LINDBLAD EXPEDITIONS HOLDINGS, INC. Commitments Disclosure

NOTE 10 — COMMITMENTS AND CONTINGENCIES

 

Redeemable Non-Controlling Interest Contingent Arrangements

 

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 agreements were established to provide formal exit opportunities for the minority interest holders and a path to 100% ownership for the Company. The put options, under certain conditions, 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 does 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.

 

Mr. Bressler, Founder and Chief Executive Officer of Natural Habitat, retains a 9.9% noncontrolling interest in Natural Habitat, which is subject to a put/call arrangement, amended May 2020,  December 2022 and July 2025. Mr. Bressler exercised a first put option in April 2024, that enabled him to sell 9.95% interest in Natural Habitat to the Company, valued as of  December 31, 2023, for $15.2 million, increasing the Company’s ownership of Natural Habitat to 90.1%. Mr. Bressler has a put right which may be exercised annually, up to 50% in any given year, for so long as Mr. Bressler holds any interest in Natural Habitat, that enables him, but does not obligate him, that under certain conditions, to sell his remaining interest in Natural Habitat to the Company, valued as of  December 31 of that year of exercise. The Company has a call option, but not an obligation, under which it can acquire Mr. Bressler’s remaining interest at a similar fair value measure as Mr. Bressler’s put option, subject to a call purchase price minimum.

 

Mr. Lawrence, President of Off the Beaten Path, through a combination of his original minority interest and the profit interest units he received pursuant to the acquisition in 2021, retains a 19.9% noncontrolling interest in Off the Beaten Path, which is subject to a put/call arrangement, as amended October 2025. Mr. Lawrence has a put option, as amended, beginning January 1, 2029 and until December 31, 2032, that under certain conditions, enables him, but does not obligate him, to sell to the Company up to 25% of his remaining interest in Off the Beaten Path, in each of those four calendar years, provided that if the put right is not exercised in any year, it shall roll over and increase the following year’s eligible put right percentage accordingly. The Company’s call option  may be exercised on or after December 31, 2029, with an expiration of  December 31, 2032, under which it can acquire Mr. Lawrence’s remaining interest at a similar fair value measure as Mr. Lawrence’s put option. 

 

Mr. Levine, founder of DuVine, retains a 25% noncontrolling interest in DuVine, which is subject to a put/call arrangement that was amended in January 2026. During April 2024, the Company exercised a portion of its call option on DuVine, acquiring an additional 5% of the business and increased its total ownership of DuVine to 75%, for $1.5 million. Mr. Levine has a put option, that under certain conditions and subject to providing notice by  January 31, 2028 (the “Amended Initial Notice Date”), enables him, but does not obligate him, to sell half (the “50% Put Right”) or all of his remaining interest in DuVine to the Company, valued as of  December 31, 2027, provided, however, that if DuVine does not provide notice of exercise of its put right by January 31, 2028, then DuVine may not exercise its put right until the following year, and, provided, further, that DuVine’s right to put all of his remaining interest to the Company is a one-time right that may only be exercised by providing notice by the Amended Initial Notice Date. Mr. Levine’s right to put any remaining interests to the Company beginning December 31, 2028 and thereafter, Mr. Levine’s put right shall be limited to the 50% Put Right until Mr. Levine no longer retains any ownership interest in DuVine. The Company has an amended first call option, commencing December 31, 2027 and every year thereafter until Mr. Levine no longer retains any ownership interest in DuVine, to acquire an additional 50% of Mr. Levine’s retained ownership interests in Duvine, under which it can acquire Mr. Levine’s remaining interest at a similar fair value measure as Mr. Levine’s put option, subject to a call purchase price minimum. 

 

Mr. and Mrs. Piegza, co-founders of Classic Journeys, retain a 19.9% noncontrolling interest in Classic Journeys, which is subject to a put/call arrangement. Mr. and Mrs. Piegza have a put option that under certain conditions, and subject to providing notice by November 13, 2026, that enables them, but does not obligate them, to sell their remaining interest in Classic Journeys to the Company, valued as of the fiscal quarter prior to the put notice. The Company has a call option, but not an obligation, under which it can acquire Mr. and Mrs. Piegza’s remaining interest at a similar fair value measure as Mr. and Mrs. Piegza’s put option. 

 

Since the redemption of these noncontrolling interests is 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, as such 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 method 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 fair value of the noncontrolling interest, are classified to retained earnings. Adjustments in excess of the fair value of the noncontrolling interest, are treated as a decrease to net income available to common stockholders. The fair value of the put options was determined using a discounted cash flow model. The redemption values were adjusted to their present values using the Company’s weighted average cost of capital. 

 

The following is a rollforward of the redeemable noncontrolling interest:

 

		For the years ended December 31,
		2025				2024				2023
(In thousands)
Beginning balance		$	29,424			$	37,784			$	27,886
Net income attributable to noncontrolling interest			5,496				2,984				4,734
Redemption value adjustment of put option			13,877				4,853				5,695
Distribution			(1,145	)			(1,400	)			(531	)
Acquired businesses᾽ noncontrolling interest			296				-				-
Redemption of put and/or call options			-				(14,797	)			-
Ending balance		$	47,948			$	29,424			$	37,784

 

Lease Commitments 

 

The Company leases office space, land for safari base camps and equipment under long-term leases, which are classified as operating leases. As of December 31, 2025, the Company’s remaining weighted average operating lease terms were approximately 11.3 years. A reconciliation of operating lease payments undiscounted cash flows to lease liabilities recognized as of December 31, 2025 is as follows:

 

(In thousands)		Operating Lease Payments
2026		$	1,126
2027			1,825
2028			1,456
2029			1,480
2030			874
Thereafter			3,083
Present value discount (18% weighted average)			(1,816	)
Total		$	8,028

 

Lease expense was $3.1 million, $2.6 million and $2.7 million for the years ended December 31, 2025, 2024 and 2023, respectively. These amounts are recorded within general and administrative expenses.

 

Brand License Agreement – National Geographic

 

The Company is party to a brand license agreement with National Geographic through 2040, 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. Prior to 2024, 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, and with third parties to provide chartered air service for guests and crew on certain of its expeditions. 

 

Future minimum payments on its charter agreements are as follows:

 

For the years ended December 31,		Amount
(In thousands)
2026		$	15,504
2027			13,572
2028			4,285
2029			4,413
Total		$	37,774

 

Other Commitments

 

The Company participates, with other tour operators, in the Consumer Protection Insurance Plan sponsored by the United States Tour Operators Association (“USTOA”). The USTOA requires a $1.0 million performance bond, letter of credit or assigned certificate of deposit from its members to insure this plan. The Company has assigned a $1.0 million letter of credit to the USTOA to satisfy this requirement. This letter of credit will be used only if the Company becomes insolvent and cannot refund its customers’ deposits.

 

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. In the opinion of management, after consulting legal counsel, there are no outstanding proceedings that are expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows.