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Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2019

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

The consolidated financial statements include the accounts of Lindblad Expeditions Holdings, Inc. and its consolidated subsidiaries, after elimination of all intercompany accounts and transactions. The consolidated financial statements and accompanying 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”).

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

2019

presentation. The reclassifications had

effect on previously reported results of operations or retained earnings.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets, liabilities, revenues and expenses. Actual results could differ from such estimates. Management estimates include determining the estimated lives of long-lived assets, determining the fair value of assets acquired and liabilities assumed in business combinations, the fair value of the Company’s common stock, the valuation of securities underlying stock-based compensation, income tax expense, the valuation of deferred tax assets and liabilities, the fair value of derivative instruments, the value of contingent consideration and assessing its litigation, other legal claims and contingencies. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the consolidated financial statements in the period that they are determined to be necessary.

Revenue from Contract with Customer [Policy Text Block]

Revenue Recognition

Revenues are measured based on consideration specified in the Company’s contracts with guests and are recognized as the related performance obligations are satisfied. The majority of the Company’s revenues are derived from guest ticket contracts which are reported as tour revenues in the consolidated statements of operations. The Company’s primary performance obligation under these contracts is to provide an expedition and

may

include pre- and post-expedition excursions, hotel accommodations, land-based expeditions and air transportation to and from the ships. Upon satisfaction of the Company’s primary performance obligation, revenue is recognized over the duration of each expedition.

Tour revenues also include revenues from the sale of goods and services onboard our ships, cancellation fees and trip insurance. Revenues from the sale of goods and services rendered onboard are recognized upon purchase. Guest cancellation fees are recognized as tour revenues at the time of the cancellation. The Company records a liability for estimated trip insurance claims based on the Company’s claims history. Proceeds received from trip insurance premiums in excess of this liability are recorded as revenue in the period in which they are received.

For the years ended

December 31, 2019,

2018

and

2017,

approximately

91%,

90%

and

90%,

respectively, of revenues were generated from guests in the United States.

single or group of customers account for a significant amount of revenues. The Company sources its guest bookings through a combination of direct selling and various agency networks and alliances. The following table disaggregates tour revenues by the sales channel it was derived from:

	For the years ended December 31,
	2019			2018			2017
Guest ticket revenue:
Direct		45	%		45	%		45	%
National Geographic		17	%		19	%		19	%
Agencies		23	%		23	%		22	%
Affinity		6	%		4	%		4	%
Guest ticket revenue		91	%		91	%		90	%
Other tour revenue		9	%		9	%		10	%
Tour revenues		100	%		100	%		100	%

Customer Deposits and Contract Liabilities, Policy [Policy Text Block]

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 consolidated balance sheet when received and are subsequently recognized as tour revenue over the duration of the expedition. Accounting Standards Codification ("ASC"),

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

longer has the right, resulting from the passage of time, to cancel their reservation and receive a full refund. All of our contract liabilities as of

December 31, 2018

were recognized and reported within tour revenues in our consolidated statement of operations for the year ended

December 31, 2019.

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

	Contract Liabilities
(In thousands)
Balance as of January 1, 2019	$	70,903
Recognized in tour revenues during the period		(263,767	)
Additional contract liabilities in period		264,915
Balance as of December 31, 2019

Cost of Revenue, Policy [Policy Text Block]

Cost of Tours

Cost of tours represents the direct costs associated with revenues during expeditions, including costs of pre- or post-expedition excursions, hotel accommodations, land-based expeditions, air and other transportation expenses and costs of goods and services rendered onboard, payroll and related expenses for shipboard and expedition personnel, food costs for guests and crew, fuel and related costs and other expenses such as land costs, port costs, repairs and maintenance, equipment expense, drydock, ship insurance and charter hire expenses.

Self Insurance Reserve [Policy Text Block]

Insurance

The Company maintains insurance to cover a number of risks including illness and injury to crew, guest injuries, pollution, other

third

-party claims in connections with its tour expedition activities, damages to hull and machinery for each of its vessels, war risks, workers’ compensation, employee health, directors’ and officers’ liability, property damages and general liabilities for

third

-party claims. The Company recognizes insurance recoverable from

third

-party insurers for incurred expenses at the time the recovery is probable and upon realization for amounts in excess of incurred expenses. All of the Company’s insurance policies are subject to coverage limits, exclusions and deductible levels.

