted cash	$	7,995	$	8,755

Prepaid expenses and other current assets consist of the following:

(In thousands)	As of September 30, 2019		As of December 31, 2018
	(unaudited)
Prepaid tour expenses	$	13,358	$	10,617
Prepaid air expense		3,386		2,973
Prepaid corporate insurance		2,358		1,158
Prepaid client insurance		2,223		2,436
Prepaid marketing, commissions and other expenses		2,064		2,622
Prepaid port agent fees		382		1,433
Prepaid income taxes		273		24
Total prepaid expenses	$	24,044	$	21,263

Accounts payable and accrued expenses consist of the following:

(In thousands)	As of September 30, 2019		As of December 31, 2018
	(unaudited)
Accrued other expense	$	9,849	$	11,464
Accounts payable		6,122		9,326
Bonus compensation liability		4,875		5,195
Employee liability		3,505		2,943
Foreign currency forward contract liability		3,048		387
Royalty payable		1,859		1,005
Income tax liabilities		1,352		576
Travel certificate liability		977		1,088
Refunds and commissions payable		850		1,533
Accrued travel insurance expense		477		427
Total accounts payable and accrued expenses	$	32,914	$	33,944

XML

Note 12 - Segment Information (Details Textual) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)
Number of Operating Segments			2
Number of Reportable Segments			2
Revenue from Contract with Customer, Including Assessed Tax	$ 100,983	$ 87,242	$ 267,294	$ 239,125
Intersegment Eliminations [Member]
Revenue from Contract with Customer, Including Assessed Tax	$ 1,300	$ 1,200	$ 3,800	$ 2,600

XML

Note 2 - Earnings Per Share - Schedule of Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Net income attributable to Lindblad Expeditions Holdings, Inc	$ 2,161	$ 5,067	$ 17,822	$ 15,998
Non-cash deemed dividend to warrant holders	2,654		2,654
Net (loss) income available to common stockholders	$ (493)	$ 5,067	$ 15,168	$ 15,998
Weighted average shares outstanding
Total weighted average shares outstanding, basic (in shares)	48,863,506	45,423,127	46,704,634	45,356,438
Dilutive potential common shares (in shares)		2,267,268	2,386,736	607,231
Total weighted average shares outstanding, diluted (in shares)	48,863,506	47,690,395	49,091,370	45,963,669
Net (loss) income per share available to common stockholders
Basic (in dollars per share)	$ (0.01)	$ 0.11	$ 0.32	$ 0.35
Diluted (in dollars per share)	$ (0.01)	$ 0.11	$ 0.31	$ 0.35

XML

Note 4 - Financial Statement Details - Restricted Cash and Marketable Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018
Total restricted cash and marketable securities	$ 7,995	$ 8,755	$ 8,593
Federal Maritime Commission Escrow [Member]
Total restricted cash and marketable securities	6,476	5,823
Certificates of Deposit and Other Restricted Securities [Member]
Total restricted cash and marketable securities	1,519	1,402
Credit Card Processor Reserves [Member]
Total restricted cash and marketable securities		$ 1,530

XML

Note 7 - Stockholders' Equity

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

NOTE

7

– STOCKHOLDERS’ EQUITY

Stock and Warrant Repurchase Plan

The Company’s Board of Directors approved a stock and warrant repurchase plan (“Repurchase Plan”) in

November 2015

and increased the repurchase plan to

$35.0

million in

November 2016.

The Repurchase Plan authorizes the Company to purchase, from time to time, the Company’s outstanding common stock. Any shares purchased will be 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. These repurchases exclude shares repurchased to settle statutory employee tax withholding related to the exercise of stock options and vesting of stock awards. All repurchases were made using cash resources. During the 

nine

months ended

September 30, 2019,

the Company repurchased

1,895

 shares of common stock for approximately

$23,000.

The Company has cumulatively repurchased

866,701

 shares of common stock for

$8.2

 million and

6,011,926

warrants for

$14.7

million, since plan inception. The available balance for the Repurchase Plan was

$12.1

 million as of

September 30, 2019.

Warrants

During the

nine

months ended

September 30, 2019,

27,311

 warrants to purchase the Company's common stock were exercised for cash.  

On

June 14, 2019,

the Company launched an offer to exchange all warrants to purchase common stock of the Company (the "Warrant Exchange"). The Warrant Exchange provided (i) an offer to each holder of the Company's outstanding warrants to receive

0.385

 shares of common stock in exchange for each warrant tendered by the holder and exchanged pursuant to the Warrant Exchange, and (ii) the solicitation of consents (the "Consent Solicitation") from holders of the warrants to amend the warrant agreement that governs all of the warrants to permit the Company to require that each outstanding warrant

not

tendered in the Warrant Exchange be converted into

0.36575

shares of common stock. The Warrant Exchange and Consent Solicitation closed on

July 17, 2019,

with

9,935,000

warrants tendered via the Warrant Exchange for an aggregate of

3,824,959

 shares of Company common stock, and approval was received for the Consent Solicitation. The remaining

125,763

warrants

not

 tendered via the Warrant Exchange were converted, per the Consent Solicitation, into

45,981

shares of Company common stock. Following the Warrant Exchange and Consent Solicitation,

no

warrants remain outstanding. 

As the fair value of the warrants tendered in the Warrant Exchange offer was less than the fair value of the common stock issued, the Company recorded a non-cash deemed dividend of approximately

$2.7

 million for the incremental fair value provided to the warrant holders. The fair value of the Company's common stock and warrants were determined using the closing market prices on

August 17, 2019,

Level

1

fair value inputs.

XML

Note 3 - Revenues

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

NOTE

3

– REVENUES

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 air transportation to and from the ships. Guest deposits represent unearned revenues and are reported as unearned passenger revenues in the condensed consolidated balance sheets when received and are subsequently recognized as tour revenue over the duration of the expedition. Accounting Standards Codification,

Revenue from Contracts with Customers

(Topic

606

) defines a “contract liability” as an entity’s obligation to transfer goods or services to a customer for which the entity has received consideration from the customer. 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. 

 The change in contract liabilities within unearned passenger revenues presented in the Company's condensed consolidated balance sheets are as follows:

	Contract Liabilities
(In thousands)	(unaudited)
Balance as of January 1, 2019	$	70,903
Recognized in tour revenues during the period		(204,935	)
Additional contract liabilities in period		192,864
Balance as of September 30, 2019	$	58,832

The following table disaggregates total revenues by revenue type:

	For the three months ended September 30,				For the nine months ended September 30,
	2019		2018		2019		2018
(In thousands)	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Guest ticket revenues	$	94,100	$	80,265	$	244,171	$	218,010
Other tour revenue		6,883		6,977		23,123		21,115
Tour revenues	$	100,983	$	87,242	$	267,294	$	239,125

XML

Note 11 - Commitments and Contingencies

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

NOTE

11

 – COMMITMENTS AND CONTINGENCIES

Fleet Expansion

In

2017,

the Company entered into an agreement with Ulstein Verft to construct a polar ice class vessel, the

National Geographic Endurance,

with a total purchase price of

1,066.0

million NOK. Subsequently, the Company exercised its right to make payments in United States Dollars, which resulted in a purchase price of

$134.6

million, including hedging costs. The purchase price is subject to potential adjustments from contract specifications for variations in speed, dead weight, fuel consumption and delivery date, and is due in installments. The

first

twenty

percent of the purchase price was paid shortly after execution of the agreement with the remaining

eighty

percent due upon delivery and acceptance of the vessel. The vessel is targeted to be delivered in the

first

 quarter of

2020.

