Norwegian Cruise Line Annual Report 2019

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FY2019 Annual Report · Norwegian Cruise Line

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2 0 1 9 A N N U A L R E P O R T

MISSION

To provide exceptional vacation

experiences, delivered by passionate

team members committed to

world-class hospitality and innovation

Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH)

is a leading global cruise company which operates

the Norwegian Cruise Line, Oceania Cruises

and Regent Seven Seas Cruises brands. With a

combined fleet of 28 ships with approximately

VISION

To be the vacation of choice for

everyone around the world

Flawless Execution

59,150 berths, these brands offer itineraries to more

Dedication to Family and Community

than 490 destinations worldwide. The Company

has nine additional ships on order for its three

award-winning brands.

VALUES

Spirit of Entrepreneurship

Financial Excellence

Environmental Stewardship

As the innovator in global cruise travel, Norwegian Cruise Line
has been breaking the boundaries of traditional cruising for
over 53 years. Most notably, the cruise line revolutionized
the industry by offering guests the freedom and flexibility to
design their ideal vacation on their preferred schedule with
no assigned dining and entertainment times and no formal
dress codes. Today, its fleet of 17 contemporary ships sails to
nearly 300 of some of the world’s most desirable destinations,
including Great Stirrup Cay, the company’s private island in
the Bahamas, and its resort destination Harvest Caye in Belize.

Oceania Cruises is the world’s leading culinary- and
destination-focused cruise line. The line’s six intimate and
luxurious ships carry only 684 or 1,250 guests and offer an
unrivaled vacation experience featuring the finest cuisine
at sea and destination-rich itineraries that span the globe.
Expertly crafted voyages aboard designer-inspired, intimate
ships call on more than 450 ports across Europe, Alaska,
Asia, Africa, Australia, New Zealand, New England-Canada,
Bermuda, the Caribbean, the Panama Canal, Tahiti and the
South Pacific and epic 180-day Around the World Voyages.
The brand has two 1,200-guest Allura-class ships on order.

Regent Seven Seas Cruises offers an unrivaled experience to
luxury travelers, visiting more than 450 iconic and immersive
destinations around the world. The cruise line’s modern fleet
recently expanded with Seven Seas SplendorTM in 2020 as
the fleet’s fifth ship and has an additional ship on order. All
luxuries are included in Regent Seven Seas Cruises voyages,
such as all-suite accommodations, round-trip business-class
air on intercontinental flights from the U.S. and Canada, the
largest collection of unlimited shore excursions, unlimited
internet access, highly personalized service, exquisite cuisine,
fine wines and spirits, gratuities and ground transfers.

Norwegian Encore, Basseterre, St. Kitts

Riviera, Valletta, Malta

Seven Seas Explorer®, Sorrento, Italy

DEAR FELLOW SHAREHOLDERS,

I am pleased to report that 2019 was another remarkable year for Norwegian Cruise Line Holdings Ltd.

Along with delivering record financial results, the year marked several key milestones for us, including

the highly anticipated debut of the 27th ship in our fleet, the best-in-class Norwegian Encore; the

tremendously successful introduction of Norwegian Joy to the North American market; the unveiling

of Silver Cove, the new and exclusive oceanfront, resort-style complex at Great Stirrup Cay; additional

investments to enhance the guest experience at each of our three award-winning brands; and the

continued expansion of our global environmental program, Sail & Sustain, which puts our commitment

to the protection and preservation of our oceans, the environment and the destinations that we visit at

the very core of our everyday operations.

Reception Area, Silver Cove at Great Stirrup Cay

New York Stock Exchange

STRONG FINANCIAL RESULTS

In 2019, we benefited from the continued robust booking environment and strong global demand for cruise
vacations on our brands. We achieved best-in-class Net Yield* of $257.20, marking our seventh consecutive year
of Net Yield* growth, and generated record Adjusted EPS* of $5.09.

Our impressive results were achieved despite several headwinds in the year, including the sudden termination
of sailings to Cuba as well as the impact from record-setting Hurricane Dorian. These events represented a
negative impact of $0.67 to Adjusted EPS* and 200 basis points to Net Yield* for the year. If not for these
uncontrollable events, our financial results would have significantly exceeded our initial expectations for Net
Yield* growth and Adjusted EPS.* Despite these uncontrollable headwinds, our strong earnings for the year
underscored the continued strength of our core business.

FULL YEAR 2019 HIGHLIGHTS

Record Revenue

Record Adjusted EPS

Gross Yield of

Net Yield of

BEST-IN-CLASS YIELDS

$6.5

$5.09*

$336.00

$257.20*

*Net Yield and Adjusted EPS are non-GAAP financial measures. A reconciliation to the most directly comparable GAAP financial measure and other associated disclosures are contained in Management’s
Discussion and Analysis of Financial Condition and Results of Operation and in the Annex to this Annual Report.

We also further strengthened our balance sheet, with Net Leverage* of 3.4x at year end. Concurrently, our
operations continued to generate significant cash in 2019, a key differentiator versus industry peers. In
addition, since January 1, 2018, we have returned over $1 billion of capital to shareholders by repurchasing
19 million shares, or 9% of our outstanding shares as of year end 2019.

Opening Bell, New York Stock Exchange

Captain Niklas Persson, Norwegian Encore (L)
Frank Del Rio, President and Chief Executive Officer, Norwegian Cruise Line Holdings Ltd. (R)

2019 RECORD FINANCIAL PERFORMANCE

Source: Company filings.

Highest Net
Ticket Yield*

$176.59

Highest Net
Onboard Yield*

$80.60

Highest Net
Yield*

$257.20

Industry Leader Across all
Net Yield* Metrics with
Seventh Consecutive Year
of Net Yield* Growth

*Net Leverage, Net Yield, Net Ticket Yield and Net Onboard Yield are non-GAAP financial measures. A reconciliation to the most directly comparable GAAP financial measure and other associated
disclosures are contained in Management's Discussion and Analysis of Financial Condition and Results of Operation and in the Annex to this Annual Report.

HIGHLY ANTICIPATED NORWEGIAN ENCORE JOINS FLEET

Norwegian Encore, St. Thomas

Our newest and most innovative ship, Norwegian Encore, was
welcomed into the Norwegian Cruise Line fleet in November as
the best booked and highest priced Caribbean-introduced ship
in our history. Following an extended inaugural program that
introduced the ship to thousands of travel partners in several
of the world’s leading cruise ports and garnered over 2.4 billion
media impressions, Norwegian Encore was officially christened at
her home in Miami, Florida, on November 21, 2019.

Laser Tag

GRAMMY Award-winning singer
and television host Kelly Clarkson
served as the ship’s Godmother.
This milestone marked the
culmination of our most successful
class of ships, the Breakaway
Plus Class, which first debuted
in Miami with the introduction of
Norwegian Escape in 2015.

Kelly Clarkson performance at
the Norwegian Encore Inaugural

Norwegian Encore takes the brand’s exclusive, stand-out
attractions to the next level, featuring the world’s longest electric
go-cart race track at sea with four high-speed curves extending
up to 13 feet over the side of the ship; the largest outdoor laser
tag arena at sea at nearly 10,000 square feet; and new immersive
escape room and interactive theater and virtual reality experiences
in the 10,000-square-foot Galaxy Pavilion.

In addition to featuring many of the highly rated restaurants and
lounges exclusive to the Breakaway Plus Class, Norwegian Encore
also debuted a new elevated Italian dining experience, Onda
by Scarpetta, in collaboration with LDV Hospitality. The Tony
Award®-winning musical Kinky Boots headlines the world-class
entertainment on board, with returning guest favorites The Choir
of Man, Happy Hour Prohibition: The Musical and the rocking
Beatles cover band at The Cavern Club.

Galaxy Pavilion

Onda by Scarpetta

COMMITMENT TO ESG INITIATIVES

We are committed to driving a positive impact on society and the
environment through the advancement of our global Environmental,
Social and Governance (ESG) strategy. In 2019, we established the
Technology, Environmental, Safety and Security (TESS) Committee
of our Board of Directors. The TESS Committee oversees matters
related to corporate social responsibility and sustainability. The
committee is chaired by Mary E. Landry, a former rear admiral of the
U.S. Coast Guard, who has developed a strong background in marine
safety, risk management and government policy over the course of
her 35-year career with the U.S. government.

55 MILLION
Plastic straws
eliminated fleetwide
annually

11 MILLION
Plastic water
bottles
eliminated
fleetwide
annually

$3 MILLION
Donated to
help rebuild the
Bahamas after
Hurricane Dorian

60%
of Company's Board
of Directors comprised
of members with
diverse backgrounds

We continue to expand our global sustainability program, Sail & Sustain, which
remains a core focus in our everyday operations and has now been integrated into
our culture. As we continue our efforts to transition away from single-use plastics,
Norwegian Cruise Line became the first major global cruise company to become
plastic water bottle free with its partnership with JUST Goods, Inc. As of January 1,
2020, the cruise line replaced all single-use plastic water bottles across its fleet
with JUST Water, 100% spring water in a plant-based carton that is refillable and
recyclable. The brand expects to eliminate over six million plastic water bottles each
year as part of its effort to provide guests with more environmentally friendly and
sustainable options at sea. Regent and Oceania Cruises both announced partnerships
with Vero Water® to replace single-use plastic water bottles on board, which together
are expected to eliminate an additional five million plastic water bottles each year.

Norwegian Cruise Line was proud to donate the use of Norwegian Encore to
host the Boys & Girls Club of Miami-Dade’s Wild About Kids Gala in November.
The Boys & Girls Club supports youth from low-income families and single-parent
households by providing safe and nurturing activities such as after-school
programs, summer school and sports league services. More than 1,600 guests
attended the gala and the event raised over $1.4 million.

In addition, with Norwegian Joy’s North
American debut, we also launched the Giving
Joy campaign, which honored deserving
teachers that are doing the most to bring joy to
their students. Thirty teachers were awarded a
complimentary seven-day cruise for two, and
three grand prize finalists were also awarded with
cash prizes of $25,000, $15,000 and $10,000 for
their school’s general operating fund.

Giving Joy Grand Prize Finalists

We are taking a proactive approach to ESG efforts, and earlier this year we announced the creation of a dedicated
ESG department. This new function will further enhance our overall ESG strategy while coordinating closely with
departments across the organization including Health, Medical, Safety and Environmental Operations, Human
Resources, Supply Chain and Legal. This new department will also be responsible for all updates to the Board of
Directors including the TESS Committee.

Partnerships

HURRICANE RELIEF

We relaunched our Hope Starts Here hurricane relief campaign in
partnership with All Hands and Hearts to provide immediate
short-term relief for those affected by the devastating Hurricane
Dorian. In less than one month, the program received donations
from our valued team members, loyal guests and travel and
business partners, which we matched with a $2 million cash
contribution as well as nearly $1 million of in-kind donations to assist
All Hands and Hearts with emergency response efforts across
The Bahamas, including debris cleanup and removal, and the
rebuilding of community infrastructure such as housing and schools.

Nassau, Bahamas

In addition, we coordinated with local Bahamian authorities to
bring needed provisions to the affected areas, and Norwegian
Breakaway departed Miami with hurricane relief supplies donated
by our employees, as well as items collected by the City of Miami
and other local organizations.

$3 MILLION
DOLLARS
TO HELP REBUILD THE BAHAMAS

Over 2,200 lbs.
of Fresh Produce

115,000
Non-Perishable
Food Items

125,000
Bottles of Water

60,000
Batteries

9,000
Medical Items

50
Generators

6
Trucks

50,000
sq. ft. of Plywood

Norwegian Joy, Alaska

ITINERARY OPTIMIZATION

NORWEGIAN JOY

Norwegian Joy made her U.S. debut in late April following a transformative renovation, which made
her amenities and experiences nearly identical to her highly successful sister ship, Norwegian Bliss. Her
redeployment to serve the North American market was incredibly successful, with meaningful contributions
to the top and bottom lines. She joined Norwegian Bliss to form the cornerstone of a strong Alaska
deployment in 2019 after which she redeployed to sail Mexican Riviera and Panama Canal cruises.

RE-ROUTING OF CUBA SAILINGS

The abrupt termination of sailings to Cuba was an
unforeseen headwind we faced mid-year. Teams across
our three brands did an incredible job in reacting quickly
to comply with the new regulations, providing itinerary
alternatives, creating new itineraries and even completely
new deployments for affected vessels. For the two
Norwegian brand vessels with sailings to Cuba, itineraries
were modified to include Freeport and/or Nassau in place
of Havana, while continuing to call on Great Stirrup Cay.

Oceania Cruises converted its near-term Cuba program into
Eastern and Western Caribbean voyages. For the second
half of 2019, the brand extended its premium-priced fall
Mediterranean season and complemented it with a new and
exotic collection of sailings to the Eastern Mediterranean
including calls to Turkey and the Holy Land, the Arabian
Peninsula and into Southeast Asia. Lastly, Regent, which
had the least exposure to Cuba of our three brands,
replaced its Cuba program with additional sailings to South
America, the Panama Canal and Bermuda.

Nassau, Bahamas

Istanbul, Turkey

SEVEN SEAS SPLENDOR, LUXURY PERFECTED

Seven Seas SplendorTM, Miami

Caption to come

Earlier this year, we introduced the highly anticipated
Seven Seas Splendor, the second Explorer-Class ship,
to the Regent Seven Seas Cruises fleet. At 750 berths,
the all-suite, all-balcony ship embodies and perfects
the elegance, style and luxury that have made sister
ship Seven Seas Explorer® renowned as the most
luxurious ship ever built. Over an acre of Italian marble
adorns Seven Seas Splendor, and her 375 suites
include nearly 52,000 square feet of balcony space,
featuring some of the largest balconies at sea. Seven
Seas Splendor also features a multimillion-dollar art
collection, a Culinary Arts Kitchen with 18 stations for
hands-on gourmet cooking experiences presented by
master chef instructors, and the newly created Serene
Spa & Wellness™, a globally inspired tranquil haven of
health, beauty and wellness.

Christie Brinkley, a universally
beloved beauty and fashion
icon who is synonymous
worldwide for her beauty, style
and commitment to health and
happiness, fittingly served as the
ship's Godmother. During her
inaugural 2020 season, Seven
Seas Splendor will be helmed by
Captain Serena Melani, a 30-year
veteran and the first woman in
cruise industry history to captain
a new ocean cruise ship at launch.

Captain
Serena Melani

Regent Suite, Seven Seas Splendor

Christie Brinkley, Seven Seas Splendor's Godmother

Caption to come

NAVIGATING THROUGH UNPRECEDENTED CHALLENGES

It is my extraordinary privilege to lead and work alongside our more than 36,000 dedicated and passionate
team members across the globe to deliver exceptional vacation experiences to our guests. I am very proud of
our team’s many accomplishments in 2019 and had high expectations for another successful year in 2020.

Prior to the emergence of the COVID-19 coronavirus, 2020 was shaping up to be an incredibly good year,
and we continued to experience strong demand across our three brands, which resulted in a record booked
position entering this year. The impact of the global outbreak has been swift, severe and significant on our
business. In a short time, our focus has shifted from optimizing the strong demand environment to adapting
to a new challenging one that evolves daily. The fluidity of this new operating environment has required us to
be nimble and adapt swiftly. Our number one priority is the health, safety and security of our guests, crew and
the communities we visit. As such, we made the difficult but necessary decision to temporarily suspend global
cruise operations to do our part in containing the spread of the virus.

I am extremely proud of how our team has joined together to navigate through these unprecedented times.
We are an extremely resilient company, as is our industry, and we have demonstrated our resilience by
overcoming several exogenous headwinds over the past fifty-plus years we have been in operation. We look
forward to providing exceptional vacation experiences, delivered by passionate team members committed to
world-class hospitality and innovation for many years to come.

Thank you for your continued support.

Frank Del Rio
President and Chief Executive Officer

Norwegian Cruise Line Holdings Ltd.

NORWEGIAN CRUISE LINE
FLEET

LEONARDO CLASS – Coming Soon

NORWEGIAN ENCORE

NORWEGIAN BLISS

NORWEGIAN JOY

NORWEGIAN ESCAPE

NORWEGIAN GETAWAY

NORWEGIAN BREAKAWAY

NORWEGIAN EPIC

NORWEGIAN GEM

NORWEGIAN PEARL

NORWEGIAN JADE

NORWEGIAN JEWEL

PRIDE OF AMERICA

NORWEGIAN DAWN

NORWEGIAN STAR

NORWEGIAN SUN

NORWEGIAN SKY

NORWEGIAN SPIRIT

REGENT SEVEN SEAS CRUISES
FLEET

OCEANIA CRUISES
FLEET

EXPLORER-CLASS III – Coming Soon

ALLURA – Coming Soon

ALLURA-CLASS II – Coming Soon

SEVEN SEAS SPLENDOR™

RIVIERA

MARINA

SEVEN SEAS EXPLORER®

SIRENA

NAUTICA

SEVEN SEAS VOYAGER®

REGATTA

INSIGNIA

SEVEN SEAS MARINER®

SEVEN SEAS NAVIGATOR®

To help fulfill our commitment to the environment, every ship in our fleet has an Environmental
Officer (EO) who oversees shipboard environmental compliance, answers guests’ environmental
questions and identifies areas for improvement.

Norwegian Cruise Line: ALANA REIS ENES RIBEIRO
Ms. Ribeiro was born in Brazil and joined the company in 2015. She has served
on both Norwegian Sun and Norwegian Jewel.

“I am proud to do my best to conserve the oceans. Working at a cruise line
that takes environmental issues seriously makes all the difference.”

Oceania Cruises: SALVATORE GIUNTA
Mr. Giunta was born in Pozzallo, Italy, a small town on the southeast coastline of
Sicily. He joined Regent Seven Seas Cruises in 2006 and Oceania Cruises in 2009
and is currently serving as the EO on board Regatta.

“As an EO, I feel like I am playing my role in protecting the world from pollution.”

Regent Seven Seas Cruises: MATIJA STAROVESKI
Mr. Staroveski was born in Zadar, Croatia, and had an interest in the ocean from
a young age. He joined the company in 2009 and has served on several Oceania
Cruises and Regent Seven Seas ships, most recently on Seven Seas Splendor.™

“ I enjoy having a chance to help save our planet and working with people
from all around the world.”

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended December 31, 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: 001-35784

NORWEGIAN CRUISE LINE HOLDINGS LTD.
(Exact name of registrant as specified in its charter)

Bermuda
(State or other jurisdiction of
incorporation or organization)

98-0691007
(I.R.S. Employer
Identification No.)

7665 Corporate Center Drive, Miami, Florida 33126
(Address of principal executive offices) (zip code)

(305) 436-4000
(Registrant’s telephone number, including area code)

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

Title of each class
Ordinary shares, par value $0.001 per share

Trading Symbol(s)
NCLH

Name of each exchange on which registered
The New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  No 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  No 

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, a 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 ☒
Non-accelerated filer 

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 Act). Yes ☐ No ☒

As of June 28, 2019, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of voting stock held by non-

affiliates of the registrant based upon the closing sales price for the registrant’s ordinary shares as reported on The New York Stock Exchange was $11.5 billion.

There were 213,202,541 ordinary shares outstanding as of February 14, 2020.

Documents Incorporated by Reference

Portions of the Proxy Statement for the registrant’s 2020 Annual General Meeting of Shareholders, to be filed with the Securities and Exchange Commission not later

than 120 days after December 31, 2019, are incorporated by reference in Part III herein.

NORWEGIAN CRUISE LINE HOLDINGS LTD.

TABLE OF CONTENTS

Business

PART I
Item 1.
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2.
Item 3.
Item 4. Mine Safety Disclosures

Properties
Legal Proceedings

PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of

Equity Securities
Selected Financial Data

Item 6.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Financial Statements and Supplementary Data
Item 8.
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information

PART III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters

Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14.

Principal Accounting Fees and Services

PART IV
Item 15. Exhibits, Financial Statement Schedules
Item 16.
Signatures

Form 10-K Summary

Page

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67

Terms Used in this Annual Report

Unless otherwise indicated or the context otherwise requires, references in this annual report to (i) the “Company,”
“we,” “our” and “us” refer to NCLH (as defined below) and its subsidiaries, (ii) “NCLC” refers to NCL Corporation
Ltd., (iii) “NCLH” refers to Norwegian Cruise Line Holdings Ltd., (iv) “Norwegian Cruise Line” or “Norwegian”
refers to the Norwegian Cruise Line brand and its predecessors, (v) “Prestige” refers to Prestige Cruises
International S. de R.L. (formerly Prestige Cruises International, Inc.), together with its consolidated subsidiaries,
including Oceania Cruises S. de R.L. (formerly Oceania Cruises, Inc.) (“Oceania Cruises”) and Seven Seas Cruises
S. de R.L. (“Regent”) (Oceania Cruises also refers to the brand by the same name and Regent also refers to the
brand Regent Seven Seas Cruises), (vi) “Apollo” refers to Apollo Global Management, LLC, its subsidiaries and the
affiliated funds it manages, (vii) “Genting HK” refers to Genting Hong Kong Limited and/or its affiliates, and (viii)
“Sponsors” refers to Apollo, certain affiliates of TPG Global, LLC and/or Genting HK.

References to the “U.S.” are to the United States of America, and “dollars” or “$” are to U.S. dollars, the “U.K.” are
to the United Kingdom and “euros” or “€” are to the official currency of the Eurozone.

This annual report includes certain non-GAAP financial measures, such as Net Revenue, Net Yield, Net Cruise
Cost, Adjusted Net Cruise Cost Excluding Fuel, Adjusted EBITDA, Adjusted Net Income and Adjusted EPS.
Definitions of these non-GAAP financial measures are included below. For further information about our non-
GAAP financial measures including detailed adjustments made in calculating our non-GAAP financial measures
and a reconciliation to the most directly comparable GAAP financial measure, we refer you to “Item 7—
Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Unless otherwise indicated in this annual report, the following terms have the meanings set forth below:

 Acquisition of Prestige. In November 2014, we acquired Prestige in a cash and stock transaction for total

consideration of $3.025 billion, including the assumption of debt.

 Adjusted EBITDA. EBITDA adjusted for other income (expense), net and other supplemental adjustments.

 Adjusted EPS. Adjusted Net Income divided by the number of diluted weighted-average shares outstanding.

 Adjusted Net Cruise Cost Excluding Fuel. Net Cruise Cost Excluding Fuel adjusted for supplemental

adjustments.

 Adjusted Net Income. Net income adjusted for supplemental adjustments.

 Allura Class Ships. Oceania Cruises’ two ships on order.

 Berths. Double occupancy capacity per cabin (single occupancy per studio cabin) even though many cabins can

accommodate three or more passengers.

 Breakaway Class Ships. Norwegian Breakaway and Norwegian Getaway.

 Breakaway Plus Class Ships. Norwegian Escape, Norwegian Joy, Norwegian Bliss and Norwegian Encore.

 Capacity Days. Available Berths multiplied by the number of cruise days for the period.

 Constant Currency. A calculation whereby foreign currency-denominated revenue and expenses in a period are

converted at the U.S. dollar exchange rate of a comparable period to eliminate the effects of foreign exchange
fluctuations.

 Dry-dock. A process whereby a ship is positioned in a large basin where all of the fresh/sea water is pumped out

in order to carry out cleaning and repairs of those parts of a ship which are below the water line.

 EBITDA. Earnings before interest, taxes, and depreciation and amortization.

 EPS. Earnings per share.

 Explorer Class Ships. Regent’s Seven Seas Explorer, Seven Seas Splendor, and an additional ship on order.

 GAAP. Generally accepted accounting principles in the U.S.

 Gross Cruise Cost. The sum of total cruise operating expense and marketing, general and administrative

expense.