As of

December 31, 2019

and

2018,

the Company self-insured for medical insurance claims up to

$125,000

In addition, as of

December 31, 2019

and

2018,

the Company maintained Stop Loss coverage for medical claims in excess of the

$125,000

which had an aggregate deductible of

$57,500

As of

December 31, 2019

and

2018,

the Company recorded a liability for Incurred-But-

Not

-Recorded (“IBNR”) medical claims, which was determined based on claims experience over the prior

four

years.

The Company also extends cancellation insurance to guests. The Company uses an insurance company to manage passenger insurance purchased to cover a variety of insurable losses including cancellations, interruption, missed connections, travel delays, accidental death and dismemberment, medical coverage and baggage issues. In certain instances, the Company is self-insured for the claims only which cover cancellations, interruption, missed connections and travel delays. The required reserve was determined based on claims experience. While the Company believes its estimated IBNR and accrued claims reserves are adequate, the ultimate losses

may

differ from its estimates.

The Company participates in a traditional marine industry reinsurance solution for liability exposure through their Protection and Indemnity (“P&I Club”) Reinsurers, which are similar to mutual marine P&I Club’s that jointly and severally indemnify each other to provide discounted primary and excess Protection and Indemnity coverage to club members. The resulting aggregated surplus of the clubs combines to provide the Company with below market primary and high excess liability coverage for covered losses. For consideration of long-term below market Protection and Indemnity rates, the joint and several liability obligation requires the down-stream indemnification by their members, including the Company.

Selling, General and Administrative Expenses, Policy [Policy Text Block]

General and Administrative Expense

General and administrative expenses primarily represent the costs of our shore-side vessel support, reservations and other administrative functions, and includes salaries and related benefits, professional fees and occupancy costs.

Selling and Marketing Expense

Selling and marketing expenses include commissions, royalties and a broad range of advertising and marketing expenses. These include advertising costs of direct mail, email, digital media, traditional media, travel agencies and brand websites, as well as costs associated with website development and maintenance, social media and corporate sponsorship costs. Advertising is charged to expense as incurred. Advertising expenses totaled

$22.4

million,

$16.9

million and

$16.4

million for the years ended

December 31, 2019,

2018

and

2017,

respectively. The largest component of advertising expense was direct mail, which totaled

$6.0

million,

$5.4

million and

$6.3

million for the years ended

December 31, 2019,

2018

and

2017,

respectively.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

The Company considers all highly liquid instruments with an original maturity of

six

months or less, as well as deposits in financial institutions, to be cash and cash equivalents. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the statement of financial position that sum to the total of the same such amounts shown in the statement of cash flows:

	For the years ended December 31,
	2019		2018		2017
(In thousands)
Cash and cash equivalents	$	101,579	$	113,396	$	96,443
Restricted cash		7,679		8,755		7,057
Total cash, cash equivalents and restricted cash as presented in the statement of cash flows	$	109,258	$	122,151	$	103,500

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentration of Credit Risk

The Company maintains cash in several financial institutions in the U.S. and other countries which, at times,

may

exceed the federally insured limits. Accounts held in the U.S. are guaranteed by the Federal Deposit Insurance Corporation up to certain limits. As of

December 31, 2019

and

2018,

the Company’s cash held in financial institutions outside of the U.S. amounted to

$9.7

million and

$6.4

million, respectively.

Restricted Cash and Marketable Securities [Policy Text Block]

Restricted Cash and Marketable Securities

The amounts held in restricted cash on the accompanying consolidated balance sheets represent principally funds required to be held by certain vendors and regulatory agencies and are classified as restricted cash since such amounts cannot be used by the Company until the restrictions are removed by those vendors and regulatory agencies. These amounts are principally held in certificates of deposit and interest income is recognized when earned.