During

February 2019,

the Company entered into an agreement with Ulstein Verft, to construct a

second

polar ice class vessel, the 

National Geographic Resolution, 

a sister ship of the

National Geographic Endurance

, with a total purchase price of

1,291.0

 million NOK. The purchase price is subject to potential adjustments from contract specifications for variations in speed, dead weight, fuel consumption and delivery date. The purchase price is due in installments, with the

first

20%

 paid shortly after execution of the agreement,

50%

 to be paid over the duration of the build and the final

30%

due upon delivery and acceptance of the vessel. The vessel is scheduled to be delivered in the

fourth

quarter of 

2021.

During

March 2019,

the Company entered into foreign exchange forward contracts to lock in

a purchase price

 for the

National Geographic Resolution

of

$153.5

 million, subject to potential contract specification adjustments.

Royalty Agreement – National Geographic

The Company is party to an alliance and license agreement with National Geographic, which allows the Company to use the National Geographic name and logo. In return for these rights, the Company is charged a royalty fee. The royalty fee is included within selling and marketing expense on the accompanying condensed consolidated statements of income. The amount is calculated based upon a percentage of certain ticket revenues less travel agent commission, including the revenues received from certain cancellation fees and any certain revenues received from the sale of pre- and post-expedition extensions. A pre- and post-expedition extension occurs when a guest extends his or her trip with pre- or post-voyage hotel nights. Royalty expense was

$1.7

 million and

$4.8

 million, for the

three

and

nine

months ended

September 

30,

2019,

respectively, and 

$1.2

million and

$3.3

million, for the

three

and

nine

months ended

September 

30,

2018,

respectively.

The royalty balance outstanding to National Geographic as of

September 

30,

2019

and

December 31, 2018

was

$1.7

 million and

$1.0

million, respectively, and are included in accounts payable and accrued expenses on the accompanying condensed consolidated balance sheets.

Royalty Agreement – World Wildlife Fund

Natural Habitat has a license agreement with WWF, 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 on the accompanying condensed consolidated statements of income. This royalty fee expense was 

$0.3

 million and

$0.7

 million for the

three

and

nine

months ended

September 

30,

2019,

respectively, and

$0.3

million and

$0.6

million for the

three

and

nine

months ended

September 30, 2018,

respectively.

Charter Commitments

From time to time, the Company enters into agreements to charter vessels onto which it holds its tours and expeditions. Future minimum payments on its charter agreements as of

September 30, 2019

are as follows:

For the years ended December 31,	Amount
(In thousands)	(unaudited)
Remainder of 2019	$	3,223
2020		12,472
2021		7,280
2022		1,850
Total	$	24,825

Legal Proceedings

From time to time, the Company is party to litigation and regulatory matters and claims. The Company expenses legal fees as incurred. The Company records a provision for contingent losses when it is both probable that a liability will be incurred and the amount or range of the loss can be reasonably estimated. The results of complex proceedings and reviews are difficult to predict and the Company’s view of these matters

may

change in the future as events related thereto unfold. An unfavorable outcome to any legal or regulatory matter, if material, could have an adverse effect on the Company’s operations or its financial position, liquidity or results of operations.

XML

Condensed Consolidated Statements of Cash Flows (Unaudited)) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Cash Flows From Operating Activities
Net income	$ 18,656	$ 16,105
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	18,603	15,062
Amortization of National Geographic fee	2,181	2,181
Amortization of deferred financing costs and other, net	1,392	1,477
Stock-based compensation	2,671	3,256
Deferred income taxes	4,177	2,653
Loss on foreign currency	1,181	1,430
Write-off of unamortized issuance costs related to debt refinancing		359
Loss on write-off of assets		129
Changes in operating assets and liabilities
Marine operating supplies and inventories	(620)	169
Prepaid expenses and other current assets	(2,780)	(1,806)
Right-to-use lease assets	(6,357)
Lease liabilities	6,574
Unearned passenger revenues	1,116	449
Other long-term assets	(7,561)	(1,981)
Other long-term liabilities	4,530	22
Accounts payable and accrued expenses	(2,213)	(247)
Net cash provided by operating activities	41,550	39,258
Cash Flows From Investing Activities
Purchases of property and equipment	(76,720)	(45,510)
Net cash used in investing activities	(76,720)	(45,510)
Cash Flows From Financing Activities
Proceeds from long-term debt	30,476	200,000
Repayments of long-term debt	(1,500)	(171,125)
Payment of deferred financing costs	(2,340)	(6,486)
Repurchase under stock-based compensation plans and related tax impacts	(1,778)	(4,509)
Warrants exercised	314
Repurchase of warrants and common stock	(23)	(854)
Net cash provided by financing activities	25,149	17,026
Effect of exchange rate changes on cash		7
Net (decrease) increase in cash, cash equivalents and restricted cash	(10,021)	10,781
Cash, cash equivalents and restricted cash at beginning of period	122,151	103,500
Cash, cash equivalents and restricted cash at end of period	112,130	114,281
Supplemental disclosures of cash flow information:
Interest	10,651	9,952
Income taxes	1,893	468
Non-cash investing and financing activities:
Additional paid-in capital exercise proceeds of option shares	225	1,682
Additional paid-in capital exchange proceeds used for option shares	(225)	(1,682)
Non-cash deemed dividend to warrant holders	$ 2,654

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	Sep. 30, 2019	Dec. 31, 2018
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized (in shares)	1,000,000	1,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanidng (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	200,000,000	200,000,000
Common stock, shares issued (in shares)	49,716,067	45,814,925
Common stock, shares outstanding (in shares)	49,625,043	45,442,728

XML

Note 6 - Financial Instruments and Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Schedule of Notional Amounts of Outstanding Derivative Positions [Table Text Block]

(in thousands)	Absolute Notional Value
Interest rate caps	$	100,000
Foreign exchange contracts		130,744

Schedule of Derivative Instruments [Table Text Block]

	As of September 30, 2019				As of December 31, 2018
	(unaudited)
(in thousands)	Fair Value, Asset Derivatives		Fair Value, Liability Derivatives		Fair Value, Asset Derivatives		Fair Value, Liability Derivatives
Derivative instruments designated as cash flow hedging instruments:
Foreign exchange forward  (a)	$	-	$	7,157	$	-	$	-
Interest rate cap  (b)		123		-		710		-
Total	$	123	$	7,157	$	710	$	-
Derivative instruments not designated as cash flow hedging instruments:
Foreign exchange forward  (c)	$	-	$	886	$	-	$	1,328
Total	$	-	$	886	$	-	$	1,328

Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) and Non-cash Flow Hedges Impacting the Income Statement [Table Text Block]

	Three Months Ended September 30,					Nine Months Ended September 30,
(In thousands)	2019			2018		2019			2018
	(unaudited)			(unaudited)		(unaudited)			(unaudited)
Derivative instruments designated as cash flow hedging instruments:
Foreign exchange forward contracts (a)	$	(7,094	)	$	-	$	(8,066	)	$	-
Interest rate caps (b)		(298	)		157		(587	)		230
Derivative instruments not designated as cash flow hedging instruments (c) :
Foreign exchange forward contracts		(715	)		163		442			(1,430	)
Total	$	(8,107	)	$	320	$	(8,211	)	$	(1,200	)