 Gross Tons. A unit of enclosed passenger space on a cruise ship, such that one gross ton equals 100 cubic feet

or 2.831 cubic meters.

 Gross Yield. Total revenue per Capacity Day.



IMO. International Maritime Organization, a United Nations agency that sets international standards for
shipping.

IPO. The initial public offering of 27,058,824 ordinary shares, par value $0.001 per share, of NCLH, which was
consummated on January 24, 2013.

 Net Cruise Cost. Gross Cruise Cost less commissions, transportation and other expense and onboard and other

expense.

 Net Cruise Cost Excluding Fuel. Net Cruise Cost less fuel expense.

 Net Revenue. Total revenue less commissions, transportation and other expense and onboard and other expense.

 Net Yield. Net Revenue per Capacity Day.

 Occupancy Percentage. The ratio of Passenger Cruise Days to Capacity Days. A percentage greater than 100%

indicates that three or more passengers occupied some cabins.

 Passenger Cruise Days. The number of passengers carried for the period, multiplied by the number of days in

their respective cruises.

 Project Leonardo. The next generation of ships for our Norwegian brand.

 Revolving Loan Facility. $875.0 million senior secured revolving credit facility.



SEC. U.S. Securities and Exchange Commission.

Secondary Equity Offering(s). Secondary public offering(s) of NCLH’s ordinary shares in December 2018,
March 2018, November 2017, August 2017, December 2015, August 2015, May 2015, March 2015, March
2014, December 2013 and August 2013.

Shipboard Retirement Plan. An unfunded defined benefit pension plan for certain crew members which
computes benefits based on years of service, subject to certain requirements.

Cautionary Statement Concerning Forward-Looking Statements

Certain statements in this annual report constitute forward-looking statements within the meaning of the U.S. federal
securities laws intended to qualify for the safe harbor from liability established by the Private Securities Litigation
Reform Act of 1995. All statements other than statements of historical facts contained, or incorporated by reference,
in this annual report, including, without limitation, those regarding our business strategy, financial position, results
of operations, plans, prospects and objectives of management for future operations (including expected fleet
additions, development plans, objectives relating to our activities and expected performance in new markets), are
forward-looking statements. Many, but not all, of these statements can be found by looking for words like “expect,”
“anticipate,” “goal,” “project,” “plan,” “believe,” “seek,” “will,” “may,” “forecast,” “estimate,” “intend,” “future”
and similar words. Forward-looking statements do not guarantee future performance and may involve risks,
uncertainties and other factors which could cause our actual results, performance or achievements to differ
materially from the future results, performance or achievements expressed or implied in those forward-looking
statements. Examples of these risks, uncertainties and other factors include, but are not limited to the impact of:

•

adverse events impacting the security of travel, such as terrorist acts, armed conflict and threats thereof, acts of
piracy, and other international events;

adverse incidents involving cruise ships;

adverse general economic and related factors, such as fluctuating or increasing levels of unemployment,
underemployment and the volatility of fuel prices, declines in the securities and real estate markets, and
perceptions of these conditions that decrease the level of disposable income of consumers or consumer
confidence;

the spread of epidemics and viral outbreaks;

breaches in data security or other disturbances to our information technology and other networks or our actual
or perceived failure to comply with requirements regarding data privacy and protection;

•

changes in fuel prices and the type of fuel we are permitted to use and/or other cruise operating costs;

• mechanical malfunctions and repairs, delays in our shipbuilding program, maintenance and refurbishments and

the consolidation of qualified shipyard facilities;

•

the risks and increased costs associated with operating internationally;

fluctuations in foreign currency exchange rates;

the unavailability of ports of call;

overcapacity in key markets or globally;

our expansion into and investments in new markets;

our inability to obtain adequate insurance coverage;

our indebtedness and restrictions in the agreements governing our indebtedness that limit our flexibility in
operating our business, including the significant portion of assets that are collateral under these agreements;

•

pending or threatened litigation, investigations and enforcement actions;

•

volatility and disruptions in the global credit and financial markets, which may adversely affect our ability to
borrow and could increase our counterparty credit risks, including those under our credit facilities, derivatives,
contingent obligations, insurance contracts and new ship progress payment guarantees;

our inability to recruit or retain qualified personnel or the loss of key personnel or employee relations issues;

our reliance on third parties to provide hotel management services for certain ships and certain other services;

future increases in the price of, or major changes or reduction in, commercial airline services;

our inability to keep pace with developments in technology;

changes involving the tax and environmental regulatory regimes in which we operate; and

other factors set forth under “Risk Factors.”

The above examples are not exhaustive and new risks emerge from time to time. Such forward-looking statements are
based on our current beliefs, assumptions, expectations, estimates and projections regarding our present and future
business strategies and the environment in which we expect to operate in the future. These forward-looking statements
speak only as of the date made. We expressly disclaim any obligation or undertaking to release publicly any updates or
revisions to any forward-looking statement to reflect any change in our expectations with regard thereto or any change of
events, conditions or circumstances on which any such statement was based, except as required by law.

Item 1. Business

History and Development of the Company

PART I

Norwegian commenced operations from Miami in 1966, launching the modern cruise industry by offering weekly
departures from Miami to the Caribbean. In February 2011, NCLH, a Bermuda limited company, was formed with the
issuance to the Sponsors of, in aggregate, 10,000 ordinary shares, with a par value of $0.001 per share. In January 2013,
NCLH completed its IPO and the ordinary shares of NCLC, which were owned entirely by the Sponsors, were
exchanged for the ordinary shares of NCLH, and NCLH became the owner of 100% of the ordinary shares and parent
company of NCLC (the “Corporate Reorganization”). At the same time, NCLH contributed $460.0 million to NCLC and
the historical financial statements of NCLC became those of NCLH. The Corporate Reorganization was affected solely
for the purpose of reorganizing our corporate structure. As a result of the Secondary Equity Offerings, as of December
2018, the Sponsors no longer owned the ordinary shares they held in NCLH.

In November 2014, we completed the Acquisition of Prestige. We believe that the combination of Norwegian and
Prestige creates a cruise operating company with a rich product portfolio and strong market presence.

Additional Information

Our registered offices are located at Walkers Corporate (Bermuda) Limited, Park Place, 3rd Floor, 55 Par-la-Ville Road,
Hamilton HM 11, Bermuda. Our principal executive offices are located at 7665 Corporate Center Drive, Miami, Florida
33126. Daniel S. Farkas, the Company’s Executive Vice President, General Counsel and Assistant Secretary, is our
agent for service of process at our principal executive offices.

Our Company

Business Overview

We are a leading global cruise company which operates the Norwegian Cruise Line, Oceania Cruises and Regent Seven
Seas Cruises brands. As of December 31, 2019, we had 27 ships with approximately 58,400 Berths and had orders for 10
additional ships through 2027, subject to certain conditions.

Seven Seas Splendor was delivered in January 2020. We have one additional Explorer Class Ship on order for delivery
in the fall of 2023. We have two Allura Class Ships on order for delivery in the winter of 2022 and spring of 2025.
Project Leonardo will introduce an additional six ships with expected delivery dates from 2022 through 2027. These
additions to our fleet will increase our total Berths to approximately 82,000.

Our brands offer itineraries to worldwide destinations including Europe, Asia, Australia, New Zealand, South America,
Africa, Canada, Bermuda, Caribbean, Alaska and Hawaii. Norwegian’s U.S.-flagged ship, Pride of America, provides
the industry’s only entirely inter-island itinerary in Hawaii.

All of our brands offer an assortment of features, amenities and activities, including a variety of accommodations,
multiple dining venues, bars and lounges, spa, casino and retail shopping areas and numerous entertainment choices. All
brands also offer a selection of shore excursions at each port of call as well as hotel packages for stays before or after a
voyage.

Our Fleet

The following table presents information about our ships and their primary areas of operation based on current and
future itineraries, which are subject to change.

Ship (1)

Norwegian
Norwegian Encore
Norwegian Bliss
Norwegian Joy

Norwegian Escape
Norwegian Getaway
Norwegian Breakaway
Norwegian Epic
Norwegian Gem
Norwegian Jade
Norwegian Pearl
Norwegian Jewel
Pride of America
Norwegian Dawn
Norwegian Star
Norwegian Sun
Norwegian Sky
Norwegian Spirit

Oceania Cruises
Oceania Riviera
Oceania Marina
Oceania Nautica
Oceania Sirena
Oceania Regatta
Oceania Insignia

Regent
Seven Seas Splendor (2)
Seven Seas Explorer
Seven Seas Voyager
Seven Seas Mariner
Seven Seas Navigator

Year
Built

2019
2018
2017

2015
2014
2013
2010
2007
2006
2006
2005
2005
2002
2001
2001
1999
1998

2012
2011
2000
1999
1998
1998

Primary Areas of Operation

Alaska, Bermuda, Canada & New England, Caribbean
Alaska, Bahamas, Caribbean, Mexico-Pacific
Alaska, Bermuda, Canada & New England, Caribbean, Central America,

Mexico-Pacific
Caribbean, Europe
Bahamas, Caribbean, Europe
Bahamas, Bermuda, Canada & New England, Caribbean
Caribbean, Europe
Bermuda, Canada & New England, Caribbean, Mexico-Pacific
Africa, Asia, Caribbean, Europe
Bahamas, Canada & New England, Caribbean, Europe,
Alaska, Australia & New Zealand, Hawaii, South Pacific
Hawaii
Asia, Bahamas, Bermuda, Caribbean, Europe
Europe, South America
Alaska, Bahamas, Caribbean, Central America
Bahamas, Caribbean
Africa, Asia, Europe

Caribbean, Europe
Europe, South America
Africa, Asia, Europe
Africa, Asia, Caribbean, Europe
Alaska, Asia, Australia & New Zealand, Central America, South Pacific
Africa, Alaska, Asia, Bermuda, Canada & New England, Caribbean, Europe,

Hawaii, Mexico-Pacific, South America, South Pacific

2020
2016
2003
2001
1999

Caribbean, Central America, Europe
Alaska, Asia, Australia & New Zealand, Caribbean, Europe
Africa, Asia, Australia & New Zealand, Europe, South America
Alaska, Asia, Australia & New Zealand, Caribbean, Europe, South America
Australia & New Zealand, Canada & New England, Caribbean, Central

America, Europe, Hawaii, South America, South Pacific

(1) The table above does not include an additional 9 ships on order.
(2) Seven Seas Splendor was delivered in January 2020.

Our Mission and Competitive Strengths

Our core mission is to provide exceptional vacation experiences delivered by passionate team members committed to
world-class hospitality and innovation. We believe that the following business strengths support our overall strategy to
deliver on our mission:

Rich Stateroom Mix

The Norwegian, Oceania Cruises and Regent fleets offer an attractive mix of staterooms, suites and villas. Norwegian’s
accommodations include the groundbreaking Studio staterooms designed for solo travelers centered around the Studio
Lounge, a private lounge area solely for Studio guests, as well as ocean views, balconies and connecting
accommodations to meet the needs of all types of cruisers. Norwegian’s suites range from two-bedroom family suites to
penthouses and owner suites, as well as three-bedroom Garden Villas measuring up to 6,694 square feet. In addition, 11
of Norwegian’s ships offer The Haven, a key-card access enclave on the upper decks with luxurious suite
accommodations, exclusive amenities, and 24/7 butler and concierge service. The Haven suites surround a private
courtyard with pool, hot tubs, sundeck, fitness center and steam rooms. On board Norwegian Epic, the Breakaway Class
Ships and the Breakaway Plus Class Ships, The Haven also includes a private lounge and fine dining restaurant.

The spacious and elegant accommodations on Oceania Cruises’ six award-winning ships, the 684-Berth Regatta,
Insignia, Sirena and Nautica, and the 1,250-Berth Marina and Riviera, range from 143-square foot inside staterooms to
opulent 2,030-square foot owner suites. The Regent fleet is comprised of five ships. Seven Seas Voyager, Seven Seas
Mariner, Seven Seas Explorer and Seven Seas Splendor feature all-suite, all-balcony accommodations, and a majority of
the accommodations on Seven Seas Navigator include balconies. The two newest ships in the Regent fleet, Seven Seas
Splendor and Seven Seas Explorer, also feature the Regent Suite, a 4,443 square-foot luxurious suite accommodation
that includes an in-suite spa retreat, a 1,300 square-foot wraparound veranda, and a glass-enclosed solarium sitting area.

High-Quality Service

The Norwegian, Oceania Cruises and Regent brands all offer a high level of onboard service. We collaborate amongst
the brands to provide an enhanced guest experience. Norwegian offers guests the freedom and flexibility to design their
ideal cruise vacation on their schedule with no set dining times, a variety of entertainment options and no formal dress
codes. Oceania Cruises and Regent are known for their quality of service, including some of the highest crew-to-guest
ratios in the industry and a staff trained to deliver personalized and attentive service.

Diverse Selection of Premium Itineraries

We continually look to enhance our already broad range of premium itineraries. Our fleet has a worldwide deployment,
offering voyages ranging from three days to a 180-day around-the-world cruise. Our vessels call on several ports in
Scandinavia, Russia, the Mediterranean, the Greek Isles, Alaska, Canada and New England, Asia, Tahiti and the South
Pacific, Australia and New Zealand, Africa, India, South America, the Panama Canal and the Caribbean. We have also
developed destinations to enhance the shore experience for our guests. In 2016, we introduced Harvest Caye in Southern
Belize. The destination features Belize’s only cruise ship pier, an expansive seven-acre white sand beach, 15,000 sq. ft.
pool with swim up bar, multiple dining options and a nature center with wildlife experiences plus adventure tours. We
were the first cruise line to offer calls to a private destination at Great Stirrup Cay in the Bahamas.

Strong Cash Flow

We believe our business model will generate a significant amount of cash flow with high revenue visibility. All three of
our brands afford the ability to pre-sell tickets, receive customer deposits and sell onboard activities in advance with long
lead times ahead of sailing. In terms of newbuild capital expenditures, the cash flow impact is mitigated as we have
obtained export credit financing for the ships which is expected to fund approximately 80% of the contract price of each
ship expected to be delivered through 2027, subject to certain conditions.

Highly Experienced Team

Our senior management team is comprised of executives with extensive experience in the cruise, travel, leisure and
hospitality-related industries. See “Information about our Executive Officers” below.

Our Business Strategies

Driving Demand

We seek to attract vacationers to our products and services in several ways, including:



delivering an enhanced, value-added vacation experience to our guests relative to other vacation alternatives;

creating diverse and unique itineraries in new and existing markets;

utilizing effective marketing and sales initiatives with a market-to-fill strategy; and

strengthening our global footprint.

Our value-added-vacation product, itinerary diversification, marketing and sales initiatives and the strengthening of our
global footprint contribute to driving increased revenues for our fleet. Our market-to-fill strategy maintains pricing
integrity by offering both the best price early in the booking cycle and value-added promotions when necessary to
mitigate the need to compromise on price.

Our destination management team reviews deployments across the fleet, either repositioning ships to new destinations or
fine-tuning itineraries, with the goal of diversifying our deployment and creating product scarcity which, in turn, leads to
higher pricing.

We also seek to increase demand through effective marketing campaigns across various channels such as branding
campaigns on nationwide television, robust and varied digital campaigns or targeted mail campaigns aimed at supporting
seasonal deployments. Our sales forces are also drivers of demand, particularly in terms of educating travel advisors on
our products and services in order to better sell to potential vacationers.

Lastly, our international efforts are aimed at strengthening our global footprint by increasing brand awareness across the
globe which allows us to diversify our guest sourcing. We maintain numerous sales offices which support sales and
marketing efforts in various markets outside of North America including the United Kingdom, Europe, Hong Kong,
Australia, New Zealand, Brazil, India, Japan and Singapore.

Maximize Revenue

We focus on growing revenue through various initiatives aimed at increasing ticket prices and Occupancy Percentages as
well as onboard spending to drive higher overall revenue. Our specific initiatives include:

Strategic Relationships. We have strategic relationships with travel advisors and tour operators who commit to
purchasing a certain level of inventory with long lead times.

Bundling Strategy. The Norwegian brand offers guests the choice of a more inclusive, value-add product
offering on certain sailings and in certain stateroom selections by allowing guests to choose from multiple
amenities.

Casino Player Strategy. We have non-exclusive arrangements with casino partners worldwide whereby loyal
gaming guests are offered cruise reward certificates redeemable for cruises. Through property sponsored events
and joint marketing programs, we have the opportunity to market cruises to these guests. These arrangements
with casino partners have the dual benefit of filling open inventory and reaching guests expected to generate
above average onboard revenue through the casino and other onboard spending.

Itinerary Optimization. We manage our ships’ deployments to promote better breadth of itineraries, sell
cruises further in advance and maximize profitability.

Ship Refurbishments. We have invested in revitalizations to our ships which provides an enhanced product
that we believe delivers higher guest satisfaction and, in turn, higher pricing.

Initiatives to Suppress Costs

We continue to leverage the combined purchasing power of our three brands to further reduce costs throughout the
organization. This initiative is bolstered by our Supply Chain and Logistics Management function which supports our
three brands as well as our corporate and international offices.

Our new ships are designed to enhance energy efficiency and we have several initiatives in place to improve efficiency
on our existing fleet. Some of these initiatives include LED lighting upgrades, waste heat recovery, new hull coatings
and itinerary optimization.

Enhanced Product Offering and Guest Experience

We believe our brands deliver a strong product offering and superb guest experience. Norwegian’s ships offer up to 28
dining options, a diverse range of accommodations and what we believe is the widest array of entertainment at sea.
Oceania Cruises’ award-winning onboard dining, with multiple open seating dining venues, is a central highlight of its
cruise experience. Regent’s all-inclusive offering includes air transportation, shore excursions, pre-cruise hotel stays (for
concierge level and above), specialty restaurants, premium spirits and fine wines, gratuities, Wi-Fi and other amenities.
We continually look for ways to enhance the already strong product offering and guest experience on board our three
brands and in the destinations in which we call. We do so through ship refurbishments, enhancements to dining and
entertainment offerings, expansion of immersive shore excursion offerings and more.

Measured Fleet Expansion

Norwegian Encore was delivered in October 2019. This ship is the largest in our fleet at approximately 169,000 Gross
Tons. With approximately 4,000 Berths, she is similar in design to Norwegian Bliss and includes additional innovative
features. Project Leonardo consists of six ships on order for the Norwegian brand with expected delivery dates through
2027, subject to certain conditions. Each of the six Project Leonardo ships are approximately 140,000 Gross Tons and
3,300 Berths. For the Regent brand, Seven Seas Splendor was delivered in January 2020. We have an order for one
additional Explorer Class Ship to be delivered in 2023. Each of the Explorer Class Ships will be approximately 55,000
Gross Tons and 750 Berths. For the Oceania Cruises brand, we have orders for two Allura Class Ships to be delivered in
2022 and 2025. Each of the Allura Class Ships will be approximately 67,000 Gross Tons and 1,200 Berths.

We believe these new ships will allow us to continue expanding the reach of our brands, positioning us for accelerated
growth and providing an optimized return on invested capital. We have obtained export credit financing which is
expected to fund approximately 80% of the contract price of each ship expected to be delivered through 2027, subject to
certain conditions.

Expand and Strengthen Our Product Distribution Channels

As part of our growth strategy, we continually look for ways to deepen and expand our sales channels.

The retail/travel advisor channel represents the majority of our ticket sales. Our travel partner base is comprised of an
extensive network of approximately 23,000 independent travel advisors worldwide. We have made substantial
investments with improvements in booking technologies, transparent pricing strategies, effective marketing tools,
improved communication and cooperative marketing initiatives to enhance and facilitate the ability of travel advisors to
market and sell our products. We have expanded sales teams who work closely with our travel advisor partners on
maximizing their marketing and sales effectiveness across all three of our brands. Our focused account management is
designed to create solutions catered to the individual retailer through product and sales training. This education creates a
deeper understanding of all our product offerings.

We continue to invest in our brands by enhancing websites, mobile applications and passenger services departments
including our personal cruise consultants, who offer personalized service throughout the process of designing cruise
vacations for our guests. We have also enhanced our capabilities to enable guests to customize their vacation experience
with certain onboard product offerings. We also have an onboard cruise sales channel where guests can book their next
cruise or purchase cruise certificates to apply to their next cruise while vacationing on our ships.

Our meetings, incentives and charters channel focuses on full ship charters as well as corporate meetings and incentive
travel. These sales often have very long lead times and can fill a significant portion of the ship’s capacity, or even an
entire sailing, in one transaction. Sixthman, a subsidiary company specializing in developing and delivering music-
oriented charters, provides a market that enables travel advisors to sell high-quality music experiences at sea to guests.

Itineraries

We offer cruise itineraries ranging from a few days to 180-days calling on worldwide locations, including destinations in
Scandinavia, Russia, the Mediterranean, the Greek Isles, Alaska, Canada and New England, Asia, Tahiti and the South
Pacific, Australia and New Zealand, Africa, India, South America, the Panama Canal and the Caribbean. We have
developed, and are continuing to develop, innovative itineraries to position our ships in new and niche markets as well as
in the mainstream markets throughout the world.

We believe that these destination-focused itineraries, complemented by a comprehensive shore excursion program
(which is included in the all-inclusive fare for cruises on the Regent ships), differentiate our brands from many of our
competitors. We call on varied destinations, many of which include overnight stays in port, allowing guests to have more
in-depth experiences than would otherwise be possible in only a single day port call.

For some of our longer itineraries, we strive to maximize profitability by selling segments of the longer itineraries as
shorter cruises (i.e., which last 7 to 20 days) in order to capture more time-constrained customers. We believe the
deployment flexibility created by the use of longer itineraries translates off-peak seasons into more profitable portions of
longer cruises.

Passenger Ticket Revenue

We offer our guests a wide variety of cruise fare options when booking a cruise. Our cruise ticket prices generally
include cruise fare and a wide variety of onboard activities and amenities, meals, entertainment and port fees and taxes.
In some instances, cruise ticket prices include round-trip airfare to and from the port of embarkation, complimentary
beverages, unlimited shore excursions, free internet, pre-cruise hotel packages, and on some of the exotic itineraries pre
or post land packages. Prices vary depending on the particular cruise itinerary, stateroom category selected and the time
of year that the voyage takes place.

Onboard and Other Revenue

All three brands generate onboard and other revenue for additional products and services which are not included in the
cruise fare, including casino operations, certain food and beverage, shore excursions, gift shop purchases, spa services,
photo services, Wi-Fi services and other similar items. Food and beverage, casino operations, photo services and shore
excursions are generally managed directly by us while retail shops, spa services, art auctions and internet services may
be managed through contracts with third-party concessionaires. These contracts generally entitle us to a percentage of
the gross sales derived from these concessions. Norwegian’s ticket prices typically include cruise accommodations,
meals in certain dining facilities and many onboard activities such as entertainment, pool-side activities and various
sports programs. To maximize onboard revenue, all three brands use various cross-marketing and promotional tools
which are supported by point-of-sale systems permitting “cashless” transactions for the sale of these products and
services. Oceania Cruises’ ticket prices may include air transportation and certain other amenities. Regent’s ticket prices
typically include air transportation, unlimited shore excursions, a pre-cruise hotel night stay (for concierge level and
above), premium wines and top shelf liquors, specialty restaurants, Wi-Fi and gratuities.

Onboard and other revenue accounted for 30%, 30% and 31% of our consolidated revenue in 2019, 2018 and 2017,
respectively.

Revenue Management Practices

Our revenue management function performs extensive analyses in order to determine booking history and uses trends by
sailing, stateroom category, travel partner, market segment, itinerary and distribution channel in order to optimize cruise
ticket revenue. We utilize a market-to-fill strategy to encourage guests to book earlier which extends our booking
window and drives higher pricing. Our targeted and high-frequency marketing campaigns communicate a message of a
value-packed cruise offering. We emphasize communication to keep the travel advisors engaged and informed and
utilize call centers to drive high potential targeted customers and increase the effectiveness of these targeted marketing
programs. This marketing strategy assists in maximizing the revenue potential from each customer contact generated.
We believe these strategies and other initiatives executed by our distribution channels will drive sustainable growth in
the number of guests carried and in Net Yields achieved.

Seasonality

Competition

Our primary competition includes operators such as Carnival Corporation and Carnival plc, which owns and operates
Carnival Cruise Line, Holland America Line, Princess Cruises and Seabourn Cruise Line, among others, and Royal
Caribbean Cruises Ltd., which owns and operates Royal Caribbean International, Celebrity Cruises, Azamara Club
Cruises and Silversea Cruises among others, as well as other cruise lines such as MSC Cruises, Crystal Cruises, Viking
Ocean Cruises and Virgin Voyages. In addition, we compete with land-based vacation alternatives, such as hotels and
resorts, vacation ownership properties, casinos, and tourist destinations throughout the world.

Sales of cruises and onboard offerings are subject to consumer discretionary spending levels and may be influenced by
geopolitical events and economic conditions.

Marketing Strategy

Our marketing teams work to enhance brand awareness and consideration of our products and services among
consumers and travel partners with the ultimate goal of driving sales. We utilize a multi-channel strategy that may
include a combination of print, television, radio, website/e-commerce, direct mail, social media, mobile and e-mail
campaigns, partnerships, customer loyalty initiatives, market research, and business-to-business events.

Building customer loyalty among our past guests is an important element of our marketing strategy. We believe that
attending to the needs and motivations of our past guests creates a cost-effective means of attracting business,
particularly to our new ships and itineraries, because past guests are familiar with our brands, products and services and
often return to cruise with us. We continue to optimize our customer databases and targeting capabilities to further
enhance our communications with our past guests who receive e-mail, direct mail and brochures with informative
destination and product information and promotional amenities. Our marketing mix includes a balance of initiatives that
both allow us to build our brand awareness to attract new-to-brand customers, while also focusing on more targeted
marketing communications aimed at retaining our current guest base. Continued investments in our websites is also key
not only to driving interest and bookings, but also to ensuring the optimal pre-cruise planning experience offering guests
the ability to shop, reserve and purchase a breadth of onboard products and services. We have a strong communications
stream that provides customized pre-cruise information to help guests maximize their cruise experience as well as a
series of communications to welcome them home and ultimately engage them in booking another cruise.

Travel advisors are crucial to our marketing and distribution efforts. We provide robust marketing support and enhanced
tools for our travel advisor partners through a variety of programs. Our travel partners can benefit from our online travel
partner education programs that include a wide variety of courses about our ships, itineraries and other best-selling
practices. Advisors can also easily customize a multitude of consumer marketing materials for their use in promoting our
products through our online platform.

Guest feedback is also a critically important element in the development of our overall marketing and business
strategies. We regularly initiate guest feedback studies among both travel partners and consumers to assess the impact of
various programs and/or to solicit information that helps shape future direction.

Ship Operations and Cruise Infrastructure

Ship Maintenance and Logistics

Sophisticated and efficient maintenance and operations systems support the technical superiority and modern look of our
fleet. In addition to routine repairs and maintenance performed on an ongoing basis and in accordance with applicable
requirements, each of our ships is generally taken out of service, approximately every 24 to 60 months, for a period of
one or more weeks for scheduled maintenance work, repairs and improvements performed in Dry-dock. Dry-dock
interval is a statutory requirement controlled under IMO requirements reflected in chapters of the International
Convention of the Safety of Life at Seas (“SOLAS”) and to some extent the International Load Lines Convention. Under
these regulations, it is required that a passenger ship Dry-dock once in five years (depending on age of vessel) or twice
in five years (depending on flag state and age of vessel) and the maximum interval between each Dry-dock cannot
exceed three years (depending on flag state and age of vessel). However, most of our international ships qualify under a
special exemption provided by the Bahamas and/or Marshall Islands (flag state), as applicable, after meeting certain
criteria set forth by the ship’s flag state to Dry-dock once every five years. To the extent practical, each ship’s crew,
catering and hotel staff remain with the ship during the Dry-dock period and assist in performing repair and maintenance
work. Accordingly, Dry-dock work is typically performed during non-peak demand periods to minimize the adverse
effect on revenue that results from ships being out of service. Dry-docks are typically scheduled in spring or autumn and
depend on shipyard availability. We take this opportunity to upgrade the vessels in all areas of both guest-facing services
and innovative compliance technology.

Suppliers

Our largest capital expenditures are for ship construction and acquisition. Our largest operating expenditures are for
payroll and related (including our contract with a third party who provides certain crew services), fuel, food and
beverage, advertising and marketing and travel advisor services. Most of the supplies that we require are available from
numerous sources at competitive prices. In addition, due to the large quantities that we purchase, we can obtain favorable
prices for many of our supplies. Our purchases are denominated primarily in U.S. dollars. Payment terms granted by the
suppliers are generally customary terms for the cruise industry.

Crew and Staff

Best-in-class guest service levels are paramount in the markets in which we operate, where travelers have discriminating
tastes and high expectations for service quality. We have dedicated increasing attention and resources to ensure that our
service offerings on all of our ships meet the demands of our guests. Among other initiatives, we have implemented
rigorous onboard training programs, with a focus on career development. We believe that our dedication to anticipating
and meeting our guests’ every need differentiates our operations and fosters close relationships between our guests and
crew, helping to build customer loyalty.

We place the utmost importance on the safety of our guests and crew. We operate all of our vessels to meet and exceed
the requirements of SOLAS and International Management Code for the Safe Operation of Ships and for Pollution
Prevention (“ISM Code”), the international safety standards which govern the cruise industry. Crew members are trained
in the Company’s stringent safety protocols, participating in regular safety trainings, exercises and drills onboard every
one of our ships to familiarize themselves and become proficient with the safety equipment onboard.

Our captains and chief engineers are experienced seafarers. Our bridge and technical officers regularly undergo rigorous
operations training such as leadership, navigation, stability, statutory and environmental regulatory compliance. To
support our deck and engine officers while at sea, we have bridge and engine resource management protocols in place,
dictating specific standard operating procedures. Our bridge teams conduct a voyage planning process prior to sailing,
where the upcoming itinerary is reviewed and discussed by the captain and bridge team prior to departure and in
preparation for arrival. In addition, all of our ships employ state-of-the-art navigational equipment and technology to
ensure that our bridge teams have accurate data regarding the planned itinerary.

Prior to every cruise setting sail, we hold a mandatory safety drill for all guests during which important safety
information is reviewed and demonstrated. We also show a safety video which runs continuously on the stateroom
televisions. Our fleet is equipped with modern navigational control and fire prevention and control systems. We have
developed a Safety Management System (“SMS”), which establishes policies, procedures, training, qualification,
quality, compliance, audit and self-improvement standards. SMS also provides real-time reports and information to
support the fleet and risk management decisions. Through these systems, our senior managers, as well as ship
management, can focus on consistent, high quality operation of the fleet. Our SMS is approved and audited regularly by
our classification society, Lloyds Register, and it also undergoes regular internal audits as well as periodic inspections by
the U.S. Coast Guard, flag state and other port and state authorities.

Insurance

We maintain insurance on the hull and machinery of our ships, which are maintained in amounts related to the estimated
market value of each ship. The coverage for each of the hull and machinery policies is maintained with syndicates of
insurance underwriters from the European and U.S. insurance markets.

In addition to the insurance coverage on the hull and machinery of our ships, we seek to maintain comprehensive
insurance coverage and believe that our current coverage is at appropriate levels to protect against most of the accident-
related risks involved in the conduct of our business. The insurance we carry includes:

 Protection and indemnity insurance (coverage for passenger, crew and third-party liabilities), including

insurance against risk of pollution liabilities;

 War risk insurance, including terrorist risk insurance. The terms of our war risk policies include provisions

where underwriters can give seven days’ notice to the insured that the policies will be cancelled in the event of
a change of risk which is typical for policies in the marine industry. Upon any proposed cancellation the insurer
shall, before expiry of the seven day period, submit new terms; and



Insurance for our shoreside property, cybersecurity, directors and officers, general liability risks and other
insurance coverages.

Our insurance coverage, including those noted above, is subject to certain limitations, exclusions and deductible levels.

Trademarks and Tradenames

Under the Norwegian brand, we own a number of registered trademarks relating to, among other things, the names
“NORWEGIAN CRUISE LINE” and “FEEL FREE,” the names of our ships (except where trademark applications for
these have been filed and are pending), incentive programs and specialty services rendered on our ships and specialty
accommodations such as “THE HAVEN BY NORWEGIAN.” In addition, we own registered trademarks relating to the
“FREESTYLE” family of names, including, “FREESTYLE CRUISING,” “FREESTYLE DINING” and “FREESTYLE
VACATION.” We believe that these trademarks are widely recognized throughout North America, Europe and other
areas of the world and have considerable value.

Under the Oceania Cruises brand, we own a number of registered trademarks relating to, among other things, the names
“OCEANIA CRUISES” and its logo, “REGATTA,” “INSIGNIA,” and “YOUR WORLD. YOUR WAY.”

Under the Regent brand, we own registered trademarks relating to, among other things, the names “SEVEN SEAS
CRUISES” and “AN UNRIVALED EXPERIENCE” as well as the names of our ships (except where trademark
applications have been filed and are pending).

We also claim common law rights in trademarks and tradenames used in conjunction with our ships, incentive programs,
customer loyalty program and specialty services rendered onboard our ships for each of our brands.

The Regent ships have been operating under the Regent brand since 2006. We entered into a trademark license
agreement with Regent Hospitality Worldwide, Inc., which we amended in February 2011, granting us the right to use
the “Regent” brand family of marks. The amended trademark license agreement allows Regent to use the Regent
tradename, in conjunction with cruises, in perpetuity, subject to the terms and conditions in the agreement.

Regulatory Issues

Registration of Our Ships

Nineteen of the ships that we currently operate are registered in the Bahamas. One of our ships, Pride of America, is a
U.S.-flagged ship. Eight of our ships are registered in the Marshall Islands. Our ships registered in the Bahamas and the
Marshall Islands are inspected at least annually pursuant to Bahamian and Marshall Islands requirements and are subject
to International laws and regulations and to various U.S. federal regulatory agencies, including, but not limited to, the
U.S. Public Health Service and the U.S. Coast Guard. Our U.S.-registered ship is subject to laws and regulations of the
U.S. federal government, including, but not limited to, the Food and Drug Administration (“FDA”), the U.S. Coast
Guard and U.S. Department of Labor. The international, national, state and local laws, regulations, treaties and other
legal requirements applicable to our operations change regularly, depending on the itineraries of our ships and the ports
and countries visited.

Our ships are subject to inspection by the port regulatory authorities in the various countries that they visit. Such
inspections include verification of compliance with the maritime safety, security, environmental, customs, immigration,
health and labor regulations applicable to each port as well as with international requirements.

Environmental Protection

Our ships are subject to various international, national, state and local laws and regulations relating to environmental
protection, including those that govern air emissions, waste discharge, waste water management and disposal, and use
and disposal of hazardous substances such as chemicals, solvents and paints. Under such laws and regulations, we are
prohibited from discharging certain materials, such as petrochemicals and plastics, into waterways, and we must adhere
to various water and air quality-related requirements.

With regard to air quality requirements, the International Maritime Organization’s (“IMO”) convention entitled
Prevention of Pollution from Ships (“MARPOL”) has set a global limit on fuel sulfur content of 0.5% beginning January
2020. Various compliance methods, such as the use of alternative fuels, or exhaust gas cleaning systems that reduce an
equivalent amount of sulfur emissions, may be utilized.

MARPOL also requires stricter limitations on sulfur emissions within designated Emission Control Areas (“ECAs”),
which include the Baltic Sea, the North Sea/English Channel, North American waters and the U.S. Caribbean Sea. Ships
operating in these waters are required to use fuel with a sulfur content of no more than 0.1% or use approved alternative
emission reduction methods. ECAs have also been established to limit emissions of oxides of nitrogen from newly built
ships. Additional ECAs may also be established in the future, with areas around Norway, Japan, and the Mediterranean
Sea being considered.

Ballast water discharges are governed by the MARPOL Ballast Water Management Convention, which came into force
in 2017 (“The Convention”), and which governs the discharge of ballast water from ships. Ballast water, which is
seawater held onboard ships and used for stabilization, may contain a variety of marine species. The Convention is
designed to regulate the treatment and discharge of ballast water to avoid the transfer of marine species to new, different,

or potentially unsuitable environments. Applicable vessels sailing in specific itineraries have also been upgraded with
ballast water treatment systems to further prevent the spread of invasive species.

MARPOL also sets forth requirements for discharges of garbage, oil and sewage from ships, including regulations
regarding the ships’ equipment and systems for the control of such discharges, and the provision of port reception
facilities for sewage handling. Ships are generally prohibited from discharging sewage into the sea within a specified
distance from the nearest land. Governments are required to ensure the provision of adequate reception facilities at ports
and terminals for the reception of sewage, without causing delay to ships. Ships are generally required to be equipped
with either approved sewage treatment plants, disinfecting systems or sewage holding tanks.

Recently adopted amendments to MARPOL will make the Baltic Sea a “Special Area” where sewage discharges from
passenger ships will be prohibited. Stricter discharge restrictions went into effect for new passenger ships in 2019, and
for existing passenger ships starting in 2021.

These requirements may impact our operations unless suitable port waste facilities are available, or new technologies for
onboard waste treatment are developed. Accordingly, the cost of complying with these requirements is not determinable
at this time.

In the U.S., the Clean Water Act of 1972, and other laws and regulations, provide the Environmental Protection Agency
(“EPA”) and the U.S. Coast Guard with the authority to regulate commercial vessels’ incidental discharges of ballast
water, bilge water, gray water, anti-fouling paints and other substances during normal operations while a vessel is in
inland waters, within three nautical miles of land, and in designated federally-protected waters. The U.S. National
Pollutant Discharge Elimination System (“NPDES”) program, authorized by the Clean Water Act, was established to
reduce pollution within U.S. territorial waters. For our affected ships, all of the NPDES requirements are set forth in the
EPA’s Vessel General Permit (“VGP”). The VGP establishes effluent limits for 26 specific discharge streams incidental
to the normal operation of a vessel. In addition to these discharge- and vessel-specific requirements, the VGP includes
requirements for inspections, monitoring, reporting and recordkeeping.

The Act to Prevent Pollution from Ships, which implements certain elements of MARPOL in the U.S., provides for
potentially severe civil and criminal penalties related to ship-generated pollution for incidents in U.S. waters within three
nautical miles of land and, in some cases, within the 200-nautical mile Exclusive Economic Zone (“EEZ”).

The Oil Pollution Act of 1990 (“OPA 90”) provides for strict liability for water pollution caused by the discharge of oil
in the 200-nautical mile EEZ of the U.S., subject to defined monetary limits. OPA 90 requires that in order for us to
operate in U.S. waters, we must have Certificates of Financial Responsibility (“COFR”) from the U.S. Coast Guard for
each ship. Our continued OPA 90 certification signifies our ability to meet the requirements for related OPA 90 liability
in the event of an oil spill or release of a hazardous substance.

Many coastal U.S. states have also enacted environmental regulations that impose strict liability for removal costs and
damages resulting from a discharge of oil or a release of a hazardous substance. These laws may be more stringent than
U.S. federal law and, in some cases, the laws have no statutory limits of liability. Among the most stringent requirements
are those set by the State of Alaska, which has enacted legislation that prohibits certain discharges in designated state
waters and requires that certain discharges be monitored to verify compliance with the established standards. The
legislation also provides that repeat violators of the regulations could be prohibited from operating in Alaskan waters.

The European Union (“EU”) has also adopted a substantial and diverse range of environmental measures aimed at
maintaining or improving the quality of the environment. To support the implementation and enforcement of European
environmental legislation, the EU has adopted directives on environmental liability and enforcement as well as a
recommendation providing for minimum criteria for environmental inspections.

With regard to air emissions from seagoing ships, the EU requires the use of low sulfur (less than 0.1%) marine gas oil
in EU ports. Passenger ships on regular service to EU ports (and not operating in an ECA) are required to use fuels
containing a maximum sulfur content of 1.5%. The EU has set January 2020 as the compliance date for the 0.5% fuel
sulfur limit within their jurisdictional waters.

In addition to the existing legal requirements, we are committed to helping to preserve the environment, because a clean,
unspoiled environment is a key element that attracts guests to our ships. Furthermore, NCL (Bahamas) Ltd. and NCL
America LLC are certified under the International Organization for Standardization’s 14001 Standard. This voluntary
standard sets requirements for establishment and implementation of a comprehensive environmental management system
which we have adopted for our operations. Currently we operate under an Environmental Management System that is
incorporated into the Company’s SMS and promote environmental awareness among our stakeholders both through our
Sail & Sustain program and annual Stewardship Report.

If we violate or fail to comply with environmental laws, regulations or treaties, we could be fined or otherwise
sanctioned by regulators. We have made, and will continue to make, capital and other expenditures to comply with
changing environmental laws, regulations and treaties. Any fines or other sanctions for violation or failure to comply
with environmental requirements or any expenditures required to comply with environmental requirements could have a
material adverse effect on our business, operations, cash flow or financial condition.

Permits for Glacier Bay, Alaska

In connection with certain Alaska cruise operations, we rely on concession permits from the U.S. National Park Service
to operate our ships in Glacier Bay National Park and Preserve. We currently hold a concession permit allowing for 41
calls annually through September 30, 2029.

Passenger Well-Being

In the U.S., we must meet the U.S. Public Health Service’s requirements, which include vessel ratings by inspectors
from the Vessel Sanitation Program of the Centers for Disease Control and Prevention (“CDC”) and the FDA. We rate at
the top of the range of CDC and FDA scores achieved by the major cruise lines. In addition, the cruise industry and the
U.S. Public Health Service have agreed on regulations for food, water and hygiene, aimed at proactively protecting the
health of travelers and preventing illness transmission to U.S. ports.

Security and Safety

The IMO has adopted safety standards as part of the SOLAS convention, which apply to all of our ships. SOLAS
establishes requirements for vessel design, structural features, construction methods and materials, refurbishment
standards, life-saving equipment, fire protection and detection, safe management and operation and security in order to
help ensure the safety and security of our guests and crew. All of our crew undergo regular security and safety training
exercises that meet all international and national maritime regulations.

SOLAS requires that all cruise ships are certified as having safety procedures that comply with the requirements of the
International Management Code for the Safe Operation of Ships and for Pollution Prevention (“ISM Code”). All of our
ships are certified as to compliance with the ISM Code. Each such certificate is granted for a five-year period and is
subject to periodic verification.

The SOLAS requirements are amended and extended by the IMO from time to time. For example, the International Port
and Ship Facility Code (“ISPS Code”) was adopted by the IMO in December 2002 with the goal of strengthening
maritime security by placing new requirements on governments, port authorities and shipping companies.
Amendments to SOLAS required that ships constructed in accordance with pre-1974 SOLAS requirements install
automatic sprinkler systems. IMO adopted an amendment to SOLAS which requires partial bulkheads on stateroom
balconies to be of non-combustible construction. The SOLAS regulation implemented Long-Range Identification and
Tracking. All of our ships are in compliance with the requirements of SOLAS as amended and/or as applicable to the
keel-laying date.

In addition to the requirements of the ISPS Code, the U.S. Congress enacted the Maritime Transportation Security Act of
2002 (“MTSA”) which implements a number of security measures at ports in the U.S. including measures that apply to
ships registered outside the U.S. while docking at ports in the U.S. The U.S. Coast Guard has published MTSA
regulations that require a security plan for every ship entering the territorial waters of the U.S., provide for identification

requirements for ships entering such waters and establish various procedures for the identification of crew members on
such ships. The Transportation Workers Identification Credential is a U.S. requirement for accessibility into and onto
U.S. ports and U.S.-flagged ships.

Maritime-Labor

In 2006, the International Labor Organization (“ILO”), an agency of the United Nations that develops and oversees
international labor standards, adopted a new Consolidated Maritime Labor Convention (“MLC 2006”). MLC 2006
contains a comprehensive set of global standards based on those that are already found in 68 maritime labor Conventions
and Recommendations adopted by the ILO since 1920. MLC 2006 includes a broad range of requirements, such as a
broader definition of a seafarer, minimum age of seafarers, medical certificates, recruitment practices, training,
repatriation, food, recreational facilities, health and welfare, hours of work and rest, accommodations, wages and
entitlements. MLC 2006 added requirements not previously in effect, in the areas of occupational safety and health.
MLC 2006 became effective in certain countries commencing August 2013. The Standard of Training Certification and
Watch Keeping for Seafarers, as amended (“STCW”), establishes minimum standards relating to training, certification
and watch-keeping for our seafarers.

Financial Requirements

The Federal Maritime Commission (“FMC”) requires evidence of financial responsibility for those offering
transportation on passenger ships operating out of U.S. ports to indemnify passengers in the event of non-performance of
the transportation. Accordingly, each of our three brands are required to maintain a $32.0 million third-party
performance guarantee in respect of liabilities for non-performance of transportation and other obligations to passengers.
The guarantee requirements are subject to additional consumer price index-based adjustments. Also, our brands have a
legal requirement to maintain security guarantees based on cruise business originated from the U.K., and certain
jurisdictions require us to establish financial responsibility to meet liability in the event of non-performance of our
obligations to passengers from those jurisdictions. As of December 31, 2019, we have in place approximately British
Pound Sterling 41.5 million of security guarantees for our brands as well as a consumer protection policy covering up to
€110.0 million.

From time to time, various other regulatory and legislative changes have been or may in the future be proposed that may
have an effect on our operations in the U.S. and the cruise industry in general.

For information regarding risks associated with our compliance with legal and regulatory requirements, see Part I Item
1A-Risk Factors in this annual report on Form 10-K, including the risk factor titled “We are subject to complex laws and
regulations, including environmental, health and safety, labor, data privacy and protection and maritime laws and
regulations, which could adversely affect our operations and any changes in the current laws and regulations could lead
to increased costs or decreased revenue.”

Taxation

U.S. Income Taxation

The following discussion is based upon current provisions of the Internal Revenue Code (the “Code”), U.S. Treasury
regulations, administrative rulings and court decisions, all of which are subject to change, possibly with retroactive
effect. Changes in these authorities may cause the tax consequences to vary substantially from the consequences
described below.

Exemption of International Shipping Income under Section 883 of the Code

Under Section 883 of the Code (“Section 883”) and the related regulations, a foreign corporation will be exempt from
U.S. federal income taxation on its U.S.-source income derived from the international operation of ships (“shipping
income”) if: (a) it is organized in a qualified foreign country, which is one that grants an “equivalent exemption” from
tax to corporations organized in the U.S. in respect of each category of shipping income for which exemption is being

claimed under Section 883; and (b) either: (1) more than 50% of the value of its stock is beneficially owned, directly or
indirectly, by qualified shareholders, which includes individuals who are “residents” of a qualified foreign country; (2)
one or more classes of its stock representing, in the aggregate, more than 50% of the combined voting power and value
of all classes of its stock are “primarily and regularly traded on one or more established securities markets” in a qualified
foreign country or in the U.S. (the “publicly traded test”); or (3) it is a “controlled foreign corporation” (a “CFC”) for
more than half of the taxable year and more than 50% of its stock is owned by qualified U.S. persons for more than half
of the taxable year (the “CFC test”). In addition, U.S. Treasury Regulations require a foreign corporation and certain of
its direct and indirect shareholders to satisfy detailed substantiation and reporting requirements.