The Company has classified marketable securities, principally money market funds or other short-term investments, as trading securities which are recorded at market value. Unrealized gains and losses are included in current operations. Gains and losses on the disposition of securities are recognized by the specific identification method in the period in which they occur. Cost of these short-term investments approximates fair value.

In order to operate guest tour expedition vessels from U.S. ports, the Company is required to either post a performance bond with the Federal Maritime Commission or escrow all unearned guest deposits plus an additional

10%

in restricted accounts, up to a maximum of

$32

million. To satisfy this requirement, the Company entered into an agreement with a financial institution to escrow the required amounts.

Restricted cash and marketable securities consist of the following:

	As of December 31,
	2019		2018
(In thousands)
Federal Maritime Commission escrow	$	6,104	$	5,823
Certificates of deposit and other restricted securities		1,575		1,402
Credit card processor reserves		-		1,530
Total restricted cash	$	7,679	$	8,755

December 31, 2018,

a cash reserve of approximately

$1.5

million was required for credit card deposits by

third

-party credit card processors and as of

December 31, 2019,

this reserve was

longer required.

Inventory Supplies, Policy [Policy Text Block]

Marine Operating Supplies and Inventories

Marine operating supplies consist primarily of fuel, provisions, spare parts, items required for maintenance and supplies used in the operation of marine expeditions. Marine operating supplies are stated at the lower of cost or net realizable value. Cost is determined using the

first

-in

first

-out method.

Inventories consist primarily of gift shop merchandise and other items for resale and are stated at the lower of cost or net realizable value. Cost is determined using the

first

-in,

first

-out method.

Prepaid Expenses and Other Current Assets [Policy Text Block]

Prepaid Expenses and Other Current Assets

The Company records prepaid expenses and other current assets at cost and expenses them in the period the services are provided or the goods are delivered. The Company’s prepaid expenses and other current assets consist of the following:

	As of December 31,
	2019		2018
(In thousands)
Prepaid tour expenses	$	15,630	$	10,617
Prepaid air expense		4,415		2,973
Prepaid marketing, commissions and other expenses		4,026		2,622
Prepaid client insurance		3,064		2,436
Prepaid corporate insurance		1,376		1,158
Prepaid port agent fees		491		1,433
Prepaid income taxes		53		24
Total prepaid expenses	$	29,055	$	21,263

Property, Plant and Equipment, Policy [Policy Text Block]

Property and Equipment

Property and equipment, net is stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, as follows:

	Years
Vessels and vessel improvements	15	-	25
Furniture & equipment		5
Computer hardware and software		5
Leasehold improvements, including expedition sites and port facilities	Shorter of lease term or related asset life

The ship-based tour and expedition industry is very capital intensive. As of

December 31, 2019,

the Company owned and operated

eight

expedition vessels. The Company has contracted for

two

polar ice-class vessels, the

National Geographic Endurance

and the

National Geographic

Resolution

, scheduled to be delivered in the

first

quarter of

2020

and the

fourth

quarter of

2021,

respectively. The Company has a capital program for the improvement of its vessels and for asset replacements in order to enhance the effectiveness and efficiency of its operations; comply with, or exceed all relevant legal and statutory requirements related to health, environment, safety, security and sustainability; and gain strategic benefits or provide newer improved product innovations to its guests.

Vessel improvement costs that add value to the Company’s vessels, such as those discussed above, are capitalized and depreciated over the shorter of the improvements, or the vessel’s, estimated remaining useful life, while costs of repairs and maintenance, including minor improvement costs and drydock expenses, are charged to expense as incurred and included in cost of tours. Drydock costs primarily represent planned maintenance activities that are incurred when a vessel is taken out of service. For U.S. flagged ships, the statutory requirement is an annual docking and U.S. Coast Guard inspections, normally conducted in drydock. Internationally flagged ships have scheduled dockings approximately every

months, for a period of up to

three

six

weeks.

Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block]

Goodwill

In accordance with ASC

360,

the Company tests for impairment annually as of

September 30,

or more frequently if warranted. The Company assesses qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than

not

that the estimated fair value of goodwill is less than its carrying amount. The Company completed the annual impairment test as of

September 30, 2019

with

indication of goodwill impairment. See Note

– Goodwill and Intangible Assets for further details on goodwill.

Goodwill and Intangible Assets, Intangible Assets, Policy [Policy Text Block]

Intangible Assets

Intangible assets include tradenames, customer lists and operating rights. Tradenames are words, symbols, or other devices used in trade or business to indicate the source of products and to distinguish it from other products and are registered with government agencies and are protected legally by continuous use in commerce. Customer lists are established relationships with existing customers that resulted in repeat purchases and customer loyalty. Based on the Company’s analysis, amortization of the tradenames and customer lists were computed using the estimated useful lives of

and

years, respectively. See Note

– Goodwill and Intangible Assets for further information.

The Company operates

two

vessels year-round in the Galápagos National Park in Ecuador; the

National Geographic Endeavour II

with

berths and the

National Geographic Islander

with

berths. In order to operate these vessels within the park, the Company is required to have in its possession cupos (licenses) sufficient to cover the total available berths on each vessel.

June 2015,

the Special Law of Special Regimen for the Province of Galapagos was approved and subsequently updated in

November 2015.

The law established that cupos, which were in effect since

July 2015,

will have a validity of

nine

years. The Company’s operating rights are up for renewal in

July 2024.

The current “owners” of the cupos will have the opportunity to re-apply for them, but any other enterprise or individual will have the opportunity to bid for the cupos. All bidders must present proof that they fulfill the conditions to properly utilize the license (access to a vessel, experience in tourism, proven environmental behavior, marketing, etc.). While the Company believes that, based on the expected criteria to retain cupos and its past operating history in the Galápagos, there is a strong possibility that the Company will retain its cupos, from an accounting perspective, it assumes they retain

value after

July 2024.

Once the renewal process has begun and if it can be determined that the Company will be successful in its bid, then the Company will adjust its amortization prospectively. Operating rights are amortized over their remaining government mandated lives.

Upon the occurrence of a triggering event, the assessment of possible impairment of the Company’s intangible assets will be based on the Company’s ability to recover the carrying value of its asset, which is determined by using the asset’s estimated undiscounted future cash flows. If these estimated undiscounted future cash flows are less than the carrying value of the asset, an impairment charge is recognized for the excess, if any, of the asset’s carrying value over its estimated fair value. A significant amount of judgment is required in estimating the future cash flows and fair values of its tradenames, customer lists and operating rights. As of

December 31, 2019

and

2018,

there was

triggering event and the Company did

not

record impairment for its intangible assets.

Long-Lived Assets [Policy Text Block]

Long-Lived Assets

The Company reviews its long-lived assets, principally its vessels, for impairment whenever events or changes in circumstances indicate that the carrying amounts of these assets

may

not

be fully recoverable. Upon the occurrence of a triggering event, the assessment of possible impairment is based on the Company’s ability to recover the carrying value of its asset, which is determined by using the asset’s estimated undiscounted future cash flows. If these estimated undiscounted future cash flows are less than the carrying value of the asset, an impairment charge is recognized for the excess of the asset’s carrying value over its estimated fair value. A significant amount of judgment is required in estimating the future cash flows and fair values of its vessels. As of

December 31, 2019

and

2018,

there was

triggering event and the Company did

not

record an impairment of its long-lived assets.

Accounts Payable and Accrued Expenses, Policy [Policy Text Bock]

Accounts Payable and Accrued Expenses

The Company records accounts payable and accrued expenses for the cost of such items when the service is provided or when the related product is delivered. The Company’s accounts payable and accrued expenses consist of the following:

	As of December 31,
	2019		2018
(In thousands)
Accounts payable	$	14,633	$	9,326
Accrued other expense		8,348		11,464
Bonus compensation liability		5,322		5,195
Employee liability		3,712		2,943
Refunds and commissions payable		1,873		1,533
Foreign currency forward contract liability		1,300		387
Royalty payable		1,075		1,005
Travel certificate liability		888		1,088
Income tax liabilities		603		576
Accrued travel insurance expense		477		427
Total accounts payable and accrued expenses	$	38,231	$	33,944

Lessee, Leases [Policy Text Block]

Leases

The Company leases office and warehousing space with lease terms ranging from

one

ten

years, and computer hardware and software and office equipment with lease terms ranging from

three

six

years.