XML

Note 2 - Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	For the three months ended September 30,					For the nine months ended September 30,
(In thousands, except share and per share data)	2019			2018		2019		2018
	(unaudited)			(unaudited)		(unaudited)		(unaudited)
Net income attributable to Lindblad Expeditions Holdings, Inc	$	2,161		$	5,067	$	17,822	$	15,998
Non-cash deemed dividend to warrant holders		2,654			-		2,654		-
Net (loss) income available to common stockholders	$	(493	)	$	5,067	$	15,168	$	15,998
Weighted average shares outstanding:
Total weighted average shares outstanding, basic		48,863,506			45,423,127		46,704,634		45,356,438
Dilutive potential common shares		-			2,267,268		2,386,736		607,231
Total weighted average shares outstanding, diluted		48,863,506			47,690,395		49,091,370		45,963,669
Net (loss) income per share available to common stockholders
Basic	$	(0.01	)	$	0.11	$	0.32	$	0.35
Diluted	$	(0.01	)	$	0.11	$	0.31	$	0.35

XML

Note 6 - Financial Instruments and Fair Value Measurements - Derivative Instruments Notional Values (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Interest Rate Cap [Member]
Interest rate caps	$ 100,000
Foreign Exchange Contract [Member]
Interest rate caps	$ 130,744

XML

Note 8 - Stock-based Compensation (Details Textual) $ / shares in Units, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019 USD ($) $ / shares shares	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($) $ / shares shares	Sep. 30, 2018 USD ($)	Dec. 31, 2018 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance	200,000		200,000		220,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Ending Balance | $ / shares	$ 9.47		$ 9.47		$ 9.63
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number	150,000		150,000
Share-based Payment Arrangement, Expense | $	$ 0.9	$ 1.3	$ 2.7	$ 3.3
2015 Long-Term Incentive Compensation Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	2,500,000		2,500,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant	1,300,000		1,300,000
2019 Long-Term Incentive Compensation Plan [Member] | Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period			109,357
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $ / shares			$ 15.30
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period, Number of Installments	3		3
2019 Long-Term Incentive Compensation Plan [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period			23,706
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $ / shares			$ 18.98
2019 Long-Term Incentive Compensation Plan [Member] | Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period			61,631
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $ / shares			$ 15.25
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period			3 years
2019 Long-Term Incentive Compensation Plan [Member] | Performance Shares [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Earn out Percentage			0.00%
2019 Long-Term Incentive Compensation Plan [Member] | Performance Shares [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Earn out Percentage			200.00%

XML

Note 11 - Commitments and Contingencies (Details Textual) kr in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Mar. 31, 2019 USD ($)	Feb. 28, 2019 NOK (kr)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 NOK (kr)	Dec. 31, 2017 USD ($)
National Geographic [Member]
Royalty Expense	$ 1.7	$ 1.2	$ 4.8	$ 3.3
Accounts Payable and Other Accrued Liabilities, Current	1.7		1.7				$ 1.0
World Wildlife Fund [Member]
Royalty Expense	$ 0.3	$ 0.3	$ 0.7	$ 0.6
Class Vessel [Member] | Ulstein Verft [Member]
Vessel, Contract Price								kr 1,066	$ 134.6
Foreign Exchange Contract [Member] | Ulstein Verft [Member]
Vessel, Contract Price					$ 153.5	kr 1,291

XML

Note 2 - Earnings Per Share

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Earnings Per Share [Text Block]

NOTE

2

– EARNINGS PER SHARE

Earnings per Common Share

Earnings per common share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. 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 and previously outstanding warrants, using the treasury stock method. 

For the

three

and

nine

months ended

September 30, 2019

and

2018,

the Company calculated earnings per share as follows:

	For the three months ended September 30,					For the nine months ended September 30,
(In thousands, except share and per share data)	2019			2018		2019		2018
	(unaudited)			(unaudited)		(unaudited)		(unaudited)
Net income attributable to Lindblad Expeditions Holdings, Inc	$	2,161		$	5,067	$	17,822	$	15,998
Non-cash deemed dividend to warrant holders		2,654			-		2,654		-
Net (loss) income available to common stockholders	$	(493	)	$	5,067	$	15,168	$	15,998
Weighted average shares outstanding:
Total weighted average shares outstanding, basic		48,863,506			45,423,127		46,704,634		45,356,438
Dilutive potential common shares		-			2,267,268		2,386,736		607,231
Total weighted average shares outstanding, diluted		48,863,506			47,690,395		49,091,370		45,963,669
Net (loss) income per share available to common stockholders
Basic	$	(0.01	)	$	0.11	$	0.32	$	0.35
Diluted	$	(0.01	)	$	0.11	$	0.31	$	0.35

For the

three

months ended

September 30, 2019,

diluted weighted average shares outstanding equals basic weighted average shares outstanding as the Company incurred a net loss available to common stockholders. For the

nine

months ended

September 30, 2019,

0.1

 million restricted shares are excluded from dilutive potential common shares as performance conditions have

not

been met. For the

three

and

nine

months ended

September 30, 2018,

0.2

million restricted shares are excluded from dilutive potential common shares as performance conditions have

not

been met.

On

July 17, 2019,

the Company completed a consent solicitation and exchange offer relating to the Company’s previously outstanding warrants (see Note

7

 – Stockholders' Equity for more information). 

XML

Note 9 - Related Party Transactions

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

NOTE

9

 – RELATED PARTY TRANSACTIONS

The Company and National Geographic Society collaborate on exploration, research, technology and conservation in order to provide travel experiences and disseminate geographic knowledge around the globe. The Lindblad/National Geographic Society alliance is set forth in (i) an Alliance and License Agreement and (ii) a Tour Operator Agreement. The extension of the agreements, entered into

July 2015, 

between the Company and National Geographic Society was contingent on the execution by Mr. Lindblad, the Company's Chief Executive Officer, of an option agreement granting National Geographic Society the right to purchase from Mr. Lindblad, for a per share price of

$10.00

per share,

five

percent of the issued and outstanding shares of the Company’s common stock as of

July 8, 2015,

including all outstanding options, warrants or other derivative securities (excluding options granted under the

2015

Plan and shares issuable upon the exercise of warrants). During

March 2019,

National Geographic Society exercised its rights in full under the option agreement to acquire the shares, and in a cashless transaction acquired shares from Mr. Lindblad.

XML

Note 5 - Long-term Debt

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Debt Disclosure [Text Block]

NOTE

5

– LONG-TERM DEBT

	As of September 30, 2019									As of December 31, 2018
	(unaudited)
(In thousands)	Principal			Deferred Financing Costs, net			Balance			Principal			Deferred Financing Costs, net			Balance
Note payable	$	2,525		$	-		$	2,525		$	2,525		$	-		$	2,525
Credit Facility		197,500			(10,155	)		187,345			199,000			(11,436	)		187,564
Senior Secured Credit Agreement		30,476			(2,229	)		28,247			-			-			-
Total long-term debt		230,501			(12,384	)		218,117			201,525			(11,436	)		190,089
Less current portion		(2,000	)		-			(2,000	)		(2,000	)		-			(2,000	)
Total long-term debt, non-current	$	228,501		$	(12,384	)	$	216,117		$	199,525		$	(11,436	)	$	188,089

For the

three

and

nine

months ended

September 30, 2019,

deferred financing costs charged to interest expense was

$0.5

 million and

$1.4

million, respectively. For the

three

and

nine

months ended

September 30, 

2018,

deferred financing costs charged to interest expense was

$0.4

 million and

$1.5

 million, respectively.

Credit Facility

In

March 2018,

the Company entered into the Third Amended and Restated Credit Agreement (the “Amended Credit Agreement”), providing for a

$200.0

million senior secured

first

lien term loan facility (the “Term Facility”), maturing

March 2025,

and a

$45.0

million senior secured incremental revolving credit facility (the “Revolving Facility”), which includes a

$5.0

million letter of credit sub-facility. The Term Facility bears interest at an adjusted Intercontinental Exchange Benchmark administration LIBOR plus a spread of

3.250%,

for an aggregated rate of

5.266%

as of

September 30, 2019.

Borrowings under the Revolving Facility

may

be used for general corporate and working capital purposes and related fees and expenses. As of

September 30, 2019,

the Company had

no

borrowings under the Revolving Facility.

Senior Secured Credit Agreements

In

January 2018,

the Company entered into a senior secured credit agreement (the “Export Credit Agreement”) with Citibank, N.A., London Branch (“Citi”) and Eksportkreditt Norge AS (“EK” and together with Citi, the “Lenders”), to make available to the Company a loan in an aggregate principal amount

not

to exceed

$107.7

million for the purpose of providing financing for up to

80%

of the purchase price of the Company’s new ice class vessel, the

National Geographic Endurance,

targeted to be completed in the

first

quarter of

2020.

If drawn upon, the loan will be made at the time of delivery of the vessel. The Export Credit Agreement, at the Company's election, will bear interest either at a fixed interest rate effectively equal to

5.78%

or a floating interest rate equal to

three

-month LIBOR plus a margin of

3.00%

per annum.

On

April 8, 2019,

the Company entered into a senior secured credit agreement (the “Second Export Credit Agreement”) with the Lenders. Pursuant to the Second Export Credit Agreement, the Lenders have agreed to make available to the Company, at the Company's option and subject to certain conditions, a loan in an aggregate principal amount

not

to exceed

$122.8

million for the purpose of providing pre- and post- delivery financing for up to

80%

of the purchase price of the Company’s new expedition ice-class cruise vessel, the

National Geographic Resolution

, scheduled to be delivered in the

fourth

quarter of

2021.

The Second Export Credit Agreement bears a variable interest rate equal to

three

-month LIBOR plus a margin of

3.00%

per annum, or

5.09%

as of

September 30, 2019.

After completion of the vessel, the Second Export Credit Agreement, at the Company’s option, will bear an interest rate of either a fixed rate of

6.36%

or a variable rate equal to

three

-month LIBOR plus a margin of

3.00%

per annum.

30%

of the borrowing will mature over

five

years from drawdown, and

70%

of the borrowing will mature over

twelve

years from drawdown. Additionally,

70%

 percent of the loan will be guaranteed by Garantiinstituttet for eksportkreditt, the official export credit agency of Norway. The Company incurred approximately

$2.3

million in financing fees related to the Second Export Agreement, recorded as deferred financing costs as part of long-term debt. During

September 

2019,

the Company drew approximately

$30.5

 million against the Second Export Credit Agreement for the

second

contracted installment payment on the

National Geographic Resolution

.

Note Payable

In connection with the Natural Habitat acquisition in

May 2016,

Natural Habitat issued an unsecured promissory note to Benjamin L. Bressler, the founder of Natural Habitat, with an outstanding principal amount of

$2.5

million due at maturity on

December 31, 2020.

The promissory note accrues interest at a rate of

1.44%

annually, with interest payable every

six

months.

Covenants

The Company’s Amended Credit Agreement, Export Credit Agreement and Second Export Credit Agreement contain financial and restrictive covenants that include among others, net leverage ratios, limits on additional indebtedness and limits on certain investments. As of

September 30, 2019,

the Company was in compliance with its covenants.

XML

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Net income	$ 2,726	$ 5,346	$ 18,656	$ 16,105
Other comprehensive income:
Net unrealized (loss) gain	(7,393)	157	(8,654)	230
Reclassification adjustment, net of tax	1,624		1,624
Total other comprehensive (loss) income	(5,769)	157	(7,030)	230
Total comprehensive (loss) income	(3,043)	5,503	11,626	16,335
Less: comprehensive income attributive to non-controlling interest	565	279	834	107
Comprehensive (loss) income attributable to common shareholders	$ (3,608)	$ 5,224	$ 10,792	$ 16,228

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Oct. 29, 2019
Document Information [Line Items]
Entity Registrant Name	LINDBLAD EXPEDITIONS HOLDINGS, INC.
Entity Central Index Key	0001512499
Trading Symbol	lind
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Common Stock, Shares Outstanding (in shares)		49,716,067
Entity Shell Company	false
Document Type	10-Q
Document Period End Date	Sep. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Amendment Flag	false
Title of 12(b) Security	Common Stock, par value $0.0001 per share

XML

Note 1 - Business and Basis of Presentation - Operating Lease Payment (Details) (Parentheticals)	Sep. 30, 2019
Weighted average discount rate	6.00%

XML

Note 3 - Revenues - Disaggregation of Revenues by Type (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Tour revenues	$ 100,983	$ 87,242	$ 267,294	$ 239,125
Guest Ticket [Member]
Tour revenues	94,100	80,265	244,171	218,010
Other Tour [Member]
Tour revenues	$ 6,883	$ 6,977	$ 23,123	$ 21,115

XML

Note 4 - Financial Statement Details - Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Accrued other expense	$ 9,849	$ 11,464
Accounts payable	6,122	9,326
Bonus compensation liability	4,875	5,195
Employee liability	3,505	2,943
Foreign currency forward contract liability	3,048	387
Royalty payable	1,859	1,005
Income tax liabilities	1,352	576
Travel certificate liability	977	1,088
Refunds and commissions payable	850	1,533
Accrued travel insurance expense	477	427
Total accounts payable and accrued expenses	$ 32,914	$ 33,944

XML

Note 12 - Segment Information (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	For the three months ended September 30,									For the nine months ended September 30,
	2019		2018		Change		%			2019		2018		Change		%
(In thousands)	(unaudited)		(unaudited)							(unaudited)		(unaudited)
Tour revenues:
Lindblad	$	76,581	$	64,507	$	12,074		19	%	$	217,549	$	194,516	$	23,033		12	%
Natural Habitat		24,402		22,735		1,667		7	%		49,745		44,609		5,136		12	%
Total tour revenues	$	100,983	$	87,242	$	13,741		16	%	$	267,294	$	239,125	$	28,169		12	%
Operating Income:
Lindblad	$	12,570	$	8,209	$	4,361		53	%	$	31,514	$	26,755	$	4,759		18	%
Natural Habitat		3,089		2,072		1,017		49	%		2,631		2,105		526		25	%
Total operating income	$	15,659	$	10,281	$	5,378		52	%	$	34,145	$	28,860	$	5,285		18	%

	For the three months ended September 30,									For the nine months ended September 30,
	2019		2018		Change		%			2019		2018		Change		%
(In thousands)	(unaudited)		(unaudited)							(unaudited)		(unaudited)
Depreciation and amortization:
Lindblad	$	5,812	$	4,645	$	1,167		25	%	$	17,380	$	13,954	$	3,426		25	%
Natural Habitat		421		379		42		11	%		1,223		1,108		115		10	%
Total depreciation and amortization	$	6,233	$	5,024	$	1,209		24	%	$	18,603	$	15,062	$	3,541		24	%

	As of September 30, 2019		As of December 31, 2018
(In thousands)	(unaudited)
Total Assets:
Lindblad	$	453,176	$	409,622
Natural Habitat		76,437		63,787
Total assets	$	529,613	$	473,409
Intangibles, net:
Lindblad	$	3,506	$	4,050
Natural Habitat		3,285		3,925
Total intangibles, net	$	6,791	$	7,975
Goodwill:
Lindblad	$	-	$	-
Natural Habitat		22,105		22,105
Total goodwill	$	22,105	$	22,105