NCLH is incorporated in Bermuda, a qualified foreign country which grants an equivalent exemption, and NCLH meets
the publicly traded test because its ordinary shares were primarily and regularly traded on the Nasdaq Stock Market (the
“Nasdaq”) until December 18, 2017, and since December 19, 2017, have been primarily and regularly traded on the New
York Stock Exchange (“NYSE”). Both the Nasdaq and the NYSE are considered to be established securities markets in
the U.S. Therefore, we believe that NCLH qualifies for the benefits of Section 883.

We believe and have taken the position that substantially all of NCLH’s income, including the income of its ship-owning
subsidiaries, is properly categorized as shipping income, and that we do not have a material amount of non-qualifying
income. It is possible, however, that the IRS interpretation of shipping income could differ from ours and that a much
larger percentage of our income does not qualify (or will not qualify) as shipping income. Moreover, the exemption for
shipping income is only available for years in which we will satisfy complex tests under Section 883. There are factual
circumstances beyond our control, including changes in the direct and indirect owners of NCLH’s ordinary shares,
which could cause NCLH or its subsidiaries to lose the benefit of the exemption under Section 883. Further, any changes
in our operations could significantly increase our exposure to taxation on shipping income, and we can give no
assurances on this matter.

Under certain circumstances, changes in the identity, residence or holdings of NCLH’s direct or indirect shareholders
could cause NCLH’s ordinary shares not to be regularly traded on an established securities market within the meaning of
the regulations under Section 883. Therefore, as a precautionary matter, NCLH has provided protections in its bye-laws
to reduce the risk of such changes impacting our ability to meet the publicly traded test by prohibiting any person from
owning, directly, indirectly or constructively, more than 4.9% of NCLH’s ordinary shares unless such ownership is
approved by NCLH’s Board of Directors (the “4.9% limit”). Any outstanding shares held in excess of the 4.9% limit will
be transferred to and held in a trust.

For U.S. federal income tax purposes, Regent and its non-U.S. subsidiaries are disregarded as entities separate from their
immediate foreign parent and Oceania Cruises was treated as a corporation until December 31, 2017, and a disregarded
entity as of January 1, 2018. For 2019, 2018 and 2017, both Regent and Oceania Cruises relied on NCLH’s ability to
meet the requirements necessary to qualify for the benefits of Section 883 as discussed above.

Taxation of International Shipping Income Where Section 883 of the Code is Inapplicable

Unless exempt from U.S. federal income taxation, a foreign corporation is subject to U.S. federal income tax in respect
of its “shipping income” that is derived from sources within the U.S. If we fail to qualify for the exemption under
Section 883 in respect of our U.S.-sourced shipping income, or if the provision was repealed, then we will be subject to
taxation in the U.S. on such income.

Generally, “shipping income” is any income that is derived from the use of vessels, from the hiring or leasing of vessels
for use on a time, voyage or bareboat charter basis or from the performance of services directly related to those uses. For
these purposes, shipping income attributable to transportation that begins or ends, but that does not both begin and end,
in the U.S., which we refer to as “U.S.- source shipping income,” will be considered to be 50% derived from sources
within the U.S.

If we do not qualify for exemption under Section 883, or if the provision was repealed, then any U.S.-sourced shipping
income or any other income that is considered to be effectively connected income would be subject to U.S. federal
corporate income taxation on a net basis (generally at a 21% rate) and state and local taxes, and our effectively

connected earnings and profits may also be subject to an additional branch profits tax of 30%, unless a lower treaty rate
applies (the “Net Tax Regime”). Our U.S. source shipping income is considered effectively connected income if we
have, or are considered to have, a fixed place of business in the U.S. involved in the earning of U.S. source shipping
income, and substantially all of our U.S. source shipping income is attributable to regularly scheduled transportation,
such as the operation of a vessel that follows a published schedule with repeated sailings at regular intervals between the
same points for voyages that begin or end in the U.S.

If we do not have a fixed place of business in the U.S. or substantially all of our income is not derived from regularly
scheduled transportation, the income will generally not be considered to be effectively connected income. In that case,
we would be subject to a special 4% tax on our U.S. source shipping income (the “4% Tax Regime”).

Other United States Taxation

U.S. Treasury Regulations list several items of income which are not considered to be incidental to the international
operation of ships and, to the extent derived from U.S. sources, are subject to U.S. federal income taxes under the Net
Tax Regime discussed above. Income items considered non-incidental to the international operation of ships include
income from the sale of single-day cruises, shore excursions, air and other transportation, and pre- and post-cruise land
packages. We believe that substantially all of our income currently derived from the international operation of ships is
shipping income.

Income from U.S.-flagged Operation under the NCL America

Income derived from our U.S.-flagged operation generally will be subject to U.S. corporate income taxes both at the
federal and state levels. We expect that such income will not be subject to U.S. branch profits tax nor a U.S. dividend
withholding tax under the U.S.-U.K. Income Tax Treaty.

U.K. Income Taxation

NCLH and NCLC are tax residents of the U.K. and are subject to normal U.K. corporation tax.

U.S. Taxation of Gain on Sale of Vessels

Gains from the sale of vessels should generally also be exempt from tax under Section 883 provided NCLH qualifies for
exemption from tax under Section 883 in respect of our shipping income. If, however, our gain does not qualify for
exemption under Section 883, or if the provision was repealed, then such gain could be subject to either the Net Tax
Regime or the 4% Tax Regime.

Certain State, Local and Non-U.S. Tax Matters

We may be subject to state, local and non-U.S. income or non-income taxes in various jurisdictions, including those in
which we transact business, own property or reside. We may be required to file tax returns in some or all of those
jurisdictions. Our state, local or non-U.S. tax treatment may not conform to the U.S. federal income tax treatment
discussed above. We may be required to pay non-U.S. taxes on dispositions of foreign property, or operations involving
foreign property may give rise to non-U.S. income or other tax liabilities in amounts that could be substantial.

Changes in Tax Laws

The various tax regimes to which we are currently subject result in a relatively low effective tax rate on our worldwide
income. These tax regimes, however, are subject to change, possibly with retroactive effect. For example, legislation has
been proposed in the past that would eliminate the benefits of the exemption from U.S. federal income tax under Section
883 and subject all or a portion of our shipping income to taxation in the U.S. Moreover, we may become subject to new
tax regimes and may be unable to take advantage of favorable tax provisions afforded by current or future law including
exemption of branch profits and dividend withholding taxes under the U.S.-U.K. Income Tax Treaty on income derived
in respect of our U.S.-flagged operation.

Employees

As of December 31, 2019, we employed approximately 4,000 employees worldwide in our shoreside operations and
approximately 32,000 shipboard employees. Regent and Oceania Cruises’ ships also utilize a third party to provide
additional hotel and restaurant employees onboard. We refer you to “Risk Factors—Our inability to recruit or retain
qualified personnel or the loss of key personnel or employee relations issues may materially adversely affect our
business, financial condition and results of operations” for more information regarding our relationships with union
employees and our collective bargaining agreements that are currently in place.

Ports and Facilities

We own a private island in the Bahamas, Great Stirrup Cay, which we utilize as a port-of-call on certain itineraries. We
also operate a cruise destination in Belize, Harvest Caye, which we introduced in November 2016. We have agreed to
develop, in conjunction with PortMiami, a new terminal, which will be our primary facility at the port. In addition, we
have entered into various agreements relating to port or berthing rights for our ships, which include the following:



an agreement with the Government of Bermuda whereby we are permitted weekly calls in Bermuda through
2028 from Boston and New York.

contracts for the Port of New Orleans, PortMiami, Port Canaveral, Manhattan Cruise Terminal, A.J. Juneau
Dock, Ogden Point Cruise Ship Terminal in Victoria, BC, Puerto Costa Maya, Port of Roatan, Puerto Plata, and
various Hawaiian ports pursuant to which we receive preferential Berths to the exclusion of other vessels for
certain specified days of the week at the terminals.

a concession permit with the U.S. National Park Service whereby our ships are permitted to call on Glacier Bay
during each summer cruise season through September 30, 2029.

an agreement with the British Virgin Islands Port Authority granting priority berthing rights for a 15-year term
through April 2032 with options to extend the agreement for two additional five-year terms.

an agreement with the West Indian Company Limited granting priority berthing rights in St. Thomas for a 10-
year term through September 2026 with an option to extend the agreement for an additional five years.

an agreement with the Port of Seattle for a 15-year lease through October 2030 with an option to extend the
agreement for an additional five years.

an agreement with the Huna Totem Corporation to develop a second pier in Icy Strait Point, Alaska, which
includes preferential berthing rights.

a 30-year preferential berthing agreement with Ward Cove Dock Group, LLC, which allows for construction of
a new double ship pier in Ward Cove, Ketchikan, Alaska. The pier will be built to simultaneously accommodate
two of Norwegian Cruise Line’s 4,000 passenger Breakaway Plus Class Ships and is expected to be ready for
the summer 2020 season.

Available Information

We file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements
and other information with the SEC. Our SEC filings are available to the public at the SEC’s website at
http://www.sec.gov.

We also maintain an Internet site at http://www.nclhltdinvestor.com. We will, as soon as reasonably practicable after we
electronically file or furnish our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-
K, proxy statements and amendments to those reports, if applicable, make available such reports free of charge on our

website. Our website also contains other items of interest to our investors, including, but not limited to, investor events,
press and earnings releases and sustainability initiatives. Our website and the information contained therein or
connected thereto are not incorporated into this annual report on Form 10-K.

Information about our Executive Officers

The following table sets forth certain information regarding NCLH’s executive officers as of February 17, 2020.

Name
Frank J. Del Rio
Mark A. Kempa
Robert Binder

Age
65 Director, President and Chief Executive Officer
48 Executive Vice President and Chief Financial Officer
55 Vice Chairman Oceania Cruises and Regent, President and Chief Executive Officer, Oceania

Position

Cruises brand

Jason M. Montague 46 President and Chief Executive Officer, Regent brand
Harry Sommer
Daniel S. Farkas
T. Robin Lindsay
Faye L. Ashby

52 President and Chief Executive Officer, Norwegian brand
51 Executive Vice President, General Counsel and Assistant Secretary
62 Executive Vice President, Vessel Operations
48 Senior Vice President and Chief Accounting Officer

All the executive officers listed above hold their offices at the pleasure of our Board of Directors, subject to rights under
any applicable employment agreements. There are no family relationships between or among any directors and executive
officers.

Frank J. Del Rio has served as President and Chief Executive Officer of NCLH since January 2015 and became a
director of NCLH in August 2015. Mr. Del Rio has been responsible for the successful integration of NCLH and Prestige
and oversees the financial, operational and strategic performance of the Norwegian, Regent and Oceania Cruises brands.
Mr. Del Rio founded Oceania Cruises in October 2002 and served as Chief Executive Officer of Prestige or its
predecessor from October 2002 through September 2016. Mr. Del Rio was instrumental in the growth of Oceania
Cruises and Regent. Prior to founding Oceania Cruises, Mr. Del Rio played a vital role in the development of
Renaissance Cruises, serving as Co-Chief Executive Officer, Executive Vice President and Chief Financial Officer from
1993 to April 2001. Mr. Del Rio holds a B.S. in Accounting from the University of Florida and is a Certified Public
Accountant (inactive license).

Mark A. Kempa has served as Executive Vice President and Chief Financial Officer since August 2018. Prior to that,
he served as Interim Chief Financial Officer from March 2018 to August 2018 and as NCLH’s Senior Vice President,
Finance, from November 2014 to August 2018. From September 2008 to November 2014, he served as Vice President,
Corporate and Capital Planning, and was an instrumental figure in the completion of NCLH’s IPO in 2013. From
January 2007 to August 2008, he served as Director, Corporate and Capital Planning. From January 2003 to December
2006, he served as Director, Newbuild Cost and Control. In this role, he spent almost three years representing the
financial interests of the Company’s expansive newbuild program while positioned overseas in Germany. From May
1998 to December 2002, he served in various roles in accounting and internal audit. Prior to joining the Company, Mr.
Kempa served as the Assistant Controller for International Voyager Media, a travel portfolio company. Mr. Kempa holds
a Bachelor’s degree in Accounting from Barry University.

Robert J. Binder has served as President and Chief Executive Officer of the Oceania Cruises brand since September
2016 and as Vice Chairman, Oceania Cruises and Regent since May 2015. He served as President of International
Operations from February 2015 until May 2015. Prior to the Acquisition of Prestige in November 2014, Mr. Binder
served as the Vice Chairman of Prestige since May 2011 and as President of Prestige since January 2008, where he
oversaw the global expansion of the Prestige brands and was responsible for sales, marketing and branding efforts
internationally. Mr. Binder is co-founder of Oceania Cruises and previously served as President of Oceania Cruises.
Before launching Oceania Cruises, Mr. Binder was the President of Meadowoods Consulting, which provided consulting
services to the financial and travel services industries. From 1992 to 2001, he held several executive posts in the cruise
industry. Mr. Binder also held senior management positions at JP Morgan Chase, where he was a Strategic Planning

Officer, and at Renaissance Cruises, where he was Vice President of Sales. Mr. Binder earned master’s degrees in both
Finance and Marketing from Cornell University and did his undergraduate studies at Purdue University.

Jason M. Montague has served as President and Chief Executive Officer of the Regent brand since September 2016. In
this role, he is responsible for financial and day-to-day operations of the Regent brand. Previously, he served as
President and Chief Operating Officer for the Oceania Cruises and Regent brands from December 2014 until September
2016, where he successfully oversaw the launch of Sirena for the Oceania Cruises brand and the Seven Seas Explorer for
the Regent brand. Prior to that, he served as Executive Vice President and Chief Integration Officer for NCLH during the
Acquisition of Prestige. Before the acquisition by NCLH, he served as Chief Financial Officer and Executive Vice
President for Prestige, from September 2010 until November 2014. During his 12-year tenure at Prestige, Mr. Montague
helped build the business plan for the launch of Oceania Cruises in 2002, including oversight for the purchase of its
initial three R-class vessels, was involved with the equity investment by Apollo Global Management, LLC and
acquisition of Regent Seven Seas Cruises, and drove financing and delivery of Oceania Cruises’ newbuilds, Marina and
Riviera. Mr. Montague served as Oceania Cruises’ Vice President and Treasurer from 2004 to 2007 and Senior Vice
President of Finance from 2008 to 2010. Prior to joining Oceania Cruises, Mr. Montague operated a successful
consulting practice focused on strategic planning and development of small to medium-sized companies. Previously, he
held the position of Vice President, Finance for Alton Entertainment Corporation, a brand equity marketer that was
majority owned by the Interpublic Group of Companies. Mr. Montague holds a B.B.A. in Accounting from the
University of Miami.

Harry Sommer has served as President and Chief Executive Officer, Norwegian Cruise Line, since January 2020 and
was President, International, from January 2019 to January 2020. Prior to that, he served as Executive Vice President,
International Business Development from May 2015 to January 2019. From February 2015 until May 2015, he served as
Executive Vice President and Chief Integration Officer for NCLH. Mr. Sommer previously served as Senior Vice
President and Chief Marketing Officer of Prestige from October 2013 until February 2015, Senior Vice President,
Finance, and Chief Information Officer of Prestige from September 2011 until October 2013 and Senior Vice President,
Accounting, Chief Accounting Officer and Controller of Prestige from August 2009 until August 2011. Prior to joining
Prestige, Mr. Sommer was the co-founder and President of Luxury Cruise Center, a high-end travel agency and prior to
that, held various marketing and finance roles at Renaissance Cruises. Mr. Sommer holds an M.B.A. from Pace
University and a B.B.A. from Baruch College.

Daniel S. Farkas has served as Executive Vice President and General Counsel of NCLH since January 2019. He has
also served as Assistant Secretary of the Company since 2013. Since Mr. Farkas joined the Company in January 2004,
he has held the positions of Secretary from 2010 to 2013, Senior Vice President and General Counsel from 2008 through
2018, Vice President and Assistant General Counsel from 2005 to 2008, and Assistant General Counsel from 2004 to
2005 and was instrumental in the Company’s IPO and the Acquisition of Prestige. Mr. Farkas was formerly a partner in
the Miami offices of the law firm Mase and Gassenheimer specializing in maritime litigation. Before that he was an
Assistant State Attorney for the Eleventh Judicial Circuit in and for Miami-Dade County, Florida. Mr. Farkas currently
serves as Chairman of the board of directors of the Cruise Industry Charitable Foundation and on the board of directors
of the Steamship Mutual Underwriting Association Limited. Mr. Farkas earned a B.A., cum laude, in English and
American Literature from Brandeis University and a J.D. from the University of Miami.

T. Robin Lindsay has served as Executive Vice President, Vessel Operations, for NCLH since January 2015. From
November 2014 until January 2015, Mr. Lindsay served as Executive Vice President, Newbuild, for Prestige. Prior to the
Acquisition of Prestige, he served as the Executive Vice President of Vessel Operations for Prestige from January 2008
until November 2014 and Senior Vice President of Hotel Operations from February 2003 until January 2008 and
oversaw all marine, technical and hotel operations. Mr. Lindsay was instrumental in the extensive refurbishment and
launch of Oceania Cruises’ Regatta, Insignia and Nautica and the development of the Marina and Riviera. Mr. Lindsay
possesses a substantial amount of experience in the cruise industry and has overseen the design and construction of many
of the industry’s most acclaimed cruise ships. Prior to joining Oceania Cruises in 2003, Mr. Lindsay was the Senior Vice
President of Vessel Operations at Silversea Cruises and, prior to that, Vice President of Operations at Radisson Seven
Seas Cruises. Mr. Lindsay earned his B.S. degree from Louisiana Tech University.

Faye L. Ashby has served as Senior Vice President and Chief Accounting Officer of NCLH since February 2016. She
joined NCLH as Controller in November 2014 after the Acquisition of Prestige and served in that position until February
2016. From January 2012 to November 2014, Ms. Ashby served as Controller for Prestige, where she managed and
developed the Accounting and External Financial Reporting teams. From March 2010 to December 2011, Ms. Ashby
held the position of Senior Director of Financial Reporting with Prestige, where she started the Financial Reporting
Department and was responsible for the preparation of annual financial statements, coordination of external audits and
researching technical accounting issues. Before joining Prestige, Ms. Ashby was a Senior Manager at the international
public accounting firm of Deloitte. She has an M.B.A. and B.B.A. with concentrations in accounting from the University
of Miami and is a Certified Public Accountant in Florida.

Item 1A. Risk Factors

In addition to the other information contained in this annual report, you should carefully consider the following risk
factors in evaluating us and our business. If any of the risks discussed in this annual report actually occur, our business,
financial condition and results of operations could be materially adversely affected. Additional risks and uncertainties
not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business,
financial condition and results of operations. The ordering of the risk factors set forth below is not intended to reflect an
indication of priority or likelihood. In connection with the forward-looking statements that appear in this annual report,
you should also carefully review the cautionary statement referred to under “Cautionary Statement Concerning
Forward–Looking Statements.”

Risks Related to the Company

Terrorist acts, armed conflict and threats thereof, acts of piracy, and other international events impacting the security
of travel could adversely affect the demand for cruises.

The threat or possibility of future terrorist acts, an outbreak of hostilities or armed conflict abroad or the possibility or
fear of such events, political unrest and instability, the issuance of travel advisories or elevated national threat warnings
by national governments, an increase in the activity of pirates, and other geo-political uncertainties have had in the past
and may again in the future have an adverse impact on the demand for cruises, and consequently, the pricing for cruises.
Decreases in demand and reduced pricing in response to such decreased demand would adversely affect our business by
reducing our profitability.

Adverse incidents involving cruise ships may adversely affect our business, financial condition and results of
operations.

The operation of cruise ships carries an inherent risk of loss caused by adverse weather conditions and maritime
disasters, including, but not limited to, oil spills and other environmental mishaps, extreme weather conditions such as
hurricanes, floods and typhoons, fire, mechanical failure, collisions, human error, war, terrorism, piracy, political action,
civil unrest and insurrection in various countries and other circumstances or events. Any such event may result in loss of
life or property, loss of revenue or increased costs and the frequency and severity of natural disasters may increase due to
climate change. The operation of cruise ships also involves the risk of other incidents at sea or while in port, including
missing guests, inappropriate crew or passenger behavior and onboard crimes, which may bring into question passenger
safety, may adversely affect future industry performance and may lead to litigation against us. Although we place
passenger safety as the highest priority in the design and operation of our fleet, we have experienced accidents and other
incidents involving our cruise ships and there can be no assurance that similar events will not occur in the future. It is
possible that we could be forced to cancel a cruise or a series of cruises due to these factors or incur increased port-
related and other costs resulting from such adverse events. Any such event involving our cruise ships or other passenger
cruise ships may adversely affect guests’ perceptions of safety or result in increased governmental or other regulatory
oversight. An adverse judgment or settlement in respect of any of the ongoing claims against us may also lead to
negative publicity about us. The expanded use of social media has increased the speed that negative publicity spreads
and makes it more difficult to mitigate reputational damage. Anything that damages our reputation (whether or not
justified), including adverse publicity about passenger safety, could have an adverse impact on demand, which could
lead to price discounting and a reduction in our sales and could adversely affect our business, financial condition and

results of operations. If there is a significant accident, mechanical failure or similar problem involving a ship, we may
have to place a ship in an extended Dry-dock period for repairs. This could result in material lost revenue and/or
increased expenditures.

The adverse impact of general economic and related factors, such as fluctuating or increasing levels of
unemployment, underemployment and the volatility of fuel prices, declines in the securities and real estate markets
and perceptions of these conditions can decrease the level of disposable income of consumers or consumer
confidence. The demand for cruises is affected by international, national and local economic conditions.

The demand for cruises is affected by international, national and local economic conditions. Adverse changes in the
perceived or actual economic climate in North America or globally, such as the volatility of fuel prices, higher interest
rates, stock and real estate market declines and/or volatility, more restrictive credit markets, higher unemployment or
underemployment rates, higher taxes, changes in governmental policies and political developments impacting
international trade, trade disputes and increased tariffs, could reduce the level of discretionary income or consumer
confidence in the countries from which we source our guests. Consequently, this may negatively affect demand for
cruise vacations in these countries, which are a discretionary purchase. Decreases in demand for cruise vacations could
result in price discounting, which, in turn, could reduce the profitability of our business. In addition, these conditions
could also impact our suppliers, which could result in disruptions in our suppliers’ services and financial losses for us.

Epidemics and viral outbreaks could have an adverse effect on our business, financial condition and results of
operations.

Public perception about the safety of travel and adverse publicity related to passenger or crew illness, such as incidents
of viral illnesses, stomach flu or other contagious diseases may impact demand for cruises and result in cruise
cancellations and employee absenteeism. For example, the recent outbreak of the COVID-19 coronavirus has resulted in
costs and lost revenue related to customer compensation, itinerary modifications, travel restrictions and advisories, the
unavailability of ports and/or destinations, cancellations and redeployments and has impacted consumer sentiment
regarding cruise travel. The spread of the COVID-19 coronavirus, particularly in North America, could exacerbate its
effect on us. Any future wide-ranging health scares would also likely adversely affect our business, financial condition
and results of operations.

Breaches in data security or other disturbances to our information technology and other networks or our actual or
perceived failure to comply with requirements regarding data privacy and protection could impair our operations,
subject us to significant fines, penalties and damages, and have a material adverse impact on our business, financial
condition and results of operations.

