Note 10 - Commitments and Contingencies

9 Months Ended

Sep. 30, 2024

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

NOTE 10—COMMITMENTS AND CONTINGENCIES

Redeemable Non-Controlling Interest

The Company has controlling interests in its Natural Habitat, Off the Beaten Path, DuVine and Classic Journeys consolidated subsidiaries. The noncontrolling interests are subject to put/call agreements. The put options enable the minority holders, but do not obligate them, to sell the remaining interests to the Company. The Company has call options which enable it, but do not obligate it, to acquire the remaining interests in the subsidiaries, subject to certain dates, expirations and similar redemption value purchase measurements as the put options. 

Since the redemption of the noncontrolling interests are not solely in the Company’s control, the Company is required to record the redeemable noncontrolling interest outside of stockholders’ equity but after its total liabilities. In addition, if it is probable that the instrument will become redeemable, solely due to the passage of time, the redeemable noncontrollable interest should be adjusted to the redemption value via one of two measurement methods. The Company elected the income classification-excess adjustment and accretion methods for recognizing changes in the redemption value of the put options. Under this methodology, a calculation of the present value of the redemption value is compared to the carrying value of the redeemable noncontrolling interest, and the carrying value of the redeemable noncontrolling interest is adjusted to the redemption value’s present value. Any adjustments to the carrying value of the redeemable noncontrolling interest, up to the redemption value of the noncontrolling interest, are classified to retained earnings. Adjustments in excess of the redemption value of the noncontrolling interest are treated as a decrease to net income available to common stockholders.

During April 2024, Mr. Bressler exercised a portion of the put option on Natural Habitat, allowing the Company to acquire an additional 9.95% of Natural Habitat for $15.2 million, increasing its ownership to 90.1%. Additionally, during April 2024, the Company exercised a portion of its call option on DuVine, acquiring an additional 5% of the business and increasing its total ownership of DuVine to 75%, for $1.5 million.

The redemption value of the put options were determined using a discounted cash flow model. The redemption values were adjusted to their present value using the Company’s weighted average cost of capital. 

The following is a rollforward of redeemable non-controlling interest: 

	For the three months ended September 30,					For the nine months ended September 30,
	2024			2023		2024			2023
(In thousands)	(unaudited)					(unaudited)
Beginning balance	$	24,233		$	30,513	$	37,784		$	27,886
Net income attributable to noncontrolling interest		2,683			2,821		3,125			3,742
Redemption value adjustment of put option		1,126			898		2,830			2,859
Distribution		(500	)		-		(1,400	)		(255	)
Redemption of put and/or call options		-			-		(14,797	)		-
Ending balance	$	27,542		$	34,232	$	27,542		$	34,232

Brand License Agreement – National Geographic

The Company is party to a brand license agreement with National Geographic, effective January 1, 2024, which includes a co-selling and co-marketing arrangement through which National Geographic promotes the Company’s offerings in its marketing campaigns across web-based, email, print and other marketing platforms and distributes the Company’s expeditions through the Disney Signature Experiences platform and also allows the Company to use the National Geographic name and logo. In return for these rights, the Company is charged a royalty fee, which is included within selling and marketing expense. The fee is calculated based upon a percentage of substantially all ticket revenues, less travel agent commission, including the revenues received from cancellation fees and any revenues received from the sale of pre- and post-expedition extensions. Beginning in 2026, the agreement has minimum royalties that increase annually through the end of the agreement term, which based on current performance are expected to be exceeded. In 2023, the Company operated under its former alliance and license agreement with National Geographic, where National Geographic sold the Company’s expeditions through its internal travel division in return for a commission fee and also allowed the Company to use the National Geographic name and logo in return for a royalty fee. Both the commission and royalty fees were recorded within selling and marketing expense. 

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, 2024 are as follows:

For the years ended December 31,	Amount
(In thousands)
2024 (three months)	$	574
2025		17,795
2026		6,903
Total	$	25,272

Other

The Company has an agreement for the acquisition of Torcatt Enterprises Limitada, a holding company that operates two vessels in the Galápagos Islands, for $17.0 million. The acquisition is expected to close in January 2025.