XML

Note 4 - Financial Statement Details (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Schedule of Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Table Text Block]

<div style="display: inline; font-family: times new roman; font-size: 10pt"><table border="0" cellpadding="0" cellspacing="0" style="margin-right: 2.5%; margin-left: 2.5%; font-size: 10pt; font-family: "Times New Roman", Times, serif; text-indent: 0px; min-; min-width: 700px;"> <tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td colspan="6" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">For the nine months ended September 30,</div></div></div></div> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td> </tr> <tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; width: 68%;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">(In thousands)</div> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2019</div></div></div> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2018</div></div></div> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td> </tr> <tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">(unaudited)</div> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">(unaudited)</div> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> </tr> <tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Cash and cash equivalents</div> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">104,135</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">105,688</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td> </tr> <tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Restricted cash</div> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">7,995</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">8,593</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td> </tr> <tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 18pt; text-indent: -9pt;">Total cash, cash equivalents and restricted cash as presented in the statement of cash flows</div> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">112,130</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">114,281</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td> </tr> </table></div>

Restricted Cash and Marketable Securities [Table Text Block]

(In thousands)		As of September 30, 2019		As of December 31, 2018
	(unaudited)
Federal Maritime Commission escrow	$	6,476	$	5,823
Certificates of deposit and other restricted securities		1,519		1,402
Credit card processor reserves		-		1,530
Total restricted cash	$	7,995	$	8,755

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Table Text Block]

(In thousands)	As of September 30, 2019		As of December 31, 2018
	(unaudited)
Prepaid tour expenses	$	13,358	$	10,617
Prepaid air expense		3,386		2,973
Prepaid corporate insurance		2,358		1,158
Prepaid client insurance		2,223		2,436
Prepaid marketing, commissions and other expenses		2,064		2,622
Prepaid port agent fees		382		1,433
Prepaid income taxes		273		24
Total prepaid expenses	$	24,044	$	21,263

Schedule of Accounts Payable and Accrued Liabilities [Table Text Block]

(In thousands)	As of September 30, 2019		As of December 31, 2018
	(unaudited)
Accrued other expense	$	9,849	$	11,464
Accounts payable		6,122		9,326
Bonus compensation liability		4,875		5,195
Employee liability		3,505		2,943
Foreign currency forward contract liability		3,048		387
Royalty payable		1,859		1,005
Income tax liabilities		1,352		576
Travel certificate liability		977		1,088
Refunds and commissions payable		850		1,533
Accrued travel insurance expense		477		427
Total accounts payable and accrued expenses	$	32,914	$	33,944

XML

Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements and 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”) regarding unaudited interim financial information and include the accounts and transactions of the Company. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s financial statements for the periods presented. Operating results for the periods presented are

not

necessarily indicative of the results of operations to be expected for the full year due to seasonality and other factors. Certain information and footnote disclosures normally included in the consolidated financial statements in accordance with U.S. GAAP have been omitted in accordance with the rules and regulations of the SEC for interim reporting. All intercompany balances and transactions have been eliminated in these unaudited condensed consolidated financial statements. These unaudited condensed consolidated financial statements and footnotes should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto for the year ended

December 31, 2018

contained in the Company’s Annual Report on Form

10

-K filed with the SEC on

February 28, 2019 (

the

“2018

Annual Report”).

The presentation of certain prior year items in the notes to the condensed consolidated financial statements of the Company have been reclassified to conform to the

2019

 presentation. The reclassifications had

no

effect on previously reported results of operations or retained earnings.

There have been

no

significant changes to the Company’s accounting policies from those disclosed in the

2018

Annual Report other than those noted below.

The Company accounts for its various operating leases in accordance with Accounting Standards Codification (“ASC”)

842

-

Leases,

as updated by Accounting Standards Update (“ASU”)

2016

-

02.

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 on its balance sheet. 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. During the

three

and

nine

months ended

September 30, 2019, 

the Company recognized

$0.4

 million and

$1.1

 million, respectively, in operating lease expense. During the

three

and

nine

months ended

September 30, 2018,

the Company recognized

$0.4

 million and

$1.1

 million, respectively, in operating lease expense. As of

September 30, 2019,

the Company’s remaining weighted average operating lease terms were approximately

67

 months. A reconciliation of operating lease payments undiscounted cash flows to lease liabilities recognized as of

September 30, 2019

is as follows:

(In thousands)	Operating Lease Payments
	(unaudited)
Remainder of 2019	$	303
2020		1,335
2021		1,372
2022		1,437
2023		1,324
Thereafter		1,922
Present value discount (6% weighted average)		(1,119	)
Total lease liability	$	6,574

New Accounting Pronouncements, Policy [Policy Text Block]

Accounting Pronouncements Recently Adopted

In

February 2016,

the Financial Accounting Standards Board (“FASB”) issued ASU

2016

-

02,

 

Leases

 (Topic

842

) and in

July 2018

issued ASU

2018

-

11,

 

Leases

 (Topic

842

): 

Targeted Improvements

. The guidance requires the recognition of lease right-of-use assets and lease liabilities by lessees for those leases previously classified as operating. This guidance was issued to increase transparency and comparability among organizations by disclosing key information about leasing arrangements and requiring the recognition of current and non-current right-of-use assets and lease liabilities on the balance sheet. Most prominent among the changes in the standard is the recognition of right-of-use assets and lease liabilities by lessees for those leases classified as operating leases. ASU

2016

-

02

was effective for fiscal years beginning after

December 15, 2018.

The Company adopted this guidance on

January 1, 2019,

as required, electing to apply retrospectively at the period of adoption with practical expedients. The adoption of this guidance had a material impact on the Company’s balance sheet by virtue of including the present value of its future operating lease payments as a liability of

$6.2

million and related right-to-use lease assets as of

January 1, 2019.

In

August 2018,

the FASB issued ASU

2018

-

13,

 

Fair Value Measurement

 (Topic

820

): 

Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement

. This amendment is intended to improve the effectiveness of fair value measurement disclosures by adding and modifying a few disclosure requirements, as well as eliminating several disclosures. ASU

2018

-

13

was effective for fiscal years beginning after

December 15, 2018.

The Company adopted this guidance on

January 1, 2019,

as required, and it did

not

have a material impact on the Company’s financial position or results of operations.

In

August 2018,

the FASB issued ASU

2018

-

15

Intangibles—Goodwill and Other—Internal-Use Software

(Subtopic

350

-

40

):

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract

. The amendments in this ASU align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software, and hosting arrangements that include an internal-use software license. ASU

2018

-

15

was effective for fiscal years beginning after

December 15, 2019

and early adoption was permitted. The Company adopted this guidance on

January 1, 2019, 

and it did

not

have a material impact on the Company's financial statements.