The integrity and reliability of our information technology systems and networks are crucial to our business operations
and disruptions to these systems or networks could impair our operations, have an adverse impact on our financial results
and negatively affect our reputation and customer demand. In addition, certain networks are dependent on third-party
technologies, systems and service providers for which there is no certainty of uninterrupted availability. Among other
things, actual or threatened natural disasters, information systems failures, computer viruses, denial of service attacks
and other cyber-attacks may cause disruptions to our information technology, telecommunications and other networks.
Our business continuity, disaster recovery, data restoration plans and data and information technology security may not
prevent disruptions that could result in adverse effects on our operations and financial results. We carry limited business
interruption insurance for certain shoreside operations, subject to limitations, exclusions and deductibles.

As part of our ordinary business operations, we and certain of our third-party service providers collect, process, transmit
and store a large volume of personally identifiable information. The security of the systems and networks where we and
our service providers store this data is a critical element of our business. Our systems and networks may be vulnerable to
computer viruses, malware, worms, hackers and other security issues, including physical and electronic break-ins, router
disruption, sabotage or espionage, disruptions from unauthorized access and tampering (including through social
engineering such as phishing attacks), impersonation of authorized users and coordinated denial-of-service attacks. For
example, in October 2018, we discovered limited instances of unauthorized access to certain employee e-mail
communications, some of which contained proprietary business and personally identifiable information. We have

implemented additional safeguards, and we do not believe that we experienced any material losses related to this
incident; however, there can be no assurance that this or any other breach or incident will not have a material impact on
our operations and financial results in the future. In addition, we may not be in a position to promptly address security
breaches, unauthorized access or other cyber-attacks or incidents or to implement adequate preventative measures if we
are unable to immediately detect such incidents. Our failure to successfully prevent, mitigate or timely respond to such
incidents could impair our ability to conduct business and damage our reputation.

We are also subject to laws in multiple jurisdictions relating to the privacy and protection of personal data, including the
European Union’s General Data Protection Regulation and the California Consumer Privacy Act. Noncompliance with
these and other privacy laws or the compromise of information systems used by us or our service providers resulting in
the loss, disclosure, misappropriation of or access to the personally identifiable information of our guests, prospective
guests, employees or vendors could result in governmental investigation, civil liability or regulatory penalties under laws
protecting the privacy of personal information, any or all of which could disrupt our operations and materially adversely
affect our business. Additionally, any material failure by us or our service providers to maintain compliance with the
Payment Card Industry security requirements or to rectify a data security issue may result in fines and restrictions on our
ability to accept credit cards as a form of payment. The regulatory framework for data privacy and protection is
uncertain for the foreseeable future, and it is possible that legal and regulatory obligations may continue to increase and
may be interpreted and applied in a manner that is inconsistent or possibly conflicting from one jurisdiction to another.

In the event of a data security breach of our systems and/or third-party systems or a cyber-attack or other cyber incident,
we may incur costs associated with the following: response, notification, forensics, regulatory investigations, public
relations, consultants, credit identity monitoring, credit freezes, fraud alert, credit identity restoration, credit card
cancellation, credit card reissuance or replacement, data restoration, regulatory fines and penalties, vendor fines and
penalties, legal fees, damages and settlements. In addition, data security breaches, a cyber-attack or other cyber incident
may cause business interruption, information technology disruption, disruptions as a result of regulatory investigation or
litigation, digital asset loss related to corrupted or destroyed data, loss of company assets, damage to our reputation,
damages to intangible property and other intangible damages, such as loss of consumer confidence, all of which could
impair our operations and have an adverse impact on our financial results.

Changes in fuel prices and the type of fuel we are permitted to use and/or other cruise operating costs would impact
the cost of our cruise ship operations and our hedging strategies may not protect us from increased costs related to
fuel prices.

Fuel expense is a significant cost for our Company. Future increases in the cost of fuel globally or regulatory
requirements which require us to use more expensive types of fuel would increase the cost of our cruise ship operations.
For example, as of January 2020, the IMO’s convention entitled Prevention of Pollution from Ships (MARPOL) set a
global limit on fuel sulfur content of 0.5% (reduced from the previous 3.5% global limit). Various compliance methods,
such as the use of low-sulfur fuels or exhaust gas cleaning systems that reduce an equivalent amount of sulfur emissions,
may be utilized. We have elected to install exhaust gas cleaning systems on some ships in our fleet, which will allow us
to continue to use high-sulfur fuel on those ships in certain areas. However, if exhaust gas cleaning systems are not
widely used in the industry, low demand for high-sulfur fuel may increase the price for such fuel. Ships in our fleet that
do not have exhaust gas cleaning systems, and in specified areas even ships with exhaust gas cleaning systems, will be
required to use low-sulfur fuels. Low-sulfur fuels may be costly due to increased demand and scarcity if suppliers are not
able to produce sufficient quantities. In addition, we could experience increases in other cruise operating costs due to
market forces and economic or political instability resulting from increases or volatility in fuel expense. Our hedging
program may not be successful in mitigating higher fuel costs, and any price protection provided may be limited due to
market conditions, including choice of hedging instruments, breakdown of correlation between hedging instrument and
market price of fuel and failure of hedge counterparties. To the extent that we use hedge contracts that have the potential
to create an obligation to pay upon settlement if fuel prices decline significantly, such hedge contracts may limit our
ability to benefit fully from lower fuel costs in the future. There can be no assurance that our hedging arrangements will
be cost-effective or that our counterparties will be able to perform under our hedging arrangements. Additionally,
deterioration in our financial condition could negatively affect our ability to enter into new hedge contracts in the future.

Mechanical malfunctions and repairs, delays in our shipbuilding program, maintenance and refurbishments and the
consolidation of qualified shipyard facilities could adversely affect our results of operations and financial condition.

The new construction, refurbishment, repair and maintenance of our ships are complex processes and involve risks
similar to those encountered in other large and sophisticated equipment construction, refurbishment and repair projects.
Our ships are subject to the risk of mechanical failure or accident, which we have occasionally experienced and have had
to repair. For example, in the past we have had to delay or cancel cruises due to mechanical issues on our ships. There
can be no assurance that we will not experience similar events in the future. If there is a mechanical failure or accident in
the future, we may be unable to procure spare parts when needed or make repairs without incurring material expense or
suspension of service, especially if a problem affects certain specialized maritime equipment, such as the radar, a pod
propulsion unit, the electrical/power management system, the steering gear or the gyro system.

In addition, availability, work stoppages, insolvency or financial problems in the shipyards’ construction, refurbishment
or repair of our ships, or other “force majeure” events that are beyond our control and the control of shipyards or
subcontractors, could also delay or prevent the newbuild delivery, refurbishment and repair and maintenance of our
ships. Any termination or breach of contract following such an event may result in, among other things, the forfeiture of
prior deposits or payments made by us, potential claims and impairment of losses. A significant delay in the delivery of a
new ship, or a significant performance deficiency or mechanical failure of a new ship could also have an adverse effect
on our business. The consolidation of the control of certain European cruise shipyards could result in higher prices for
the construction of new ships and refurbishments and could limit the availability of qualified shipyards to construct new
ships. Also, the lack of qualified shipyard repair facilities could result in the inability to repair and maintain our ships on
a timely basis. These potential events and the associated losses, to the extent that they are not adequately covered by
contractual remedies or insurance, could adversely affect our results of operations and financial condition.

Conducting business internationally may result in increased costs and risks.

We operate our business internationally and plan to continue to develop our international presence. Operating
internationally exposes us to a number of risks, including political risks, risks of increases in duties and taxes, risks
relating to anti-bribery laws, as well as risks that laws and policies affecting cruising, vacation or maritime businesses, or
governing the operations of foreign-based companies may change. Additional risks include imposition of trade barriers,
withholding and other taxes on remittances and other payments by subsidiaries and changes in and application of foreign
taxation structures, including value added taxes. If we are unable to address these risks adequately, our business,
financial condition and results of operations could be materially and adversely affected.

Operating internationally also exposes us to numerous and sometimes conflicting legal and regulatory requirements. In
many parts of the world, including countries in which we operate, practices in the local business communities might not
conform to international business standards. We have implemented safeguards and policies to prevent violations of
various anti-corruption laws that prohibit improper payments or offers of payments to foreign governments and their
officials for the purpose of obtaining or retaining business by our employees and agents. However, our existing
safeguards and policies and any future improvements may prove to be less than effective and our employees or agents
may engage in conduct prohibited by our policies, but for which we nevertheless may be held responsible. If our
employees or agents violate our policies, if we fail to maintain adequate record-keeping and internal accounting practices
to accurately record our transactions or if we fail to implement or maintain other adequate safeguards, we may be subject
to regulatory sanctions or severe criminal or civil sanctions and penalties.

We have operations in and source passengers from the U.K. and member countries of the European Union. Effective as
of January 31, 2020, the U.K. withdrew from the European Union, commonly referred to as “Brexit.” During a
transition period (set to expire on December 31, 2020), it will remain in the single market and be subject to the European
Union’s rules and regulations while the British government continues to negotiate the terms of the U.K.’s future
relationship with the European Union. The outcome of these negotiations is uncertain, and we do not know to what
extent Brexit will ultimately impact the business environment in the U.K., the rest of the European Union, or other
countries. The withdrawal could also adversely affect tax, legal and regulatory regimes to which our business in the
region is subject and disrupt the free movement of goods, services and people between the U.K. and the European

Union, which could make it more difficult to source passengers from these regions. These events could have a material
adverse effect on our business, financial condition and results of operations.

Fluctuations in foreign currency exchange rates could adversely affect our financial results.

We earn revenues, pay expenses, purchase and own assets and incur liabilities in currencies other than the U.S. dollar;
most significantly a portion of our revenue and expenses are denominated in foreign currencies, particularly British
pound, Canadian dollar, euro and Australian dollar. Because our consolidated financial statements are presented in U.S.
dollars, we must translate revenues and expenses, as well as assets and liabilities, into U.S. dollars at exchange rates in
effect during or at the end of each reporting period. The strengthening of the U.S. dollar against our other major
currencies may adversely affect our U.S. dollar financial results and will reduce the U.S. dollar amount received upon
conversion of these currencies into U.S. dollars.

We have historically and may in the future enter into ship construction contracts denominated in euros or other foreign
currencies. While we have entered into foreign currency derivatives to manage a portion of the currency risk associated
with such contracts, we are exposed to fluctuations in the euro exchange rate for the portions of the ship construction
contracts that have not been hedged. Additionally, if the shipyard is unable to perform under the related ship
construction contract, any foreign currency hedges that were entered into to manage the currency risk would need to be
terminated.

Unavailability of ports of call may materially adversely affect our business, financial condition and results of
operations.

We believe that attractive port destinations are a major reason why guests choose to go on a particular cruise or on a
cruise vacation. The availability of ports, including the specific port facility at which our guests will embark and
disembark, is affected by a number of factors, including, but not limited to, existing capacity constraints, security, safety,
health and environmental concerns, adverse weather conditions and natural disasters such as hurricanes, floods, typhoons
and earthquakes, financial limitations on port development, political instability, exclusivity arrangements that ports may
have with our competitors, local governmental regulations and fees, local community concerns about port development
and other adverse impacts on their communities from additional tourists and sanctions programs implemented by the
Office of Foreign Assets Control of the United States Treasury Department or other regulatory bodies. For example, we
had to temporarily change certain itineraries in the Caribbean due to damage some ports sustained during an active
hurricane season in 2017. There can be no assurance that our ports of call will not be similarly affected in the future.
Additionally, in June 2019, the Office of Foreign Assets Control of the United States Department of the Treasury
removed the authorization for group people-to-people educational travel by U.S. persons to Cuba. Concurrently, the
United States Department of Commerce’s Bureau of Industry and Security removed the authorization to travel for most
non-commercial aircraft and all passenger and recreational vessels, including cruise ships, on temporary sojourn in
Cuba. Combined, these rulings effectively eliminated the ability of cruise lines to offer cruise travel to Cuba. Due to
environmental and over-crowding concerns, some local governments have begun to take measures to limit the number of
cruise ships and passengers allowed at certain destinations. For example, Dubrovnik, Venice and Barcelona have either
implemented or considered implementing such limitations on cruise ships and passengers. Limitations on the availability
of ports of call or on the availability of shore excursions and other service providers at such ports have adversely
affected our business, financial condition and results of operations in the past and could do so in the future.

Overcapacity in key markets or globally could adversely affect our operating results.

We continue to expand our fleet through our newbuild program and expect to add nine additional ships to our fleet
through 2027. Our competitors have also announced similar expansions to their fleets. These increases in capacity in the
cruise industry globally and potential overcapacity in certain key markets may cause us to lower pricing, which would
reduce profitability and adversely affect our results of operations. Additionally, older ships in our fleet may not be as
competitive as new ships enter the market and we may not be able to sell such older ships at optimal prices.

Our expansion into and investments in new markets may not be successful.

We believe there remains significant opportunity to expand our passenger sourcing into major markets, such as Europe
and Australia, as well as into emerging markets and to expand our itineraries in new markets, and we are in the process
of such expansion efforts. Expansion into new markets requires significant levels of investment and attention from
management. There can be no assurance that these markets will develop as anticipated or that we will have success in
these markets, and if we do not, we may be unable to recover our investment spent to expand our business into these
markets and may forgo opportunities in more lucrative markets, which could adversely impact our business, financial
condition and results of operations.

Our inability to obtain adequate insurance coverage may adversely affect our business, financial condition and
results of operations.

There can be no assurance that our risks are fully insured against or that any particular claim will be fully paid by our
insurance. Such losses, to the extent they are not adequately covered by contractual remedies or insurance, could affect
our financial results. In addition, we have been and continue to be subject to calls, or premiums, in amounts based not
only on our own claim records, but also the claim records of all other members of the protection and indemnity
associations through which we receive indemnity coverage for tort liability. Our payment of these calls and increased
premiums could result in significant expenses to us. If we, or other members of our protection and indemnity
associations, were to sustain significant losses in the future, our ability to obtain insurance coverage at commercially
reasonable rates or at all could be materially adversely affected. For example, in the past our protection and indemnity
associations have increased certain deductibles and determined not to cover certain categories of claims. Moreover,
irrespective of the occurrence of such events, there can still be no assurance that we will be able to obtain adequate
insurance coverage at commercially reasonable rates or at all.

Our indebtedness, and the agreements governing our indebtedness, may limit our flexibility in operating our business
and a significant portion of our assets, including many of our ships, are collateral under our debt agreements.

A substantial portion of our cash flow from operations is dedicated to the repayment of our indebtedness, which may
limit our available funds for other business functions and strategic opportunities and may make us more vulnerable to
downturns in our business, the economy and the industry in which we operate. We may not be able to generate sufficient
cash to service our indebtedness, and may be forced to take other actions to satisfy our obligations under our
indebtedness, including refinancing our indebtedness, which may not be successful. Any refinancing of our debt could
be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our
business operations.

In addition, the agreements governing our indebtedness contain, and any instruments governing future indebtedness of
ours may contain, covenants that impose significant operating and financial restrictions on us, including restrictions or
prohibitions on our ability to, among other things: incur or guarantee additional debt or issue certain preference shares;
pay dividends on or make distributions in respect of our share capital or make other restricted payments, including the
ability of NCLH’s subsidiaries, including NCLC, to pay dividends or make distributions to NCLH; repurchase or redeem
capital stock or subordinated indebtedness; make certain investments or acquisitions; transfer, sell or create liens on
certain assets; and consolidate or merge with, or sell or otherwise dispose of all or substantially all of our assets to other
companies. As a result of these covenants, we are limited in the manner in which we conduct our business, and we may
be unable to engage in favorable business activities or finance future operations or capital needs.

Our existing debt agreements also require us, and any instruments governing future indebtedness of ours may require us,
to maintain minimum level of liquidity, as well as limit our net funded debt-to-capital ratio and maintain certain other
financial ratios. Our ability to meet those financial ratios can be affected by events beyond our control, and there can be
no assurance that we will meet those ratios. A failure to comply with the covenants contained in our debt agreements
could result in an event of default under such agreements, which, if not cured or waived, could have a material adverse

effect on our business, financial condition and results of operations. In the event of any default under our debt
agreements, the holders of our indebtedness thereunder:



could elect to declare all indebtedness outstanding, together with accrued and unpaid interest and fees, to be due
and payable and terminate all commitments to extend further credit, if applicable; and/or



could require us to apply all of our available cash to repay such indebtedness.

Such actions by the holders of our indebtedness could cause cross defaults under our other indebtedness, and there is no
assurance that we would have sufficient current assets to repay such indebtedness in full. If we were unable to repay
those amounts, the holders of our secured indebtedness could proceed against the collateral granted to them to secure
that indebtedness, which includes a significant portion of our assets including many of our ships. Any such action would
have an adverse impact on our business, financial condition and results of operations.

Litigation, enforcement actions, fines or penalties could adversely impact our financial condition or results of
operations and damage our reputation.

Our business is subject to various U.S. and international laws and regulations that could lead to enforcement actions,
fines, civil or criminal penalties or the assertion of litigation claims and damages. In addition, improper conduct by our
employees or agents could damage our reputation and/or lead to litigation or legal proceedings that could result in civil
or criminal penalties, including substantial monetary fines. In certain circumstances, it may not be economical to defend
against such matters, and a legal strategy may not ultimately result in us prevailing in a matter. Such events could lead to
an adverse impact on our financial condition or results of operations.

As a result of any ship-related or other incidents, litigation claims, enforcement actions and regulatory actions and
investigations, including, but not limited to, those arising from personal injury, loss of life, loss of or damage to personal
property, business interruption losses or environmental damage to any affected coastal waters and the surrounding area,
may be asserted or brought against various parties, including us and/or our cruise brands. The time and attention of our
management may also be diverted in defending such claims, actions and investigations. Subject to applicable insurance
coverage, we may also incur costs both in defending against any claims, actions and investigations and for any
judgments, fines, civil or criminal penalties if such claims, actions or investigations are adversely determined.

The U.S. Government announced that, effective May 2, 2019, it will no longer suspend the right of private parties to
bring litigation under Title III of the Cuban Liberty and Solidarity (Libertad) Act of 1996, popularly known as the
Helms-Burton Act, allowing certain individuals whose property was confiscated by the Cuban government beginning in
1959 to sue anyone who "traffics" in the property in question in U.S. courts. Claims have now been brought against us
and other companies who have done business in Cuba. If these suits are successful, they could result in substantial
monetary damages against the Company.

The impact of volatility and disruptions in the global credit and financial markets may adversely affect our ability to
borrow and could increase our counterparty credit risks, including those under our credit facilities, derivatives,
contingent obligations, insurance contracts and new ship progress payment guarantees.

There can be no assurance that we will be able to borrow additional money on terms as favorable as our current debt, on
commercially acceptable terms, or at all. Economic downturns, including failures of financial institutions and any related
liquidity crisis, can disrupt the capital and credit markets. Such disruptions could cause counterparties under our credit
facilities, derivatives, contingent obligations, insurance contracts and new ship progress payment guarantees to be unable
to perform their obligations or to breach their obligations to us under our contracts with them, which could include
failures of financial institutions to fund required borrowings under our loan agreements and to pay us amounts that may
become due under our derivative contracts and other agreements. Also, we may be limited in obtaining funds to pay
amounts due to our counterparties under our derivative contracts and to pay amounts that may become due under other
agreements. If we were to elect to replace any counterparty for their failure to perform their obligations under such
instruments, we would likely incur significant costs to replace the counterparty. Any failure to replace any counterparties
under these circumstances may result in additional costs to us or an ineffective instrument.

Certain of our debt agreements use LIBOR as a reference rate for interest rate calculations. In July 2017, the U.K.’s
Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021.
The U.S. Federal Reserve has begun publishing a Secured Overnight Funding Rate, which is intended to replace U.S.
dollar LIBOR. Plans for alternative reference rates for other currencies have also been announced. At this time, we
cannot predict how markets will respond to these proposed alternative rates or the effect of any changes to LIBOR or the
discontinuation of LIBOR. If LIBOR is no longer available or if our lenders have increased costs due to changes in
LIBOR, we may experience potential increases in interest rates on our variable rate debt, which could adversely impact
our results of operations. In addition, some of our debt agreements which use LIBOR as a reference rate do not contain
fallback reference rates. If LIBOR is discontinued, we may incur additional costs related to contract renegotiation for
such agreements.

Our inability to recruit or retain qualified personnel or the loss of key personnel or employee relations issues may
materially adversely affect our business, financial condition and results of operations.

Our success is dependent upon our personnel and our ability to recruit and retain high quality employees. We must
continue to recruit, retain and motivate management and other employees in order to maintain our current business and
support our projected growth. We need to hire and train a considerable number of qualified crew members to staff the
ships that will be joining our fleet in the coming years. This may require significant efforts on the part of our
management team, and our inability to hire a sufficient number of qualified crew members would adversely affect our
business.

Our executive officers and other members of senior management have substantial experience and expertise in our
business and have made significant contributions to our growth and success. The unexpected loss of services of one or
more of these individuals could materially adversely affect us.

Currently, we are a party to collective bargaining agreements with certain crew members. Any future amendments to
such collective bargaining agreements or inability to satisfactorily renegotiate such agreements may increase our labor
costs and have a negative impact on our financial condition. In addition, although our collective bargaining agreements
have a no-strike provision, they may not prevent a disruption in work on our ships in the future. Any such disruptions in
work could have a material adverse effect on our financial results.

We rely on third parties to provide hotel management services for certain ships and certain other services, and we are
exposed to risks facing such providers. In certain circumstances, we may not be able to replace such third parties or
we may be forced to replace them at an increased cost to us.

We rely on external third parties to provide hotel management services for certain ships and certain other services that
are vital to our business. If these service providers suffer financial hardship or are otherwise unable to continue
providing such services, we cannot guarantee that we will be able to replace such service providers in a timely manner,
which may cause an interruption in our operations. To the extent that we are able to replace such service providers, we
may be forced to pay an increased cost for equivalent services. Both the interruption of operations and the replacement
of the third-party service providers at an increased cost could adversely impact our financial condition and results of
operations.

We rely on scheduled commercial airline services for passenger and crew connections. Increases in the price of, or
major changes or reduction in, commercial airline services could undermine our customer base or disrupt our
operations.

A number of our passengers and crew depend on scheduled commercial airline services to transport them to ports of
embarkation for our cruises. Increases in the price of airfare due to increases in fuel prices, fuel surcharges, changes in
commercial airline services as a result of strikes, weather or other events, or the lack of availability due to schedule
changes or a high level of airline bookings could adversely affect our ability to deliver guests and crew to or from our
ships and thereby increase our cruise operating expenses which would, in turn, have an adverse effect on our financial
condition and results of operations.

A failure to keep pace with developments in technology could impair our operations or competitive position.

Our business continues to demand the use of sophisticated systems and technology. These systems and technologies
must be refined, updated and replaced with more advanced systems on a regular basis in order for us to meet our
customers’ demands and expectations. If we are unable to do so on a timely basis or within reasonable cost parameters,
or if we are unable to appropriately and timely train our employees to operate any of these new systems, our business
could suffer. We also may not achieve the benefits that we anticipate from any new system or technology, such as fuel
abatement technologies, and a failure to do so could result in higher than anticipated costs or could impair our operating
results.

Risks Related to the Regulatory Environment in Which We Operate

Future changes in applicable tax laws, or our inability to take advantage of favorable tax regimes, could increase the
amount of taxes we must pay.

We believe and have taken the position that our income that is considered to be derived from the international operation
of ships as well as certain income that is considered to be incidental to such income (“shipping income”), is exempt from
U.S. federal income taxes under Section 883, based upon certain assumptions as to shareholdings and other information
as more fully described in “Item 1—Business—Taxation.” The provisions of Section 883 are subject to change at any
time, possibly with retroactive effect.