The Company accounts for its various operating leases in accordance with 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

-months or less. Short-term leases are accounted for monthly over the lease term.

Fair Value Measurement, Policy [Policy Text Block]

Fair Value Measurements

Fair value is defined as an exit price, representing the amount that would be received upon the sale of an asset or payment to transfer a liability in an orderly transaction between market participants. Fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. A

three

-tier fair value hierarchy is used to prioritize the inputs in measuring fair value as follows:

Level 1	Quoted market prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at measurement date.

Level 2	Quoted market prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable, either directly or indirectly. Fair value is determined through the use of models or other valuation methodologies.


Level 3	Significant unobservable inputs for assets or liabilities that cannot be corroborated by market data. Fair value is determined by the reporting entity’s own assumptions utilizing the best information available and includes situations where there is little market activity for the investment.

Level

financial liabilities consist of obligations for which there is

current market for these securities such that the determination of fair value requires significant judgment or estimation. Changes in fair value measurements categorized within Level

of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate.

The carrying amounts of cash and cash equivalents, accounts payable and accrued expenses and unearned passenger revenue 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

December 31, 2019

and

2018.

As of

December 31, 2019

and

2018,

other than derivative instruments the Company had

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

The asset’s or liability’s fair value measurement within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement.

Derivatives, Policy [Policy Text Block]

Derivative Instruments and Hedging Activities

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. The Company also uses foreign exchange forward contracts, designated as cash flow hedges, to manage its exposure to foreign denominated contracts, particularly the Norwegian Kroner ("NOK"),

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.

By entering into derivative instrument contracts, the Company exposes itself, from time to time, to counterparty credit risk. Counterparty credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is in an asset position, the counterparty has a liability to the Company, which creates credit risk for the Company. The Company continues to monitor counterparty credit risk as part of its ongoing hedge assessments.

The Company’s derivative assets consist principally of interest rate caps and currency exchange contracts, which are carried at fair value based on significant observable inputs (Level

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.

The Company records derivatives on a gross basis in other long-term assets and other liabilities in the consolidated balance sheets at fair value. The accounting for changes in value of the derivative depends on whether or

not

the transaction has been designated and qualifies for hedge accounting. Derivatives that are

not

designated as hedges are reported and measured at fair value through earnings.

The Company applies hedge accounting to interest rate and foreign exchange rate derivatives entered into for risk management purposes. To qualify for hedge accounting, a derivative must be highly effective at reducing the risk associated with the exposure being hedged. In addition, key aspects of achieving hedge accounting are documentation of hedging strategy and hedge effectiveness at the hedge inception and substantiating hedge effectiveness on an ongoing basis. A derivative must be highly effective in accomplishing the hedge objective of offsetting changes in the cash flows of the hedged item for the risk being hedged. The effective portion of changes in the fair value of derivatives designated in a hedge relationship and that qualify as cash flow hedges is recorded in accumulated other comprehensive income, net of tax, and is subsequently reclassified into earnings in the period that the hedged transaction affects earnings.

The Company formally documents the relationship between derivatives and hedged items, as well as the risk-management objective and the strategy for undertaking hedge transactions at the inception of the hedging relationship. This documentation includes linking cash flow hedges to specific assets and liabilities on the balance sheet or to specific forecasted transactions. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivative instruments that are used are highly effective in offsetting changes in fair values or cash flows of the hedged items.

Income Tax, Policy [Policy Text Block]

Income Taxes

The Company is subject to income taxes in both the U.S. and the non-U.S. jurisdictions in which it operates. Significant management judgment is required in projecting ordinary income to determine the Company’s estimated effective tax rate.

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 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 our foreign and U.S. companies to determine the appropriate level of valuation allowances.

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 the Financial Accounting Standards Board's ("FASB") authoritative guidance on accounting for uncertainty in income taxes, and it has established income tax reserves in accordance with this guidance where necessary. As of

December 31, 2019,

the Company had

unrecognized tax benefits and as of

December 31, 2018,

the Company had a liability for unrecognized tax benefits of

$0.3

million, which was included in other long-term liabilities on the Company’s consolidated balance sheets. The guidance also discusses the classification of related interest and penalties on income taxes. The Company’s policy is to record interest and penalties on uncertain tax positions as a component of income tax expense. During the years ended

December 31, 2019

and

2018,

interest and penalties on uncertain tax positions included in income tax expense was insignificant.

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

U.S. federal, state or foreign jurisdiction tax audits pending. During

2018,

the Company closed tax audits on its

three

Ecuadorian entities. 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 have been audited through

2017

Other Long-term Assets [Policy Text Block]

Other Long-Term Assets

2016,

the Company recorded a

$3.6

million tax asset for long-term prepaid value-added taxes related to the importation of the

National Geographic Endeavour II

and expects to earn tax credits that will reduce the asset over the next several years.

2015,

the Company, Mr. Lindblad, the Chief Executive Officer and President of the Company, and National Geographic Society entered into an agreement where Mr. Lindblad agreed to grant National Geographic Society an option to purchase

2,387,499

of Mr. Lindblad’s shares in the Company as consideration for the assumption of the Tour Operator Agreement and an Alliance and License Agreement between the Company and National Geographic. The Company recorded a

$13.8

million long-term asset for the license agreement to be amortized through

March

2020.

The balance of the license agreement asset as of

December 31, 2019

and

2018

was

$0.7

million and

$3.6

million, respectively. 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. See Note

– Commitments and Contingencies for more details.

Financing Receivable [Policy Text Block]

Loan

Receivable

During

December 2019,

the Company and Ulstein Verft AS (“Ulstein Verft”) amended the

National Geographic

Resolution

construction agreement. The amended agreement provides for a

$4.0

million loan to Ulstein Verft, with repayment to be

112%

of the principle loan balance, due on maturity in

December 2023.

The agreement provides that, if the

National Geographic Resolution

is delivered early, as determined by the expedited delivery schedule per the agreement, that all or a portion of the loan will be considered as a delivery bonus and forgiven, as determined by the agreement. The Company incurred approximately

$0.1

million in legal fees related to this loan that were capitalized and will be amortized to interest expense, net over the life of the loan. This receivable is recorded at amortized cost within other long-term assets.

Debt, Policy [Policy Text Block]

Deferred Financing Costs

Deferred financing costs relate to the issuance costs of recognized debt liabilities and are presented in the consolidated balance sheets as direct deduction from the debt carrying amount. Deferred financing costs are amortized over the life of the debt or loan agreement through interest expense, net in the consolidated statements of operations. See Note

– Long-term Debt.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

Foreign Currency Translation

The Company’s functional currency is the U.S. dollar. Any foreign operations and remeasurement adjustments and gains or losses resulting from foreign currency transactions are recorded as foreign exchange gains or losses in the consolidated statements of operations.

Share-based Payment Arrangement [Policy Text Block]

Stock-Based Compensation

The Company accounts for stock-based compensation issued to employees, non-employee directors or other service providers in accordance with ASC

718,

Compensation - Stock Compensation, that requires awards to be recorded at their fair value on the date of grant and amortized over the service period of the award. The Company recognizes stock-based compensation costs on a straight-line basis over the requisite service period of the award, which is generally the vesting term of the equity instrument issued, within general and administrative expenses.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

December 2019,

the FASB issued ASU

2019

12,

Income Taxes (Topic

740

)–Simplifying the Accounting for Income Taxes. The amendments of this ASU are intended to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic

740.

The amendments also improve consistent application of and simplify GAAP for other areas of Topic

740

by clarifying and amending existing guidance. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after

December 15, 2020,

and early adoption is permitted. The Company will adopt this ASU as required, and is currently reviewing the impact of the amendments of this update on its financial statements.

Accounting Pronouncements Recently Adopted

February 2016,

the 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

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.

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

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.

August 2018,

the FASB issued ASU

2018

Intangibles—Goodwill and Other—Internal-Use Software (Subtopic

350

): 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

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.