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Note 5 - Long-term Debt - Long-term Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Principal	$ 230,501	$ 201,525
Deferred Financing Costs, Net	(12,384)	(11,436)
Balance	218,117	190,089
Principal, Current	(2,000)	(2,000)
Deferred Financing Costs, Net, Current
Balance, Current	(2,000)	(2,000)
Principal, Non-current	228,501	199,525
Deferred Financing Costs, Net, Non-current	(12,384)	(11,436)
Balance, Non-current	216,117	188,089
Notes Payable, Other Payables [Member]
Principal	2,525	2,525
Deferred Financing Costs, Net
Balance	2,525	2,525
Term Facility [Member]
Principal	197,500	199,000
Deferred Financing Costs, Net	(10,155)	(11,436)
Balance	187,345	187,564
Senior Secured Credit Agreement [Member]
Principal	30,476
Deferred Financing Costs, Net	(2,229)
Balance	$ 28,247

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Note 6 - Financial Instruments and Fair Value Measurements - Derivatives Recognized in Condensed Consolidation Financial Statements (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Total		$ (8,107)	$ 320	$ (8,211)	$ (1,200)
Foreign Exchange Contract [Member] | Designated as Hedging Instrument [Member]
Foreign exchange forward contracts (a)	[1]	(7,094)		(8,066)
Foreign Exchange Contract [Member] | Not Designated as Hedging Instrument [Member]
Foreign exchange forward contracts	[2]	(715)	163	442	(1,430)
Interest Rate Cap [Member] | Designated as Hedging Instrument [Member]
Foreign exchange forward contracts (a)	[3]	$ (298)	$ 157	$ (587)	$ 230

[1] For the three and nine months ended September 30, 2019, $1.6 million was recognized as a loss on foreign currency in the condensed consolidated statements of income, and $5.5 million and $6.4 million, respectively, was recognized, net of tax, as a component of other comprehensive income (loss) within stockholders' equity.

[2] Gains (losses) related to derivative instruments are expected to be largely offset by (losses) gains on the underlying exposures being hedged. During the three and nine months ended September 30, 2019, a loss of $0.7 million and a gain of $0.4 million, respectively, was recognized in gain (loss) on foreign currency. During the three and nine months ended September 30, 2018, a gain of $0.2 million and a loss of $1.4 million, respectively, was recognized in gain (loss) on foreign currency.

[3] Recognized, net of tax, as a component of other comprehensive income (loss) within stockholders' equity.

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Note 10 - Income Taxes (Details Textual) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Effective Income Tax Rate Reconciliation, Percent, Total	20.60%	16.60%
Other Noncurrent Liabilities [Member]
Unrecognized Tax Benefits, Ending Balance	$ 0.1		$ 0.6

XML

Note 5 - Long-term Debt (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Schedule of Long-term Debt Instruments [Table Text Block]

	As of September 30, 2019									As of December 31, 2018
	(unaudited)
(In thousands)	Principal			Deferred Financing Costs, net			Balance			Principal			Deferred Financing Costs, net			Balance
Note payable	$	2,525		$	-		$	2,525		$	2,525		$	-		$	2,525
Credit Facility		197,500			(10,155	)		187,345			199,000			(11,436	)		187,564
Senior Secured Credit Agreement		30,476			(2,229	)		28,247			-			-			-
Total long-term debt		230,501			(12,384	)		218,117			201,525			(11,436	)		190,089
Less current portion		(2,000	)		-			(2,000	)		(2,000	)		-			(2,000	)
Total long-term debt, non-current	$	228,501		$	(12,384	)	$	216,117		$	199,525		$	(11,436	)	$	188,089

XML

Note 1 - Business and Basis of Presentation (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Lessee, Operating Lease, Liability, Maturity [Table Text Block]

(In thousands)	Operating Lease Payments
	(unaudited)
Remainder of 2019	$	303
2020		1,335
2021		1,372
2022		1,437
2023		1,324
Thereafter		1,922
Present value discount (6% weighted average)		(1,119	)
Total lease liability	$	6,574

XML

Note 1 - Business and Basis of Presentation (Details Textual) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Jan. 01, 2019	Dec. 31, 2018
Operating Lease, Expense	$ 400	$ 400	$ 1,100	$ 1,100
Operating Lease, Weighted Average Remaining Lease Term	5 years 210 days		5 years 210 days
Operating Lease, Right-of-Use Asset	$ 6,357		$ 6,357
Operating Lease, Liability, Total	$ 6,574		$ 6,574
Accounting Standards Update 2016-02 [Member]
Operating Lease, Right-of-Use Asset					$ 6,200
Operating Lease, Liability, Total					$ 6,200

XML

Note 9 - Related Party Transactions (Details Textual) - National Geographic Society [Member] - Collaborate Agreement [Member]	Jul. 08, 2015 $ / shares
Call Options, Exercise Price	$ 10
Call Options, Percentage of Issued and Outstanding Shares	5.00%

XML

Note 5 - Long-term Debt (Details Textual) - USD ($) $ in Thousands		1 Months Ended		3 Months Ended		9 Months Ended
	Apr. 08, 2019	Sep. 30, 2019	Jan. 31, 2018	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Mar. 31, 2018
Amortization of Debt Issuance Costs and Discounts, Total				$ 500	$ 400	$ 1,392	$ 1,477
Payments of Financing Costs, Total						2,340	$ 6,486
Revolving Credit Facility [Member]
Long-term Line of Credit, Total		$ 0		$ 0		$ 0
Credit Agreement [Member] | Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity								$ 45,000
Credit Agreement [Member] | Letter of Credit [Member]
Line of Credit Facility, Maximum Borrowing Capacity								5,000
Credit Agreement [Member] | Senior Secured Term Loan Facility [Member]
Debt Instrument, Face Amount								$ 200,000
Credit Agreement [Member] | Senior Secured Term Loan Facility [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate						3.25%
Debt Instrument, Interest Rate, Effective Percentage		5.266%		5.266%		5.266%
Export Credit Agreement [Member]
Debt Instrument, Basis Spread on Variable Rate						3.00%
Debt Agreement, Maximum Borrowing Capacity	$ 122,800		$ 107,700
Percentage of Purchase Price, Financing Maximum	80.00%		80.00%
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate			5.78%
Export Credit Agreement [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate			3.00%
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate		5.09%		5.09%		5.09%
Second Export Credit Agreement [Member]
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate	6.36%
Payments of Financing Costs, Total	$ 2,300
Proceeds from Issuance of Debt		$ 30,500
Second Export Credit Agreement [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate	3.00%
Promissory Notes, Natural Habitat Acquisition [Member]
Debt Instrument, Face Amount		$ 2,500		$ 2,500		$ 2,500
Debt Instrument, Interest Rate, Stated Percentage		1.44%		1.44%		1.44%

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Note 6 - Financial Instruments and Fair Value Measurements - Estimated Fair Values of Derivative Instruments (Details) - Fair Value, Inputs, Level 2 [Member] - USD ($) $ in Thousands		Sep. 30, 2019	Dec. 31, 2018
Designated as Hedging Instrument [Member]
Derivatives designated as hedging instruments		$ 123	$ 710
Derivatives designated as hedging instruments		7,157
Not Designated as Hedging Instrument [Member]
Derivatives designated as hedging instruments
Derivatives designated as hedging instruments		886	1,328
Foreign Exchange Contract [Member] | Designated as Hedging Instrument [Member]
Derivatives designated as hedging instruments	[1]
Derivatives designated as hedging instruments	[1]	7,157
Foreign Exchange Contract [Member] | Not Designated as Hedging Instrument [Member]
Derivatives designated as hedging instruments	[2]
Derivatives designated as hedging instruments	[2]	886	1,328
Interest Rate Cap [Member] | Designated as Hedging Instrument [Member]
Derivatives designated as hedging instruments	[3]	123	710
Derivatives designated as hedging instruments	[3]

[1] Recorded in accounts payable and accrued expenses and other long-term liabilities.

[2] Recorded in accounts payable and accrued expenses.

[3] Recorded in prepaid expenses and other current assets and other long-term assets.

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Note 11 - Commitments and Contingencies - Charter Commitments (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Remainder of 2019	$ 3,223
2020	12,472
2021	7,280
2022	1,850
Total	$ 24,825

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Condensed Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Tour revenues	$ 100,983	$ 87,242	$ 267,294	$ 239,125
Operating expenses:
Cost of tours	48,294	44,964	124,831	114,645
General and administrative	15,266	14,718	47,615	45,647
Selling and marketing	15,531	12,255	42,100	34,911
Depreciation and amortization	6,233	5,024	18,603	15,062
Total operating expenses	85,324	76,961	233,149	210,265
Operating income	15,659	10,281	34,145	28,860
Interest expense, net	(3,214)	(2,409)	(9,391)	(8,013)
(Loss) gain on foreign currency	(2,338)	163	(1,181)	(1,430)
Other (expense) income	(30)	1	(79)	(118)
Total other expense	(5,582)	(2,245)	(10,651)	(9,561)
Income before income taxes	10,077	8,036	23,494	19,299
Income tax expense	7,351	2,690	4,838	3,194
Net income	2,726	5,346	18,656	16,105
Net income attributable to noncontrolling interest	565	279	834	107
Net income attributable to Lindblad Expeditions Holdings, Inc	2,161	5,067	17,822	15,998
Non-cash deemed dividend to warrant holders	2,654		2,654
Net (loss) income available to common stockholders	$ (493)	$ 5,067	$ 15,168	$ 15,998
Weighted average shares outstanding
Basic (in shares)	48,863,506	45,423,127	46,704,634	45,356,438
Diluted (in shares)	48,863,506	47,690,395	49,091,370	45,963,669
Net (loss) income per share available to common stockholders
Basic (in dollars per share)	$ (0.01)	$ 0.11	$ 0.32	$ 0.35
Diluted (in dollars per share)	$ (0.01)	$ 0.11	$ 0.31	$ 0.35

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Note 10 - Income Taxes

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE

10

 – INCOME TAXES

Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The measurement of net deferred tax assets is reduced by the amount of any tax benefit that, based on available evidence, is

not

expected to be realized, and a corresponding valuation allowance is established. The determination of the required valuation allowance against net deferred tax assets was made without taking into account the deferred tax liabilities created from the book and tax differences on indefinite-lived assets.

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 recognizes the effect on deferred taxes of a change in tax rates in income in the period that includes the enactment date. 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 is subject to income taxes in both the U.S. and the non-U.S. jurisdictions in which it operates. 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 reflect the “more-likely-than-

not”

criteria of FASB’s authoritative guidance on accounting for uncertainty in income taxes, and it has established income tax reserves in accordance with this guidance where necessary. Once a financial statement benefit for a tax position is recorded or a tax reserve is established, the Company adjusts it only when there is more information available or when an event occurs necessitating a change. While the Company believes that the amount of the recorded financial statement benefits and tax reserves reflect the more-likely-than-

not

criteria, it is possible that the ultimate outcome of current or future examinations

may

result in a reduction to the tax benefits previously recorded on its condensed consolidated financial statements or

may

exceed the current income tax reserves in amounts that could be material. As of

September 30, 2019,

and

December 31, 2018,

the Company had a liability for unrecognized tax benefits of

$0.1

 million and

$0.6

million, respectively, which was included in other long-term liabilities. The Company’s policy is to record interest and penalties on uncertain tax positions as a component of income tax expense. During the

three

and

nine

months ended

September 30, 2019

and

2018,

interest and penalties related to uncertain tax positions included in income tax expense are

not

significant. The Company's effective tax rate for the

nine

months ended

September 30, 2019

and

2018

was an expense of

20.6%

 and

16.6%,

respectively.

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

three

prior years remain subject to examination by tax authorities and the Company’s foreign tax returns for the current year and

four

prior years remain subject to examination by tax authorities (except for the Ecuador entities, where the Company's foreign tax returns for the current year and

three

 prior years remain subject to examination by tax authorities).

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Note 1 - Business and Basis of Presentation

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block]

NOTE

1

– BUSINESS AND BASIS OF PRESENTATION

Business

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

eight

owned expedition ships and

five

seasonal charter vessels under the Lindblad brand and operates eco-conscious expeditions and nature-focused, small-group tours under the Natural Habitat, Inc. (“Natural Habitat”) brand.

The Company operates the following reportable business segments:

Lindblad

– primarily 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. Many of these 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’s Sea of Cortez, Costa Rica and Panama, and foster active engagement by guests. Each expedition ship is designed to be comfortable and inviting, while being fully equipped with state-of-the-art tools for in-depth exploration. The Company has an alliance with National Geographic Partners (“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.

Natural Habitat

– primarily land-based adventure travel expeditions around the globe, as well as select itineraries on small chartered vessels for parts of the year, with unique itineraries designed to offer intimate encounters with nature and our planet's wild destinations. Natural Habitat creates opportunities for adventure and discovery that transform lives with expeditions that include polar bear tours in Churchill, Canada, Alaskan grizzly bear adventures, small-group Galápagos 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.

The Company’s common stock is listed on the NASDAQ Capital Market under the symbol “LIND”.

 

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements and 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”) regarding unaudited interim financial information and include the accounts and transactions of the Company. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s financial statements for the periods presented. Operating results for the periods presented are

not

necessarily indicative of the results of operations to be expected for the full year due to seasonality and other factors. Certain information and footnote disclosures normally included in the consolidated financial statements in accordance with U.S. GAAP have been omitted in accordance with the rules and regulations of the SEC for interim reporting. All intercompany balances and transactions have been eliminated in these unaudited condensed consolidated financial statements. These unaudited condensed consolidated financial statements and footnotes should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto for the year ended

December 31, 2018

contained in the Company’s Annual Report on Form

10

-K filed with the SEC on

February 28, 2019 (

the

“2018

Annual Report”).

The presentation of certain prior year items in the notes to the condensed consolidated financial statements of the Company have been reclassified to conform to the

2019

 presentation. The reclassifications had

no

effect on previously reported results of operations or retained earnings.

There have been

no

significant changes to the Company’s accounting policies from those disclosed in the

2018

Annual Report other than those noted below.

The Company accounts for its various operating leases in accordance with Accounting Standards Codification (“ASC”)

842

-

Leases,

as updated by Accounting Standards Update (“ASU”)

2016

-

02.

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 on its balance sheet. 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. During the

three

and

nine

months ended

September 30, 2019, 

the Company recognized

$0.4

 million and

$1.1

 million, respectively, in operating lease expense. During the

three

and

nine

months ended

September 30, 2018,

the Company recognized

$0.4

 million and

$1.1

 million, respectively, in operating lease expense. As of

September 30, 2019,

the Company’s remaining weighted average operating lease terms were approximately

67

 months. A reconciliation of operating lease payments undiscounted cash flows to lease liabilities recognized as of

September 30, 2019

is as follows:

(In thousands)	Operating Lease Payments
	(unaudited)
Remainder of 2019	$	303
2020		1,335
2021		1,372
2022		1,437
2023		1,324
Thereafter		1,922
Present value discount (6% weighted average)		(1,119	)
Total lease liability	$	6,574

Accounting Pronouncements Recently Adopted

In

February 2016,

the Financial Accounting Standards Board (“FASB”) issued ASU

2016

-

02,

 

Leases

 (Topic

842

) and in

July 2018

issued ASU

2018

-

11,

 

Leases

 (Topic

842

): 

Targeted Improvements

. The guidance requires the recognition of lease right-of-use assets and lease liabilities by lessees for those leases previously classified as operating. This guidance was issued to increase transparency and comparability among organizations by disclosing key information about leasing arrangements and requiring the recognition of current and non-current right-of-use assets and lease liabilities on the balance sheet. Most prominent among the changes in the standard is the recognition of right-of-use assets and lease liabilities by lessees for those leases classified as operating leases. ASU

2016

-

02

was effective for fiscal years beginning after

December 15, 2018.