We believe and have taken the position that substantially all of our income derived from the international operation of
ships is properly categorized as shipping income and that we do not have a material amount of non-qualifying income. It
is possible, however, that a much larger percentage of our income does not qualify (or will not qualify) as shipping
income. Moreover, the exemption for shipping income is only available for years in which NCLH will satisfy complex
stock ownership tests or the publicly traded test under Section 883 as described in “Item 1—Business— Taxation—
Exemption of International Shipping Income under Section 883 of the Code.” There are factual circumstances beyond
our control, including changes in the direct and indirect owners of NCLH’s ordinary shares, which could cause us or our
subsidiaries to lose the benefit of this tax exemption. Finally, any changes in our operations could significantly increase
our exposure to either the Net Tax Regime or the 4% Regime (each as defined in “Item 1—Business—Taxation”), and
we can give no assurances on this matter.

If we or any of our subsidiaries were not to qualify for the exemption under Section 883, our or such subsidiary’s U.S.-
source income would be subject to either the Net Tax Regime or the 4% Regime (each as defined in “Item 1—
Business— Taxation”). As of the date of this filing, we believe that NCLH and its subsidiaries will satisfy the publicly
traded test imposed under Section 883 and therefore believe that NCLH will qualify for the exemption under Section
883. However, as discussed above, there are factual circumstances beyond our control that could cause NCLH to not
meet the stock ownership or publicly traded tests. Therefore, we can give no assurances on this matter. We refer you to
“Item 1—Business—Taxation.”

We may be subject to state, local and non-U.S. income or non-income taxes in various jurisdictions, including those in
which we transact business, own property or reside. We may be required to file tax returns in some or all of those
jurisdictions. Our state, local or non-U.S. tax treatment may not conform to the U.S. federal income tax treatment
discussed above. We may be required to pay non-U.S. taxes on dispositions of foreign property or operations involving
foreign property that may give rise to non-U.S. income or other tax liabilities in amounts that could be substantial.

The various tax regimes to which we are currently subject result in a relatively low effective tax rate on our worldwide
income. These tax regimes, however, are subject to change, possibly with retroactive effect. For example, legislation has
been proposed in the past that would eliminate the benefits of the exemption from U.S. federal income tax under Section
883 and subject all or a portion of our shipping income to taxation in the U.S. Moreover, we may become subject to new
tax regimes and may be unable to take advantage of favorable tax provisions afforded by current or future law, including
exemption of branch profits and dividend withholding taxes under the U.S. – U.K. Income Tax Treaty on income
derived in respect of our U.S.–flagged operation.

The government of Bermuda recently enacted the Economic Substance Act 2018 which sets forth minimum economic
substance requirements for entities established in Bermuda. The Company is currently analyzing these rules in
anticipation of further guidance from Bermuda authorities on the application of the Economic Substance Act 2018. If the
Company is unable to comply with such requirements, the Company may consider alternate jurisdictions or otherwise
become subject to tax regimes which may be less favorable.

We are subject to complex laws and regulations, including environmental, health and safety, labor, data privacy and
protection and maritime laws and regulations, which could adversely affect our operations and any changes in the
current laws and regulations could lead to increased costs or decreased revenue.

Increasingly stringent and complex international, federal, state, and local laws and regulations addressing environmental
protection and health and safety of workers could affect our operations. The IMO, a United Nations agency with
responsibility for the safety and security of shipping and the prevention of marine pollution by ships, the Council of the
European Union, individual countries, the United States, and individual states have implemented and are considering,
new laws and rules to manage cruise ship operations. Many aspects of the cruise industry are subject to international
treaties such as SOLAS, an international safety regulation, MARPOL, IMO’s requirements governing environmental
protection, and STCW, an IMO regulation governing ship manning. In the United States, the Environmental Protection
Agency and the U.S. Coast Guard both have regulations addressing cruise ship operations.

The U.S. and various state and foreign government and regulatory agencies have enacted or are considering new
environmental regulations and policies aimed at reducing the threat of invasive species in ballast water, requiring the use
of low-sulfur fuels, increasing fuel efficiency requirements and further restricting emissions, including those of green-
house gases, and improving sewage and greywater-handling capabilities. Compliance with such laws and regulations
may entail significant expenses for ship modification and changes in operating procedures which could adversely impact
our operations as well as our competitors’ operations.

The International Labor Organization’s Maritime Labor Convention, 2006 regulates many aspects of maritime crew
labor and impacts the worldwide sourcing of new crew members. MARPOL regulations have established special
Emission Control Areas (“ECAs”) with stringent limitations on sulfur and nitrogen oxide emissions from fuel burning
aboard ships. Ships operating in designated ECAs (which include the Baltic Sea, the North Sea/English Channel, and
many of the waters within 200 nautical miles of the U.S. and Canadian coasts including the Hawaiian Islands and waters
surrounding Puerto Rico and the U.S. Virgin Islands) are generally expected to meet the new sulfur oxide emissions
limits through the use of low-sulfur fuels or installation of exhaust gas cleaning systems.

These issues are, and we believe will continue to be, areas of focus by the relevant authorities throughout the world. This
could result in the enactment of more stringent regulation of cruise ships that would subject us to increasing compliance
costs in the future. Some environmental groups continue to lobby for more extensive oversight of cruise ships and have
generated negative publicity about the cruise industry and its environmental impact.

In the past, states have implemented taxes that impact the cruise industry. It is possible that other states, countries or
ports of call that our ships regularly visit may also decide to assess new taxes or fees or change existing taxes or fees
specifically applicable to the cruise industry and its employees and/or guests, which could increase our operating costs
and/or could decrease the demand for cruises.

Existing and future legal and regulatory restrictions on our ability to collect and use data could also negatively affect our
ability to market our business, result in increased compliance costs, and otherwise affect our business processes, all of
which could have an adverse effect on our financial results.

Risks Related to NCLH’s Ordinary Shares

Shareholders of NCLH may have greater difficulties in protecting their interests than shareholders of a U.S.
corporation.

We are a Bermuda exempted company. The Companies Act 1981 of Bermuda (the “Companies Act”), which applies to
NCLH, differs in material respects from laws generally applicable to U.S. corporations and their shareholders. Taken
together with the provisions of NCLH’s bye-laws, some of these differences may result in you having greater difficulties
in protecting your interests as a shareholder of NCLH than you would have as a shareholder of a U.S. corporation. This
affects, among other things, the circumstances under which transactions involving an interested director are voidable,
whether an interested director can be held accountable for any benefit realized in a transaction with our Company, what
approvals are required for business combinations by our Company with a large shareholder or a wholly-owned
subsidiary, what rights you may have as a shareholder to enforce specified provisions of the Companies Act or NCLH’s
bye-laws, and the circumstances under which we may indemnify our directors and officers.

NCLH does not currently pay dividends on its ordinary shares.

NCLH does not currently pay dividends to its shareholders and NCLH’s Board of Directors may never declare a
dividend. Our existing debt agreements restrict, and any of our future debt arrangements may restrict, among other
things, the ability of NCLH’s subsidiaries, including NCLC, to pay distributions to NCLH and NCLH’s ability to pay
cash dividends to its shareholders. In addition, any determination to pay dividends in the future will be entirely at the
discretion of NCLH’s Board of Directors and will depend upon our results of operations, cash requirements, financial
condition, business opportunities, contractual restrictions, restrictions imposed by applicable law and other factors that
NCLH’s Board of Directors deems relevant. We are not legally or contractually required to pay dividends. In addition,
NCLH is a holding company and would depend upon its subsidiaries for their ability to pay distributions to NCLH to
finance any dividend or pay any other obligations of NCLH. Investors seeking dividends should not purchase NCLH’s
ordinary shares.

Provisions in NCLH’s constitutional documents may prevent or discourage takeovers and business combinations that
NCLH’s shareholders might consider to be in their best interests.

NCLH’s bye-laws contain provisions that may delay, defer, prevent or render more difficult a takeover attempt that its
shareholders consider to be in their best interests. As a result, these provisions may prevent NCLH’s shareholders from
receiving a premium to the market price of NCLH’s shares offered by a bidder in a takeover context. Even in the
absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing market price of
NCLH’s shares if they are viewed as discouraging takeover attempts in the future. These provisions include:



the ability of NCLH’s Board of Directors to designate one or more series of preference shares and issue
preference shares without shareholder approval;

a classified board of directors;

the sole power of a majority of NCLH’s Board of Directors to fix the number of directors;

the power of NCLH’s Board of Directors to fill any vacancy on NCLH’s Board of Directors in most
circumstances, including when such vacancy occurs as a result of an increase in the number of directors or
otherwise; and

advance notice requirements for nominating directors or introducing other business to be conducted at
shareholder meetings.

Additionally, NCLH’s bye-laws contain provisions that prevent third parties from acquiring beneficial ownership of
more than 4.9% of its outstanding shares without the consent of NCLH’s Board of Directors and provide for the lapse of

rights, and sale, of any shares acquired in excess of that limit. The effect of these provisions may preclude third parties
from seeking to acquire a controlling interest in NCLH in transactions that shareholders might consider to be in their best
interests and may prevent them from receiving a premium above market price for their shares.

Item 1B. Unresolved Staff Comments

Not applicable.

Item 2. Properties

Information about our cruise ships may be found under “Item 1. Business—Our Fleet” and “Item. 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”

NCLH’s principal executive offices are located in Miami, Florida where we lease approximately 335,900 square feet of
facilities.

We lease a number of domestic and international offices throughout Europe, Asia, South America and Australia to
administer our brand operations globally. Norwegian owns a private island in the Bahamas, Great Stirrup Cay, which we
utilize as a port-of-call on some of our itineraries. We operate a cruise destination in Belize, Harvest Caye.

We believe that our facilities are adequate for our current needs, and that we are capable of obtaining additional facilities
as necessary.

Item 3. Legal Proceedings

Booksafe Travel Protection Plan

As previously disclosed in our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2019, June 30, 2019,
and September 30, 2019, on September 21, 2018, a proposed class-action lawsuit was filed by Marta and Jerry Phillips
and others against NCL Corporation Ltd. in the United States District Court for the Southern District of Florida relating
to the marketing and sales of our Booksafe Travel Protection Plan. The plaintiffs purport to represent an alleged class of
passengers who purchased Booksafe Travel Protection Plans. The complaint alleged that the Company concealed that it
received proceeds on the sale of the travel insurance portion of the plan. The complaint sought an unspecified amount of
damages, fees and costs. The Company moved to invoke the arbitration clause of the ticket contract to move the case out
of Federal Court. On May 29, 2019, the Court granted the motion and compelled the plaintiffs to submit their claims to
arbitration on an individual basis, dismissing the claims before the Court with prejudice. The plaintiffs filed an appeal on
October 28, 2019. We believe we have meritorious defenses to the claim and that any liability which may arise as a
result of this action will not have a material impact on our consolidated financial statements.

Helms-Burton Act

On August 27, 2019, two lawsuits were filed against Norwegian Cruise Line Holdings Ltd. in the United States District
Court for the Southern District of Florida under Title III of the Cuban Liberty and Solidarity (Libertad) Act of 1996, also
known as the Helms-Burton Act. The complaint filed by Havana Docks Corporation alleges it holds an interest in the
Havana Cruise Port Terminal and the complaint filed by Javier Garcia-Bengochea alleges that he holds an interest in the
Port of Santiago, Cuba, both of which were expropriated by the Cuban Government. The complaints further allege that
the Company “trafficked” in those properties by embarking and disembarking passengers at these facilities. The
plaintiffs seek all available statutory remedies, including the value of the expropriated property, plus interest, treble
damages, attorneys’ fees and costs. On January 7, 2020, the United States District Court for the Southern District of
Florida dismissed the claim by Havana Docks Corporation. We believe that the plaintiff plans to appeal the order. We
believe we have meritorious defenses to the claims and intend to vigorously defend these matters.

Other

In the normal course of our business, various claims and lawsuits have been filed or are pending against us. Most of
these claims and lawsuits are covered by insurance and, accordingly, the maximum amount of our liability is typically
limited to our deductible amount.

Nonetheless, the ultimate outcome of these claims and lawsuits that are not covered by insurance cannot be determined
at this time. We have evaluated our overall exposure with respect to all of our threatened and pending litigation and, to
the extent required, we have accrued amounts for all estimable probable losses associated with our deemed exposure. We
are currently unable to estimate any other potential contingent losses beyond those accrued, as discovery is not complete
nor is adequate information available to estimate such range of loss or potential recovery. However, based on our current
knowledge, we do not believe that the aggregate amount or range of reasonably possible losses with respect to these
matters will be material to our consolidated results of operations, financial condition or cash flows. We intend to
vigorously defend our legal position on all claims and, to the extent necessary, seek recovery.

Item 4. Mine Safety Disclosures

None.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities

Market Information

Since December 19, 2017, NCLH’s ordinary shares have been listed on the NYSE under the symbol “NCLH.” Prior to
December 19, 2017, NCLH’s ordinary shares were listed on the Nasdaq Stock Market LLC (Nasdaq Global Select
Market) under the symbol “NCLH.”

Holders

As of February 14, 2020, there were 248 record holders of NCLH’s ordinary shares. Since certain of NCLH’s ordinary
shares are held by brokers and other institutions on behalf of shareholders, the foregoing number is not representative of
the number of beneficial owners.

Dividends

NCLH does not currently pay dividends to its shareholders. Any determination to pay dividends in the future will be at
the discretion of our Board of Directors and will depend upon our results of operations, financial condition, restrictions
imposed by applicable law and our financing agreements and other factors that our Board of Directors deems relevant.

Purchases of Equity Securities by the Issuer

On April 17, 2018, the Board of Directors of NCLH approved a three-year share repurchase program under which
NCLH may purchase up to $1.0 billion of its ordinary shares (the “Repurchase Program”). Pursuant to the Repurchase
Program, NCLH may repurchase its ordinary shares from time to time, in amounts, at prices and at such times as it
deems appropriate, subject to market conditions and other considerations. Repurchases under the Repurchase Program
may take place in the open market or in privately negotiated transactions, including structured and derivative
transactions such as accelerated share repurchase transactions and may be made under a Rule 10b5-1 plan. There was no
share repurchase activity during the three months ended December 31, 2019 and approximately $248.8 million remained
available under the Repurchase Program.

Stock Performance Graph

This performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the
liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of NCLH under the
Securities Act of 1933, as amended, or the Exchange Act.

The following graph shows a comparison of the cumulative total return for our ordinary shares, the Standard & Poor’s
500 Composite Stock Index and the Dow Jones United States Travel and Leisure index. The Stock Performance Graph
assumes that $100 was invested at the closing price of our ordinary shares on the Nasdaq and in each index on the last

trading day of fiscal 2014. Past performance is not necessarily an indicator of future results. The stock prices used were
as of the close of business on the respective dates.

Item 6. Selected Financial Data

The following selected financial data should be read in conjunction with the consolidated financial statements and notes
thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing
elsewhere in this annual report.

The consolidated financial statements as of December 31, 2019 include the impact of a change in accounting policy
related the adoption of Accounting Standards Codification 842 – Leases on January 1, 2019. See Note 5, Leases, to the
Notes to the Consolidated Financial Statements included herein for additional information about these changes in
accounting policy.

(in thousands, except share
data, per
share data and operating data)
Statement of operations data:

As of or for the Year Ended December 31,

2019

2018

2017

2016

2015

Total revenue
Operating income
Net income
EPS:

Basic
Diluted

$
$
$

$
$

6,462,376
1,178,077
930,228

4.33
4.30

$
$
$

$
$

6,055,126
1,219,061
954,843

4.28
4.25

$
$
$

$
$

5,396,175
1,048,819
759,872

3.33
3.31

$
$
$

$
$

4,874,340
925,464
633,085

2.79
2.78

$
$
$

$
$

4,345,048
702,486
427,137

1.89
1.86

Weighted-average shares
outstanding:

Basic
Diluted

Balance sheet data:

214,929,977
216,475,076

223,001,739
224,419,205

228,040,825
229,418,326

227,121,875
227,850,286

226,591,437
230,040,132

$ 16,684,599

$ 15,205,970

$ 14,094,869

$ 12,973,911

$ 12,264,757

Total assets
Property and equipment,
net
Long-term debt,
including current portion $
Total shareholders’
equity

$ 13,135,337

$ 12,119,253

$ 11,040,488

$ 10,117,689

6,801,693

6,515,579

6,492,091

5,963,001

6,307,765

5,749,766

6,398,687

4,537,726

9,458,805

6,397,537

3,780,880

Operating data:

Passengers carried
Passenger Cruise Days
Capacity Days
Occupancy Percentage

2,695,718
20,637,949
19,233,459

2,795,101
20,276,568
18,841,678

2,519,324
18,523,030
17,363,422

2,337,311
17,588,707
16,376,063

2,164,404
16,027,743
14,700,990

107.3 %

107.6 %

106.7 %

107.4 %

109.0 %

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Financial Presentation

The following discussion and analysis contains forward-looking statements within the meaning of the federal securities
laws, and should be read in conjunction with the disclosures we make concerning risks and other factors that may affect
our business and operating results. You should read this information in conjunction with the consolidated financial
statements and the notes thereto included in this annual report. See also “Cautionary Statement Concerning Forward-
Looking Statements” immediately prior to Part I, Item 1 in this annual report.

We categorize revenue from our cruise and cruise-related activities as either “passenger ticket” revenue or “onboard and
other” revenue. Passenger ticket revenue and onboard and other revenue vary according to product offering, the size of
the ship in operation, the length of cruises operated and the markets in which the ship operates. Our revenue is seasonal
based on demand for cruises, which has historically been strongest during the Northern Hemisphere’s summer months.
Passenger ticket revenue primarily consists of revenue for accommodations, meals in certain restaurants on the ship,
certain onboard entertainment, port fees and taxes and includes revenue for service charges and air and land
transportation to and from the ship to the extent guests purchase these items from us. Onboard and other revenue
primarily consists of revenue from casino, beverage sales, shore excursions, specialty dining, retail sales, spa services
and photo services. Our onboard revenue is derived from onboard activities we perform directly or that are performed by
independent concessionaires, from which we receive a share of their revenue.

Our cruise operating expense is classified as follows:

 Commissions, transportation and other primarily consists of direct costs associated with passenger ticket

revenue. These costs include travel advisor commissions, air and land transportation expenses, related credit
card fees, certain port fees and taxes and the costs associated with shore excursions and hotel accommodations
included as part of the overall cruise purchase price.

 Onboard and other primarily consists of direct costs incurred in connection with onboard and other revenue,

including casino, beverage sales and shore excursions.

 Payroll and related consists of the cost of wages and benefits for shipboard employees and costs of certain

inventory items, including food, for a third party that provides crew and other hotel services for certain ships.

 Fuel includes fuel costs, the impact of certain fuel hedges and fuel delivery costs.

 Food consists of food costs for passengers and crew on certain ships.

 Other consists of repairs and maintenance (including Dry-dock costs), ship insurance and other ship expenses.

Critical Accounting Policies

Our consolidated financial statements have been prepared in accordance with U.S. GAAP. The preparation of these
consolidated financial statements requires us to make estimates, judgments and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of our consolidated
financial statements and the reported amounts of revenue and expenses during the periods presented. We rely on
historical experience and on various other assumptions that we believe to be reasonable under the circumstances to make
these estimates and judgments. Actual results could differ materially from these estimates. We believe that the following
critical accounting policies reflect the significant estimates and assumptions used in the preparation of our consolidated
financial statements. These critical accounting policies, which are presented in detail in our notes to our audited
consolidated financial statements, relate to ship accounting and asset impairment.

Ship Accounting

Ships represent our most significant assets, and we record them at cost less accumulated depreciation. Depreciation of
ships is computed on a straight-line basis over the weighted average useful lives of primarily 30 years after a 15%
reduction for the estimated residual value of the ship. Ship improvement costs that we believe add value to our ships are
capitalized to the ship and depreciated over the shorter of the improvements’ estimated useful lives or the remaining
useful life of the ship. When we record the retirement of a ship component included within the ship’s cost basis, we
estimate the net book value of the component being retired and remove it from the ship’s cost basis. Repairs and
maintenance activities are charged to expense as incurred. We account for Dry-dock costs under the direct expense
method which requires us to expense all Dry-dock costs as incurred.

We determine the weighted average useful lives of our ships based primarily on our estimates of the useful lives of the
ships’ major component systems on the date of acquisition, such as cabins, main diesels, main electric, superstructure
and hull. The useful lives of ship improvements are estimated based on the economic lives of the new components. In
addition, to determine the useful lives of the ship or ship components, we consider the impact of the historical useful
lives of similar assets, manufacturer recommended lives and anticipated changes in technological conditions. Given the
large and complex nature of our ships, our accounting estimates related to ships and determinations of ship improvement
costs to be capitalized require judgment and are uncertain. Should certain factors or circumstances cause us to revise our
estimate of ship service lives or projected residual values, depreciation expense could be materially lower or higher. If
circumstances cause us to change our assumptions in making determinations as to whether ship improvements should be
capitalized, the amounts we expense each year as repairs and maintenance costs could increase, partially offset by a
decrease in depreciation expense. If we reduced our estimated weighted average 30-year ship service life by one year,
depreciation expense for the year ended December 31, 2019 would have increased by $12.9 million. In addition, if our
ships were estimated to have no residual value, depreciation expense for the same period would have increased by $66.4
million. We believe our estimates for ship accounting are reasonable and our methods are consistently applied. We
believe that depreciation expense is based on a rational and systematic method to allocate our ships’ costs to the periods
that benefit from the ships’ usage.

Asset Impairment

We review our long-lived assets, principally ships, for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Assets are grouped and evaluated at the lowest level for
which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets. We
consider historical performance and future estimated results in our evaluation of potential impairment and then compare
the carrying amount of the asset to the estimated future cash flows expected to result from the use of the asset. If the
carrying amount of the asset exceeds the estimated expected undiscounted future cash flows, we measure the amount of
the impairment by comparing the carrying amount of the asset to its fair value. We estimate fair value based on the best
information available utilizing estimates, judgments and projections as necessary. Our estimate of fair value is generally
measured by discounting expected future cash flows at discount rates commensurate with the associated risk.

We evaluate goodwill and tradenames for impairment annually or more frequently when an event occurs or
circumstances change that indicates the carrying value of a reporting unit may not be recoverable. For our evaluation of
goodwill we use the Step 0 Test which allows us to first assess qualitative factors to determine whether it is more likely
than not (i.e., more than 50%) that the fair value of a reporting unit is less than its carrying value. For tradenames we
also provide a qualitative assessment to determine if there is any indication of impairment.

In order to make this evaluation, we consider whether any of the following factors or conditions exist:

 Changes in general macroeconomic conditions such as a deterioration in general economic conditions;

limitations on accessing capital; fluctuations in foreign exchange rates; or other developments in equity and
credit markets;

 Changes in industry and market conditions such as a deterioration in the environment in which an entity

operates; an increased competitive environment; a decline in market-dependent multiples or metrics (in both

absolute terms and relative to peers); a change in the market for an entity’s products or services; or a regulatory
or political development;

 Changes in cost factors that have a negative effect on earnings and cash flows;

 Decline in overall financial performance (for both actual and expected performance);

 Entity and reporting unit specific negative events such as changes in management, key personnel, strategy, or

customers; litigation; or a change in the composition or carrying amount of net assets; and

 Decline in share price (in both absolute terms and relative to peers).