The Company adopted this guidance on

January 1, 2019,

as required, electing to apply retrospectively at the period of adoption with practical expedients. The adoption of this guidance had a material impact on the Company’s balance sheet by virtue of including the present value of its future operating lease payments as a liability of

$6.2

million and related right-to-use lease assets as of

January 1, 2019.

In

August 2018,

the FASB issued ASU

2018

-

13,

 

Fair Value Measurement

 (Topic

820

): 

Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement

. This amendment is intended to improve the effectiveness of fair value measurement disclosures by adding and modifying a few disclosure requirements, as well as eliminating several disclosures. ASU

2018

-

13

was effective for fiscal years beginning after

December 15, 2018.

The Company adopted this guidance on

January 1, 2019,

as required, and it did

not

have a material impact on the Company’s financial position or results of operations.

In

August 2018,

the FASB issued ASU

2018

-

15

Intangibles—Goodwill and Other—Internal-Use Software

(Subtopic

350

-

40

):

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract

. The amendments in this ASU align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software, and hosting arrangements that include an internal-use software license. ASU

2018

-

15

was effective for fiscal years beginning after

December 15, 2019

and early adoption was permitted. The Company adopted this guidance on

January 1, 2019, 

and it did

not

have a material impact on the Company's financial statements.

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Note 6 - Financial Instruments and Fair Value Measurements

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Derivatives and Fair Value [Text Block]

NOTE

6

– FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Derivative Instruments and Hedging Activities

The Company’s derivative assets and liabilities consist principally of foreign exchange forward contracts and interest rate caps and 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 internal valuation techniques, as 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.

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 the Canadian and New Zealand dollars, the Brazilian Real, South African Rand, Indian Rupee, 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.

In

March 2019,

the Company entered into foreign exchange forward contracts, designated as cash flow hedges, to hedge its exposure to Norwegian Kroner ("NOK"), related to the Company’s contract to purchase the new polar ice-class vessel, the

National Geographic Resolution

 (see Note

11

– Commitments and Contingencies). The cost of the foreign exchange forward contracts will be amortized to interest expense over their lives, from the effective date through settlement dates.

Interest Rate Risk

. The Company uses interest rate caps, designated as cash flow hedges, to manage the risk related to its floating rate corporate debt.

The Company records the effective portion of changes in the fair value of its cash flow hedges to other comprehensive income (loss), net of tax, and subsequently reclassifies these amounts into earnings in the period during which the hedged transaction is recognized. Any changes in fair values of hedges that are determined to be ineffective are immediately reclassified from accumulated other comprehensive income (loss) into earnings.

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

nine

-month period ended

September 30, 2019.

The Company estimates that approximately

$2.2

million of losses currently recorded in accumulated other comprehensive income (loss) will be recognized in earnings over the next

12

months due to the maturity of the cash flow hedge and the hedged item. The Company will continue to assess the effectiveness of the hedges on an ongoing basis. During the

three

and

nine

months ended

September 30, 2019,

a

$1.6

 million loss was reclassified from other comprehensive income and recognized as a loss on foreign currency due to the maturity of a foreign exchange forward contract that was designated as a cash flow hedge.

The Company held the following derivative instruments with absolute notional values as of

September 

30,

2019:

(in thousands)	Absolute Notional Value
Interest rate caps	$	100,000
Foreign exchange contracts		130,744

Estimated fair values (Level

2

) of derivative instruments were as follows:

	As of September 30, 2019				As of December 31, 2018
	(unaudited)
(in thousands)	Fair Value, Asset Derivatives		Fair Value, Liability Derivatives		Fair Value, Asset Derivatives		Fair Value, Liability Derivatives
Derivative instruments designated as cash flow hedging instruments:
Foreign exchange forward  (a)	$	-	$	7,157	$	-	$	-
Interest rate cap  (b)		123		-		710		-
Total	$	123	$	7,157	$	710	$	-
Derivative instruments not designated as cash flow hedging instruments:
Foreign exchange forward  (c)	$	-	$	886	$	-	$	1,328
Total	$	-	$	886	$	-	$	1,328

_________

(a) Recorded in accounts payable and accrued expenses and other long-term liabilities.

(b) Recorded in prepaid expenses and other current assets and other long-term assets.

(c) Recorded in accounts payable and accrued expenses.

Changes in the fair value of the Company’s hedging instruments are recorded in accumulated other comprehensive income, pursuant to the guidelines of cash flow hedge accounting as outlined in ASC

815.

The effects of derivatives recognized in the Company’s condensed consolidated financial statements were as follows:

	Three Months Ended September 30,					Nine Months Ended September 30,
(In thousands)	2019			2018		2019			2018
	(unaudited)			(unaudited)		(unaudited)			(unaudited)
Derivative instruments designated as cash flow hedging instruments:
Foreign exchange forward contracts (a)	$	(7,094	)	$	-	$	(8,066	)	$	-
Interest rate caps (b)		(298	)		157		(587	)		230
Derivative instruments not designated as cash flow hedging instruments (c) :
Foreign exchange forward contracts		(715	)		163		442			(1,430	)
Total	$	(8,107	)	$	320	$	(8,211	)	$	(1,200	)

__________

(a) For the three and nine months ended September 30, 2019, $1.6  million was recognized as a loss on foreign currency in the condensed consolidated statements of income, and $5.5  million and $6.4  million, respectively, was recognized, net of tax, as a component of other comprehensive income (loss) within stockholders’ equity.

(b)

Recognized, net of tax, as a component of other comprehensive income (loss) within stockholders’ equity.

(c)

Gains (losses) related to derivative instruments are expected to be largely offset by (losses) gains on the underlying exposures being hedged. During the three and nine  months ended September 30, 2019, a loss of $0.7  million and a gain of $0.4  million, respectively, was recognized in gain (loss) on foreign currency. During the three and nine months ended September 30, 2018, a gain of $0.2 million and a loss of $1.4  million, respectively, was recognized in gain (loss) on foreign currency.

Fair Value Measurements

The carrying amounts of cash and cash equivalents, accounts payable and accrued expenses, approximate fair value due to the short-term nature of these instruments. The carrying value of long-term debt approximates fair value given that the terms of the agreement were comparable to the market as of

September 30, 2019.

As of

September 30, 2019

and

December 31, 2018,

the Company had

no

other significant liabilities that were measured at fair value on a recurring basis.

XML

Note 4 - Financial Statement Details - Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Prepaid tour expenses	$ 13,358	$ 10,617
Prepaid air expense	3,386	2,973
Prepaid corporate insurance	2,358	1,158
Prepaid client insurance	2,223	2,436
Prepaid marketing, commissions and other expenses	2,064	2,622
Prepaid port agent fees	382	1,433
Prepaid income taxes	273	24
Total prepaid expenses	$ 24,044	$ 21,263

XML

Note 1 - Business and Basis of Presentation - Operating Lease Payment (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Remainder of 2019	$ 303
2020	1,335
2021	1,372
2022	1,437
2023	1,324
Thereafter	1,922
Present value discount (6% weighted average)	(1,119)
Total lease liability	$ 6,574

XML

Note 3 - Revenues - Change in Contract Liabilities (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($)
Balance	$ 70,903
Recognized in tour revenues during the period	(204,935)
Additional contract liabilities in period	192,864
Balance	$ 58,832