We also may conduct a quantitative assessment comparing the fair value of each reporting unit to its carrying value,
including goodwill. This is called the Step I Test which consists of a combined approach using discounted future cash
flows and market multiples to determine the fair value of the reporting units. The market approach considers revenue and
EBITDA multiples from an appropriate peer group. Our discounted cash flow valuation reflects our principal
assumptions of 1) forecasted future operating results and growth rates, 2) forecasted capital expenditures for fleet growth
and ship improvements and 3) a weighted average cost of capital of market participants, adjusted for an optimal capital
structure.We believe that the combined approach is the most representative method to assess fair value as it utilizes
expectations of long-term growth as well as current market conditions. For the tradenames, we may also use a
quantitative assessment, which utilizes the relief from royalty method and includes the same forecasts and discount rates
from the discounted cash flow valuation in the goodwill assessment along with a tradename royalty rate assumption.

We have concluded that our business has three reporting units. Each brand, Oceania Cruises, Regent Seven Seas and
Norwegian, constitutes a business for which discrete financial information is available and management regularly
reviews the operating results and, therefore, each brand is considered an operating segment.

As of December 31, 2019, there was $523.0 million, $462.1 million and $403.8 million of goodwill for the Oceania
Cruises, Regent Seven Seas and Norwegian reporting units, respectively. For our 2019 annual goodwill impairment
evaluation, we elected to perform quantitative tests for the each of the reporting units. Based on the results of the Step 1
Tests, we determined there was no impairment of goodwill because the fair value of the Regent Seven Seas and
Norwegian reporting units substantially exceeded their carrying values. The fair value of the Oceania Cruises reporting
unit exceeded the carrying value by 24%. However, a change in the conditions of any reporting unit may result in a
decline in fair value in future periods. As of December 31, 2019, our tests supported the carrying values of these assets
and we believe that we have made reasonable estimates and judgments.

Non-GAAP Financial Measures

We use certain non-GAAP financial measures, such as Net Revenue, Net Yield, Net Cruise Cost, Adjusted Net Cruise
Cost Excluding Fuel, Adjusted EBITDA, Adjusted Net Income and Adjusted EPS, to enable us to analyze our
performance. See “Terms Used in this Annual Report” for the definitions of these and other non-GAAP financial
measures. We utilize Net Revenue and Net Yield to manage our business on a day-to-day basis and believe that they are
the most relevant measures of our revenue performance because they reflect the revenue earned by us net of significant
variable costs. In measuring our ability to control costs in a manner that positively impacts net income, we believe
changes in Net Cruise Cost and Adjusted Net Cruise Cost Excluding Fuel to be the most relevant indicators of our
performance.

As our business includes the sourcing of passengers and deployment of vessels outside of the U.S., a portion of our
revenue and expenses are denominated in foreign currencies, particularly British pound, Canadian dollar, euro and
Australian dollar which are subject to fluctuations in currency exchange rates versus our reporting currency, the U.S.
dollar. In order to monitor results excluding these fluctuations, we calculate certain non-GAAP measures on a Constant
Currency basis, whereby current period revenue and expenses denominated in foreign currencies are converted to U.S.
dollars using currency exchange rates of the comparable period. We believe that presenting these non-GAAP measures

on both a reported and Constant Currency basis is useful in providing a more comprehensive view of trends in our
business.

We believe that Adjusted EBITDA is appropriate as a supplemental financial measure as it is used by management to
assess operating performance. We also believe that Adjusted EBITDA is a useful measure in determining our
performance as it reflects certain operating drivers of our business, such as sales growth, operating costs, marketing,
general and administrative expense and other operating income and expense. Adjusted EBITDA is not a defined term
under GAAP nor is it 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 capital expenditures and related depreciation,
principal and interest payments and tax payments and it includes other supplemental adjustments.

In addition, Adjusted Net Income and Adjusted EPS are non-GAAP financial measures that exclude certain amounts and
are used to supplement GAAP net income and EPS. We use Adjusted Net Income and Adjusted EPS as key performance
measures of our earnings performance. We believe that both management and investors benefit from referring to these
non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future
periods. These non-GAAP financial measures also facilitate management’s internal comparison to our historical
performance. In addition, management uses Adjusted EPS as a performance measure for our incentive compensation.
The amounts excluded in the presentation of these non-GAAP financial measures may vary from period to period;
accordingly, our presentation of Adjusted Net Income and Adjusted EPS may not be indicative of future adjustments or
results. For example, for the year ended December 31, 2018, we incurred Secondary Equity Offering expenses of $0.9
million. Similar expenses were not incurred in the year ended December 31, 2019. We included this as an adjustment in
the reconciliation of Adjusted Net Income since these expenses were not representative of our day-to-day operations and
we have included similar non-representative adjustments in prior periods.

You are encouraged to evaluate each adjustment used in calculating our non-GAAP financial measures and the reasons
we consider our non-GAAP financial measures appropriate for supplemental analysis. In evaluating our non-GAAP
financial measures, you should be aware that in the future we may incur expenses similar to the adjustments in our
presentation. Our non-GAAP financial measures have limitations as analytical tools, and you should not consider these
measures in isolation or as a substitute for analysis of our results as reported under GAAP. Our presentation of our non-
GAAP financial measures should not be construed as an inference that our future results will be unaffected by unusual or
non-recurring items. Our non-GAAP financial measures may not be comparable to other companies. Please see a
historical reconciliation of these measures to the most comparable GAAP measure presented in our consolidated
financial statements below in the “Results of Operations” section.

Summary of Significant 2019 Events

In January 2019, we (a) reduced the pricing of our existing $875 million Revolving Loan Facility, (b) reduced the
pricing and increased the approximately $1.3 billion principal amount outstanding under the term loan A facility to $1.6
billion, and (c) extended the maturity dates for our Revolving Loan Facility and our term loan A facility to 2024, subject
to certain conditions.

In June 2019, the Office of Foreign Assets Control of the United States Department of the Treasury removed the
authorization for group people-to-people educational travel by U.S. persons to Cuba. As a result, we have stopped
sailings to Cuba effective June 5, 2019 and revised the affected itineraries. The estimated negative impact resulting from
this regulatory change was approximately $0.45 to both diluted EPS and Adjusted EPS for the year ended December 31,
2019. We expect the negative impact to diluted EPS and Adjusted EPS to continue into 2020 as a result of the cessation
of cruises to Cuba.

In October 2019, Norwegian Encore was delivered.

In December 2019, we redeemed $565.0 million principal amount of the outstanding 4.75% Senior Notes due 2021 and
issued $565.0 million of 3.625% Senior Notes due 2024.

Throughout 2019, we repurchased approximately $349.9 million of NCLH’s outstanding ordinary shares under our
previously authorized three-year, $1.0 billion share repurchase program. As of December 31, 2019, $248.8 million of
authorized repurchases remained.

Executive Overview

Total revenue increased 6.7% to $6.5 billion for the year ended December 31, 2019 compared to $6.1 billion for the year
ended December 31, 2018. Gross Yield increased 4.6%. Net Revenue for the year ended December 31, 2019 increased
5.1% to $4.9 billion from $4.7 billion in the same period in 2018 with an increase in Net Yield of 2.9% and an increase
in Capacity Days of 2.1%.

For the year ended December 31, 2019, we had net income and diluted EPS of $930.2 million and $4.30, respectively.
For the year ended December 31, 2018, we had net income and diluted EPS of $954.8 million and $4.25, respectively.
Operating income decreased 3.4% to slightly below $1.2 billion for the year ended December 31, 2019 from slightly
above $1.2 billion for the year ended December 31, 2018.

We had Adjusted Net Income and Adjusted EPS of $1.1 billion and $5.09, respectively, for the year ended
December 31, 2019, including $170.8 million of adjustments primarily consisting of expenses related to non-cash share-
based compensation, amortization of intangible assets, losses on the extinguishment and modification of debt and the
redeployment of Norwegian Joy, compared to Adjusted Net Income and Adjusted EPS of $1.1 billion and $4.92,
respectively, for the year ended December 31, 2018. A 2.0% improvement in Adjusted EBITDA was achieved for the
same period. We refer you to our “Results of Operations” below for a calculation of Net Revenue, Net Yield, Adjusted
Net Income, Adjusted EPS and Adjusted EBITDA.

In late January 2020, the COVID-19 coronavirus outbreak began impacting the Company’s financial performance and
operations. The Company has experienced costs and lost revenue related to itinerary modifications, travel restrictions
and advisories, the unavailability of ports and/or destinations, cancellations and redeployments. The COVID-19
coronavirus is also impacting consumer sentiment regarding cruise travel generally, and the full impact of this indirect
effect cannot be quantified at this time. See “Epidemics and viral outbreaks could have an adverse effect on our business,
financial condition and results of operations” in Part I Item 1A-Risk Factors for further information related to this risk.

Results of Operations

The discussion below compares the results of operations for the year ended December 31, 2019 to the year ended
December 31, 2018. For a comparison of the Company’s results of operations for the fiscal years ended December 31,
2017 to the year ended December 31, 2018, see “Item 7, Management’s Discussion and Analysis of Financial Condition
and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018,
which was filed with the U.S. Securities and Exchange Commission on February 27, 2019.

We reported total revenue, total cruise operating expense, operating income and net income as follows (in thousands,
except per share data):

Total revenue
Total cruise operating expense
Operating income
Net income
EPS:

Basic
Diluted

Year Ended December 31,
2018
2019

$
$
$
$

6,462,376 $
3,663,261 $
1,178,077 $
930,228 $

6,055,126
3,377,076
1,219,061
954,843

$
$

4.33 $
4.30 $

4.28
4.25

The following table sets forth operating data as a percentage of total revenue:

Revenue

Passenger ticket
Onboard and other
Total revenue

Cruise operating expense

Commissions, transportation and other
Onboard and other
Payroll and related
Fuel
Food
Other

Total cruise operating expense

Other operating expense

Marketing, general and administrative
Depreciation and amortization
Total other operating expense

Operating income

Non-operating income (expense)

Interest expense, net
Other income (expense), net

Total non-operating income (expense)

Net income before income taxes
Income tax benefit (expense)
Net income

Year Ended December 31,

2019

2018

69.9 %
30.1 %
100.0 %

70.4 %
29.6 %
100.0 %

17.4 %
6.1 %
14.3 %
6.3 %
3.4 %
9.2 %
56.7 %

15.1 %
10.0 %
25.1 %
18.2 %

(4.2) %
0.1 %
(4.1) %
14.1 %
0.3 %
14.4 %

16.5 %
5.8 %
14.6 %
6.5 %
3.5 %
8.9 %
55.8 %

14.8 %
9.3 %
24.1 %
20.1 %

(4.4)%
0.3 %
(4.1)%
16.0 %
(0.2)%
15.8 %

The following table sets forth selected statistical information:

Passengers carried
Passenger Cruise Days
Capacity Days
Occupancy Percentage

Year Ended December 31,

2019
2,695,718
20,637,949
19,233,459

2018
2,795,101
20,276,568
18,841,678

107.3 %

107.6 %

Net Revenue, Gross Yield and Net Yield were calculated as follows (in thousands, except Capacity Days and Yield
data):

Year Ended December 31,
2019

2019

Constant
Currency
$ 4,517,393 $ 4,559,023 $ 4,259,815
1,795,311
6,055,126

1,944,983
6,504,006

1,944,983
6,462,376

2018

1,120,886
394,673

1,129,491
394,673

998,948
348,656
$ 4,946,817 $ 4,979,842 $ 4,707,522
18,841,678
321.37
249.85

338.16 $
258.92 $

336.00 $
257.20 $

19,233,459

$
$

Passenger ticket revenue
Onboard and other revenue

Total revenue

Less:
Commissions, transportation and other expense
Onboard and other expense

Net Revenue
Capacity Days
Gross Yield
Net Yield

Gross Cruise Cost, Net Cruise Cost, Net Cruise Cost Excluding Fuel and Adjusted Net Cruise Cost Excluding Fuel were
calculated as follows (in thousands, except Capacity Days and per Capacity Day data):

Year Ended December 31,
2019

Total cruise operating expense
Marketing, general and administrative expense

Gross Cruise Cost

Less:
Commissions, transportation and other expense
Onboard and other expense

Net Cruise Cost
Less: Fuel expense

Net Cruise Cost Excluding Fuel

Less Non-GAAP Adjustments:

Non-cash deferred compensation (1)
Non-cash share-based compensation (2)
Secondary Equity Offering expenses (3)
Severance payments and other fees (4)
Redeployment of Norwegian Joy (5)
Other (6)

Adjusted Net Cruise Cost Excluding Fuel
Capacity Days
Gross Cruise Cost per Capacity Day
Net Cruise Cost per Capacity Day
Net Cruise Cost Excluding Fuel per Capacity Day
Adjusted Net Cruise Cost Excluding Fuel per Capacity Day

2019

Constant
Currency
$ 3,663,261 $ 3,684,318 $ 3,377,076
897,929
4,275,005

980,047
4,664,365

974,850
4,638,111

2018

1,120,886
394,673
3,122,552
409,602
2,712,950

1,129,491
394,673
3,140,201
409,602
2,730,599

998,948
348,656
2,927,401
392,685
2,534,716

2,135
95,055
—
6,514
7,051
—

2,167
115,983
883
—
—
(1,412)
$ 2,602,195 $ 2,619,844 $ 2,417,095
18,841,678
226.89
155.37
134.53
128.28

242.51 $
163.27 $
141.97 $
136.21 $

241.15 $
162.35 $
141.05 $
135.30 $

$
$
$
$

19,233,459

(1) Non-cash deferred compensation expenses related to the crew pension plan and other crew expenses, which are

included in payroll and related expense.

(2) Non-cash share-based compensation expense related to equity awards, which are included in marketing, general and

administrative expense and payroll and related expense.

(3) Secondary Equity Offering expenses are included in marketing, general and administrative expense.
(4) Severance payments related to restructuring costs are included in marketing, general and administrative expense.
(5) Expenses related to the redeployment of Norwegian Joy from Asia to the U.S. and the closing of the Shanghai

office, which are included in other cruise operating expense and marketing, general and administrative expense.

(6) Other primarily related to expenses and reimbursements for certain legal costs included in marketing, general and

administrative expense.

Adjusted Net Income and Adjusted EPS were calculated as follows (in thousands, except share and per share data):

Net income
Non-GAAP Adjustments:

Non-cash deferred compensation (1)
Non-cash share-based compensation (2)
Secondary Equity Offering expenses (3)
Severance payments and other fees (4)
Extinguishment and modification of debt (5)
Amortization of intangible assets (6)
Redeployment of Norwegian Joy (7)
Other (8)

Adjusted Net Income

Diluted weighted-average shares outstanding - Net income and Adjusted Net Income
Diluted earnings per share

Adjusted EPS

Year Ended December 31,

2019
930,228 $

2018
954,843

3,514
95,055
—
6,514
16,676
18,414
30,629
—

3,453
115,983
883
—
6,346
24,890
—
(1,412)
1,104,986
224,419,205
4.25
4.92

1,101,030 $

216,475,076

$
$

4.30 $
5.09 $

(1) Non-cash deferred compensation expenses related to the crew pension plan and other crew expenses are included in

payroll and related expense and other income (expense), net.

(2) Non-cash share-based compensation expenses related to equity awards are included in marketing, general and

administrative expense and payroll and related expense.

(3) Secondary Equity Offering expenses are included in marketing, general and administrative expense.
(4) Severance payments related to restructuring costs are included in marketing, general and administrative expense.
(5) Losses on extinguishments and modifications of debt are included in interest expense, net.
(6) Amortization of intangible assets related to the Acquisition of Prestige are included in depreciation and amortization

expense.

(7) Expenses related to the redeployment of Norwegian Joy from Asia to the U.S. and the closing of the Shanghai

office, which are included in other cruise operating expense, marketing, general and administrative expense and
depreciation and amortization expense.

(8) Other primarily related to expenses and reimbursements for certain legal costs included in marketing, general and

administrative expense.

EBITDA and Adjusted EBITDA were calculated as follows (in thousands):

Year Ended
December 31,

Net income
Interest expense, net
Income tax (benefit) expense
Depreciation and amortization expense

EBITDA

Other (income) expense, net (1)
Non-GAAP Adjustments:

Non-cash deferred compensation (2)
Non-cash share-based compensation (3)
Secondary Equity Offering expenses (4)
Severance payments and other fees (5)
Redeployment of Norwegian Joy (6)
Other (7)

Adjusted EBITDA

2019
930,228 $
272,867
(18,863)
646,188
1,830,420
(6,155)

2018
954,843
270,404
14,467
561,060
1,800,774
(20,653)

2,135
95,055
—
6,514
7,051
—

2,167
115,983
883
—
—
(1,412)
$ 1,935,020 $ 1,897,742

(1) Primarily consists of gains and losses, net for forward currency exchanges and proceeds from insurance and

litigation settlements.

(2) Non-cash deferred compensation expenses related to the crew pension plan and other crew expenses are included in

payroll and related expense.

(3) Non-cash share-based compensation expense related to equity awards are included in marketing, general and

administrative expense and payroll and related expense.

(4) Secondary Equity Offering expenses are included in marketing, general and administrative expense.
(5) Severance payments related to restructuring costs are included in marketing, general and administrative expense.
(6) Expenses related to the redeployment of Norwegian Joy from Asia to the U.S. and the closing of the Shanghai

office, which are included in other cruise operating expense and marketing, general and administrative expense.
(7) Other primarily related to expenses and reimbursement for certain legal costs included in marketing, general and

administrative expense.

Year Ended December 31, 2019 (“2019”) Compared to Year Ended December 31, 2018 (“2018”)

Revenue

Total revenue increased 6.7% to $6.5 billion in 2019 compared to $6.1 billion in 2018 primarily due to an increase in
Capacity Days and improved pricing. Gross Yield increased 4.6%. Net Revenue increased 5.1% to $4.9 billion in 2019,
from $4.7 billion in 2018, due to an increase in Capacity Days of 2.1% and an increase in Net Yield of 2.9%. The
increase in Capacity Days was primarily due to a full year of Norwegian Bliss in 2019 and the introduction of
Norwegian Encore to the fleet during the fourth quarter of 2019, partially offset by a reduction in Capacity Days while
Norwegian Joy was undergoing revitalization and other repairs and maintenance for our fleet including scheduled Dry-
docks. The increase in Gross Yield and Net Yield was primarily due to an increase in passenger ticket pricing and
onboard spending. On a Constant Currency basis, Net Yield increased 3.6%.

Expense

Total cruise operating expense increased 8.5% in 2019 compared to 2018, primarily due to the increase in Capacity
Days, the redeployment of Norwegian Joy during the second quarter of 2019 and incremental direct costs related to air
promotions. Gross Cruise Cost increased 8.5% in 2019 compared to 2018, due to an increase in total cruise operating
expense and marketing, general and administrative expenses. Total other operating expense increased 11.1% in 2019
compared to 2018. Marketing, general and administrative expenses increased primarily due to higher advertising
expenses. Depreciation and amortization expense increased primarily due to the additions of Norwegian Encore and
Norwegian Bliss and ship improvement projects. Net Cruise Cost per Capacity Day increased 4.5% (5.1% on a Constant

Currency basis) due to an increase in marketing, general and administrative expenses, costs associated with the cessation
of cruises to Cuba and other ship operating costs. Adjusted Net Cruise Cost Excluding Fuel per Capacity Day increased
5.5% (6.2% on a Constant Currency basis). We refer you to the “Results of Operations” above for a reconciliation of
total cruise operating expense to Adjusted Net Cruise Cost Excluding Fuel.

Interest expense, net was $272.9 million in 2019 compared to $270.4 million in 2018. The increase in 2019 includes
$16.7 million of losses on extinguishment of debt and debt modification costs. In 2019, interest expense also reflects
lower outstanding debt balances and lower margins associated with recent refinancings, partially offset by newbuild
financings and an increase in LIBOR. 2018 included losses on extinguishment of debt and debt modification costs of
$6.3 million.

Other income (expense), net was income of $6.2 million in 2019 compared to income of $20.7 million in 2018. Other
income in 2019 was primarily due to gains from insurance proceeds and a litigation settlement partially offset by losses
on foreign currency exchange. Other income in 2018 was primarily due to gains on foreign currency exchange.

Income tax benefit (expense) was a benefit of $18.9 million in 2019 compared to an expense of $14.5 million in 2018.
During 2018, we implemented certain tax restructuring strategies that created our ability to utilize the net operating loss
carryforwards of Prestige, for which we had previously provided a full valuation allowance. As a result, in 2019 we
recorded a tax benefit of $35.7 million in connection with the reversal of substantially all of the valuation allowance.

Liquidity and Capital Resources

General

As of December 31, 2019, our liquidity was $1.1 billion consisting of $252.9 million in cash and cash equivalents and
$875.0 million available under our Revolving Loan Facility. Our primary ongoing liquidity requirements are to finance
working capital, capital expenditures and debt service.

As of December 31, 2019, we had a working capital deficit of $2.9 billion. This deficit included $2.0 billion of advance
ticket sales, which represents the total revenue we collect in advance of sailing dates and accordingly are substantially
more like deferred revenue balances rather than actual current cash liabilities. Our business model, along with our
Revolving Loan Facility, allows us to operate with a working capital deficit and still meet our operating, investing and
financing needs.

We evaluate potential sources of additional liquidity, including the capital markets, in the ordinary course of business.
We will continue to evaluate opportunities to optimize our capital structure, taking into consideration our current and
expected capital requirements, our assessment of prevailing market conditions and expectations regarding future
conditions, and the contractual and other restrictions to which we are subject.

Our existing debt agreements restrict, and any of our future debt arrangements may restrict, among other things, the
ability of our subsidiaries to make distributions and/or to pay dividends to NCLC and NCLH’s ability to pay cash
dividends to its shareholders. NCLH is a holding company and depends upon its subsidiaries for their ability to pay
distributions to NCLH to finance any dividend or pay any other obligations of NCLH. However, we do not believe that
these restrictions have had or are expected to have an impact on our ability to meet any cash obligations.

In January 2019, we (a) reduced the pricing of our existing $875.0 million Revolving Loan Facility, (b) reduced the
pricing and increased the approximately $1.3 billion principal amount outstanding under the term loan A facility to $1.6
billion, and (c) extended the maturity dates for our Revolving Loan Facility and our term loan A facility to 2024, subject
to certain conditions. We used the proceeds from the increase in our term loan A facility to prepay all of the then
outstanding amounts under the term loan B facility. In addition, in December 2019, we redeemed $565.0 million
principal amount of the then outstanding 4.75% Senior Notes due 2021 and issued $565.0 million of 3.625% Senior
Notes due 2024. See Note 8, Long-Term Debt, to the Notes to the Consolidated Financial Statements included herein for
additional information about these refinancing activities as well as our other debt agreements.

Sources and Uses of Cash

In this section, references to 2019 refer to the year ended December 31, 2019 and references to 2018 refer to the year
ended December 31, 2018.

Net cash provided by operating activities was $1.8 billion in 2019 compared to $2.1 billion in 2018. The net cash
provided by operating activities in 2019 included net income of $930.2 million, an increase in advance ticket sales of
$347.4 million and timing differences in cash receipts and payments relating to various operating assets and liabilities.
The change in net cash provided by operating activities in 2018 includes net income of $954.8 million as well as timing
differences in cash receipts and payments relating to various operating assets and liabilities, including an increase in
advance ticket sales of $262.6 million.

Net cash used in investing activities was $1.7 billion in 2019, primarily related to payments for the delivery of
Norwegian Encore, ships under construction, ship improvement projects and shoreside projects. Net cash used in
investing activities was $1.5 billion in 2018, primarily related to payments for the delivery of Norwegian Bliss, ship
improvements, ships under construction and shoreside projects.

Net cash used in financing activities was $53.4 million in 2019, primarily due to the repurchase of $349.9 million of
NCLH’s ordinary shares, net repayments of our Revolving Loan Facility and the net refinancing of term loans partially
offset by the issuance of new debt. Net cash used in financing activities was $584.8 million in 2018, reflecting the net
repayment of our Revolving Loan Facility, repayments on other loan facilities, the repurchase of NCLH’s ordinary
shares and deferred financing fees and other, partially offset by the proceeds from borrowings on newbuild loan
facilities.

For the Company’s cash flow activities for the fiscal year ended December 31, 2017, see “Item 7, Management’s
Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form
10-K for the year ended December 31, 2018, which was filed with the U.S. Securities and Exchange Commission on
February 27, 2019.

Future Capital Commitments

Future capital commitments consist of contracted commitments, including ship construction contracts, and future
expected capital expenditures necessary for operations as well as our ship refurbishment projects. As of December 31,
2019, anticipated capital expenditures were $1.4 billion, $1.2 billion and $2.6 billion for the years ending December 31,
2020, 2021 and 2022, respectively. We have export credit financing in place for the anticipated expenditures related to
ship construction contracts of $0.5 billion, $0.2 billion and $1.3 billion for the years ending December 31, 2020, 2021
and 2022, respectively. These future expected capital expenditures will significantly increase our depreciation and
amortization expense as we take delivery of the ships.

For the Norwegian Brand, Project Leonardo will introduce an additional six ships, each approximately 140,000 Gross
Tons with approximately 3,300 Berths, with expected delivery dates from 2022 through 2027, subject to certain
conditions. For the Regent brand, Seven Seas Splendor was delivered in January 2020. We have an order for one
additional Explorer Class Ship to be delivered in 2023. Each of the Explorer Class Ships will be approximately 55,000
Gross Tons and 750 Berths. For the Oceania Cruises brand, we have orders for two Allura Class Ships to be delivered in
2022 and 2025. Each of the Allura Class Ships will be approximately 67,000 Gross Tons and 1,200 Berths.

The combined contract prices of the 10 ships on order for delivery as of December 31, 2019, including Seven Seas
Splendor, which was delivered in January 2020, was approximately €7.4 billion, or $8.3 billion based on the euro/U.S.
dollar exchange rate as of December 31, 2019. We have obtained export credit financing which is expected to fund
approximately 80% of the contract price of each ship, subject to certain conditions. We do not anticipate any contractual
breaches or cancellations to occur. However, if any such events were to occur, it could result in, among other things, the
forfeiture of prior deposits or payments made by us and potential claims and impairment losses which may materially
impact our business, financial condition and results of operations.

Capitalized interest for the years ended December 31, 2019 and 2018 was $32.9 million and $30.4 million, respectively,
primarily associated with the construction of our newbuild ships.

Off-Balance Sheet Transactions

None.

Contractual Obligations

As of December 31, 2019, our contractual obligations with initial or remaining terms in excess of one year, including
interest payments on long-term debt obligations, were as follows (in thousands):

Total

Less than
1 year

1-3 years

3-5 years

5 years

More than

Long-term debt (1)
Operating leases (2)
Ship construction contracts (3)
Port facilities (4)
Interest (5)
Other (6)
Total (7)

$ 6,926,677 $ 746,358 $ 1,566,662 $ 2,834,787 $ 1,778,870
112,718
829,303
1,726,575
183,906
198,588
$ 17,260,637 $ 1,959,646 $ 4,459,806 $ 6,011,225 $ 4,829,960

63,988
1,874,516
135,720
361,982
456,938

63,493
2,327,887
145,212
244,247
395,599

287,995
5,588,490
2,086,925
1,008,378
1,362,172

47,796
556,784
79,418
218,243
311,047

(1) Long-term debt includes premiums aggregating $0.2 million and capital leases. Long-term debt excludes deferred
financing fees which are a direct deduction from the carrying value of the related debt liability in the consolidated
balance sheets.

(2) Operating leases are primarily for offices, motor vehicles and office equipment.
(3) Ship construction contracts are for our newbuild ships based on the euro/U.S. dollar exchange rate as of December
31, 2019. Export credit financing is in place from syndicates of banks. The amount does not include the two Project
Leonardo ships and one Allura Class Ship which were still subject to financing and certain Italian government
approvals as of December 31, 2019.

(4) Port facilities are for our usage of certain port facilities.
(5) Interest includes fixed and variable rates with LIBOR held constant as of December 31, 2019.
(6) Other includes future commitments for service, maintenance and other business enhancement capital expenditure

contracts.

(7) Total excludes $0.7 million of unrecognized tax benefits as of December 31, 2019, because an estimate of the

timing of future tax settlements cannot be reasonably determined.

Other

Certain service providers may require collateral in the normal course of our business. The amount of collateral may
change based on certain terms and conditions.

As a routine part of our business, depending on market conditions, exchange rates, pricing and our strategy for growth,
we regularly consider opportunities to enter into contracts for the building of additional ships. We may also consider the
sale of ships, potential acquisitions and strategic alliances. If any of these transactions were to occur, they may be
financed through the incurrence of additional permitted indebtedness, through cash flows from operations, or through the
issuance of debt, equity or equity-related securities.

Funding Sources

Certain of our debt agreements contain covenants that, among other things, require us to maintain a minimum level of
liquidity, as well as limit our net funded debt-to-capital ratio, and maintain certain other ratios and restrict our ability to
pay dividends. Substantially all of our ships and other property and equipment are pledged as collateral for certain of our
debt. We believe we were in compliance with these covenants as of December 31, 2019.

In addition, our existing debt agreements restrict, and any of our future debt arrangements may restrict, among other
things, the ability of our subsidiaries, including NCLC, to make distributions and/or pay dividends to NCLH and
NCLH’s ability to pay cash dividends to its shareholders. NCLH is a holding company and depends upon its subsidiaries
for their ability to pay distributions to it to finance any dividend or pay any other obligations of NCLH. However, we do
not believe that these restrictions have had or are expected to have an impact on our ability to meet any cash obligations.

The impact of changes in world economies and especially the global credit markets can create a challenging environment
and may reduce future consumer demand for cruises and adversely affect our counterparty credit risks. In the event this
environment deteriorates, our business, financial condition and results of operations could be adversely impacted.

We believe our cash on hand, expected future operating cash inflows, additional available borrowings under our
Revolving Loan Facility and our ability to issue debt securities or additional equity securities, will be sufficient to fund
operations, debt payment requirements, capital expenditures and maintain compliance with covenants under our debt
agreements over the next 12-month period. There is no assurance that cash flows from operations and additional
financings will be available in the future to fund our future obligations.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

General

Interest Rate Risk

As of December 31, 2019, we had interest rate swap and collar agreements to hedge our exposure to interest rate
movements and to manage our interest expense. As of December 31, 2019, 78% of our debt was fixed and 22% was
variable, which includes the effects of the interest rate swaps and collars. The notional amount of outstanding debt
associated with the interest rate swaps and collars was $1.7 billion as of December 31, 2019. As of December 31, 2018,
72% of our debt was fixed and 28% was variable, which includes the effects of the interest rate swaps. The notional
amount of outstanding debt associated with the interest rate swap agreements was $1.0 billion as of December 31, 2018.
The change in our fixed rate percentage from December 31, 2018 to December 31, 2019 was primarily due to higher
outstanding fixed rate debt and additional interest rate swaps and collars executed.

Based on our December 31, 2019 outstanding variable rate debt balance, and adding as variable debt the principle
amount of debt associated with interest rate swap agreements that matured on January 2, 2020, a one percentage point
increase in annual LIBOR interest rates would increase our annual interest expense by approximately $20.9 million
excluding the effects of capitalization of interest.

Foreign Currency Exchange Rate Risk

As of December 31, 2019, we had foreign currency derivatives to hedge the exposure to volatility in foreign currency
exchange rates related to our ship construction contracts denominated in euros. These derivatives hedge the foreign
currency exchange rate risk on a portion of the payments on our ship construction contracts. The payments not hedged
aggregate €3.0 billion, or $3.4 billion based on the euro/U.S. dollar exchange rate as of December 31, 2019. As of
December 31, 2018, the payments not hedged aggregated €2.2 billion, or $2.5 billion, based on the euro/U.S. dollar
exchange rate as of December 31, 2018. The change from December 31, 2018 to December 31, 2019 was due to the
delivery of a ship in October 2019 and additional foreign exchange derivatives executed. We estimate that a 10% change

in the euro as of December 31, 2019 would result in a $0.3 billion change in the U.S. dollar value of the foreign currency
denominated remaining payments.

Fuel Price Risk

Our exposure to market risk for changes in fuel prices relates to the forecasted purchases of fuel on our ships. Fuel
expense, as a percentage of our total cruise operating expense, was 11.2% for the year ended December 31, 2019 and
11.6% for the year ended December 31, 2018. We use fuel derivative agreements to mitigate the financial impact of
fluctuations in fuel prices and as of December 31, 2019, we had hedged approximately 56%, 50% and 18% of our 2020,
2021 and 2022 projected metric tons of fuel purchases, respectively. As of December 31, 2018, we had hedged
approximately 57%, 53% and 33% of our 2019, 2020 and 2021 projected metric tons of fuel purchases, respectively. The
change in fuel price risk from December 31, 2018 to December 31, 2019 was due to additional fuel hedges executed.

We estimate that a 10% increase in our weighted-average fuel price would increase our anticipated 2020 fuel expense by
$50.0 million. This increase would be partially offset by an increase in the fair value of our fuel swap agreements of
$23.0 million. Fair value of our derivative contracts is derived using valuation models that utilize the income valuation
approach. These valuation models take into account the contract terms such as maturity, as well as other inputs such as
fuel types, fuel curves, creditworthiness of the counterparty and the Company, as well as other data points.

Item 8. Financial Statements and Supplementary Data

Our Consolidated Financial Statements and Quarterly Selected Financial Data are included beginning on page F-1 of this
report.

Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management has evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the
effectiveness of our disclosure controls and procedures, as such term is defined in Exchange Act Rule 13a-15(e), as of
December 31, 2019. There are inherent limitations to the effectiveness of any system of disclosure controls and
procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures.
Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their
control objectives. Based upon management’s evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures were effective as of December 31, 2019, to provide reasonable
assurance that the information required to be disclosed by us in the reports we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and
that it is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial
Officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as
such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our
management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the
effectiveness of our internal control over financial reporting based on the 2013 Internal Control-Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO Framework”). Based on
this evaluation under the COSO Framework, management concluded that our internal control over financial reporting
was effective as of December 31, 2019.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2019 has been audited
by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which is
included on page F-1.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during the quarter ended December 31, 2019
that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and
not absolute, assurance that the objectives of the system will be met. In addition, the design of any control system is
based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent
limitations of control systems, there is only the reasonable assurance that our controls will succeed in achieving their
goals under all potential future conditions.

Item 9B. Other Information

None.

Item 10. Directors, Executive Officers and Corporate Governance

PART III

Except for information concerning executive officers (called for by Item 401(b) of Regulation S-K), which is included in
Part I of this Annual Report and except as disclosed below with respect to our Code of Ethical Business Conduct, the
information required under Item 10 is incorporated herein by reference to our definitive proxy statement to be filed with
the SEC within 120 days after the end of our fiscal year ended December 31, 2019 in connection with our 2020 Annual
General Meeting of Shareholders.

Code of Ethical Business Conduct

We have adopted a Code of Ethical Business Conduct that applies to all of our employees, including our principal
executive officer, principal financial officer, principal accounting officer or controller and persons performing similar
functions, and our directors. This document is posted on our website at www.nclhltdinvestor.com. We intend to disclose
waivers from, and amendments to, our Code of Ethical Business Conduct that apply to our directors and executive
officers, including our principal executive officer, principal financial officer, principal accounting officers or controller
and persons performing similar functions, by posting such information on our website www.nclhltdinvestor.com to the
extent required by applicable rules of the SEC and the NYSE. None of the websites referenced in this Annual Report or
the information contained therein is incorporated herein by reference.

Item 11. Executive Compensation

The information required under Item 11 is incorporated herein by reference to our definitive proxy statement to be filed
with the SEC within 120 days after the end of our fiscal year ended December 31, 2019 in connection with our 2020
Annual General Meeting of Shareholders.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required under Item 12 is incorporated herein by reference to our definitive proxy statement to be filed
with the SEC within 120 days after the end of our fiscal year ended December 31, 2019 in connection with our 2020
Annual General Meeting of Shareholders.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required under Item 13 is incorporated herein by reference to our definitive proxy statement to be filed
with the SEC within 120 days after the end of our fiscal year ended December 31, 2019 in connection with our 2020
Annual General Meeting of Shareholders.

Item 14. Principal Accounting Fees and Services

The information required under Item 14 is incorporated herein by reference to our definitive proxy statement to be filed
with the SEC within 120 days after the end of our fiscal year ended December 31, 2019 in connection with our 2020
Annual General Meeting of Shareholders.

Item 15. Exhibits, Financial Statement Schedules

(1) Financial Statements

PART IV

Our Consolidated Financial Statements have been prepared in accordance with Item 8. Financial Statements and
Supplementary Data and are included beginning on page F-1 of this report.

(2) Financial Statement Schedules

Schedule II: Valuation and Qualifying Accounts for the three years ended December 31, 2019 are included on page 68.

(3) Exhibits

The exhibits listed below are filed or incorporated by reference as part of this annual report on Form 10-K.

Exhibit
Number

3.1

3.2

4.1

4.2

INDEX TO EXHIBITS

Description of Exhibit

Memorandum of Association of Norwegian Cruise Line Holdings Ltd. (incorporated herein by reference
to Exhibit 3.1 to amendment no. 5 to Norwegian Cruise Line Holdings Ltd.’s registration statement on
Form S-1 filed on January 8, 2013 (File No. 333-175579))

Amended and Restated Bye-Laws of Norwegian Cruise Line Holdings Ltd., effective as of June 13, 2019
(incorporated herein by reference to Exhibit 3.2 to Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed
on June 14, 2019 (File No. 001-35784))

Indenture, dated as of December 16, 2019, between NCL Corporation Ltd. and U.S. Bank National
Association, as trustee, with respect to $565.0 million aggregate principal amount of 3.625% senior
unsecured notes due 2024 (incorporated herein by reference to Exhibit 4.1 to Norwegian Cruise Line
Holdings Ltd.’s Form 8-K filed on December 16, 2019 (File No. 001-35784))

Form of Certificate of Ordinary Shares (incorporated herein by reference to Exhibit 4.7 to amendment no.
5 to Norwegian Cruise Line Holdings Ltd.’s registration statement on Form S-1 filed on January 8, 2013
(File No. 333-175579))

4.3**

Description of Securities of Norwegian Cruise Line Holdings Ltd.

9.1

10.1

10.2

Deed of Trust, dated January 24, 2013, by and between Norwegian Cruise Line Holdings Ltd. and State
House Trust Company Limited (incorporated herein by reference to Exhibit 9.1 to Norwegian Cruise Line
Holdings Ltd.’s Form 8-K filed on January 30, 2013 (File No. 001-35784))

Office Lease Agreement, dated as of November 27, 2006, by and between NCL (Bahamas) Ltd. and
Hines Reit Airport Corporate Center LLC and related Guarantee by NCL Corporation Ltd., and First
Amendment, dated November 27, 2006 (incorporated herein by reference to Exhibit 4.46 to NCL
Corporation Ltd.’s annual report on Form 20-F filed on March 6, 2007 (File No. 333-128780))+

Amendment No. 1, dated December 1, 2006, Amendment No. 2, dated March 20, 2007, Amendment No.
3, dated July 31, 2007, and Amendment No. 4, dated December 10, 2007, to Office Lease Agreement,
dated December 1, 2006, as amended, by and between Hines Reit Airport Corporate Center LLC and
NCL (Bahamas) Ltd. (incorporated herein by reference to Exhibit 4.64 to NCL Corporation Ltd.’s annual
report on Form 20-F filed on March 13, 2008 (File No. 333-128780))+

10.3

Amendment No. 5, dated February 2, 2010, to Office Lease Agreement, dated December 1, 2006, as

amended, by and between Hines Reit Airport Corporate Center LLC and NCL (Bahamas) Ltd.
(incorporated herein by reference to Exhibit 10.45 to amendment no. 2 to NCL Corporation Ltd.’s
registration statement on Form S-1 filed on January 31, 2011 (File No. 333-170141))

10.4

Amendment No. 6, dated April 1, 2012, and Amendment No. 7, dated June 19, 2012, to Office Lease

Agreement, dated December 1, 2006, as amended, by and between Hines Reit Airport Corporate Center
LLC and NCL (Bahamas) Ltd. (incorporated herein by reference to Exhibit 10.6 to NCL Corporation
Ltd.’s report on Form 6-K filed on November 2, 2012 (File No. 333-128780))+

10.5

Amendment No. 8, dated January 28, 2015, to Office Lease Agreement, dated December 1, 2006, as
amended, by and between SPUS7 Miami ACC, LP and NCL (Bahamas) Ltd. (incorporated herein by
reference to Exhibit 10.3 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on May 8, 2015
(File No. 001-35784))+

10.6

Amendment No. 9, dated June 30, 2015, to Office Lease Agreement, dated December 1, 2006, as

amended, by and between SPUS7 Miami ACC, LP and NCL (Bahamas) Ltd. (incorporated herein by
reference to Exhibit 10.2 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on August 7, 2015
(File No. 001-35784))+

10.7

10.8

10.9

10.10

10.11

Amendment No. 10, dated March 31, 2016, to Office Lease Agreement, dated December 1, 2006, as
amended, by and between SPUS7 Miami ACC, LP and NCL (Bahamas) Ltd. (incorporated herein by
reference to Exhibit 10.5 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on May 10, 2016
(File No. 001-35784))+

Amendment No. 11, dated February 8, 2017, to Office Lease Agreement, dated December 1, 2006, as
amended, by and between SPUS7 Miami ACC, LP and NCL (Bahamas) Ltd. (incorporated herein by
reference to Exhibit 10.1 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on May 10, 2017
(File No. 001-35784))+

Amendment No. 12, dated August 24, 2017, to Office Lease Agreement, dated December 1, 2006, as
amended, by and between SPUS7 Miami ACC, LP and NCL (Bahamas) Ltd. (incorporated herein by
reference to Exhibit 10.3 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on November 9,
2017 (File No. 001-35784))

Amendment No. 13, dated November 30, 2017, to Office Lease Agreement, dated December 1, 2006, as
amended, by and between SPUS7 Miami ACC, LP and NCL (Bahamas) Ltd. (incorporated herein by
reference to Exhibit 10.13 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27,
2018 (File No. 001-35784))+

Amendment No. 14, dated January 16, 2018, to Office Lease Agreement, dated December 1, 2006, as
amended, by and between SPUS7 Miami ACC, LP and NCL (Bahamas) Ltd. (incorporated herein by
reference to Exhibit 10.14 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27,
2018 (File No. 001-35784))

10.12

Amendment No. 15, dated March 1, 2018, to Office Lease Agreement, dated December 1, 2006, as

amended, by and between SPUS7 Miami ACC, LP and NCL (Bahamas) Ltd. (incorporated herein by
reference to Exhibit 10.1 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on May 7, 2018
(File No. 001-35784))+

10.13**

Amendment No. 16, dated November 15, 2019, to Office Lease Agreement, dated December 1, 2006, as

amended, by and between W-Crocker Lam Office Owner VIII, L.L.C. and NCL (Bahamas) Ltd.#

10.14

€529.8 million Breakaway One Credit Agreement, dated November 18, 2010, by and among Breakaway

One, Ltd. and a syndicate of international banks and related Guarantee by NCL Corporation Ltd.
(incorporated herein by reference to Exhibit 10.57 to amendment no. 4 to NCL Corporation Ltd.’s
registration statement on Form S-1 filed on June 9, 2011 (File No. 333-170141))+

10.15

First Amendment, dated May 31, 2012, to €529.8 million Breakaway One Credit Agreement, dated

November 18, 2010, as amended, by and among Breakaway One, Ltd. and a syndicate of international
banks (incorporated herein by reference to Exhibit 10.13 to NCL Corporation Ltd.’s report on Form 6-K
filed on November 2, 2012 (File No. 333-128780))+

10.16

Side Letter, dated April 25, 2019, to €529.8 million Breakaway One Credit Agreement, dated November
18, 2010, as amended, by and among Breakaway One, Ltd., NCL Corporation Ltd., NCL International,
Ltd. and KfW IPEX Bank GmbH (incorporated herein by reference to Exhibit 10.2 to Norwegian Cruise
Line Holdings Ltd.’s Form 10-Q filed on August 8, 2019 (File No. 001-35784))#

10.17

€529.8 million Breakaway Two Credit Agreement, dated as of November 18, 2010, by and among

Breakaway Two, Ltd. and a syndicate of international banks and related Guarantee by NCL Corporation
Ltd. (incorporated herein by reference to Exhibit 10.58 to amendment no. 4 to NCL Corporation Ltd.’s
registration statement on Form S-1 filed on June 9, 2011 (File No. 333-170141))+

10.18

First Amendment, dated December 21, 2010, to €529.8 million Breakaway Two Credit Agreement, dated
as of November 18, 2010, by and among Breakaway Two, Ltd. and a syndicate of international banks and
a related Guarantee by NCL Corporation Ltd. (incorporated herein by reference to Exhibit 10.59 to
amendment no. 2 to NCL Corporation Ltd.’s registration statement on Form S-1 filed on January 31, 2011
(File No. 333-170141))

10.19

Second Amendment, dated May 31, 2012, to €529.8 million Breakaway Two Credit Agreement, dated as

of November 18, 2010, by and among Breakaway Two, Ltd. and a syndicate of international banks
(incorporated herein by reference to Exhibit 10.14 to NCL Corporation Ltd.’s report on Form 6-K filed on
November 2, 2012 (File No. 333-128780))+

10.20

10.21

10.22

Side Letter, dated August 7, 2019, to €529.8 million Breakaway Two Credit Agreement, dated November
18, 2010, as amended, by and among Breakaway Two, Ltd., NCL Corporation Ltd., NCL International,
Ltd. and KfW IPEX-Bank GmbH (incorporated herein by reference to Exhibit 10.2 to Norwegian Cruise
Line Holdings Ltd.’s Form 10-Q filed on November 8, 2019 (File No. 001-35784))#

€590.5 million Breakaway Three Credit Agreement, dated October 12, 2012, by and among Breakaway
Three, Ltd. and various other lenders therein defined and a related Guaranty by NCL Corporation Ltd.
(incorporated herein by reference to Exhibit 10.17 to NCL Corporation Ltd.’s report on Form 6-K/A filed
on January 8, 2013 (File No. 333-128780))+

Supplemental Agreement, dated July 26, 2016, to €590.5 million Breakaway Four Credit Agreement,
dated October 12, 2012, by and among Breakaway Four, Ltd., as borrower, NCL Corporation Ltd., as
guarantor, NCL International, Ltd., as shareholder and KfW IPEX-Bank GmbH, as facility agent and
lender (incorporated herein by reference to Exhibit 10.1 to Norwegian Cruise Line Holdings Ltd.’s Form
10-Q filed on November 9, 2016 (File No. 001-35784))+

10.23

Fourth Amended and Restated Credit Agreement, dated as of January 2, 2019, by and among NCL

Corporation Ltd., as borrower, Voyager Vessel Company, LLC, as co-borrower, JPMorgan Chase Bank,
N.A., as administrative agent and as collateral agent and a syndicate of other banks party thereto as joint
bookrunners, arrangers, co-documentation agents and lenders (incorporated herein by reference to Exhibit
10.25 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27, 2019 (File No. 001-
35784))+

10.24

Supplemental Agreement, dated December 22, 2015, to €665.9 million Seahawk One Credit Agreement,
dated July 14, 2014, by and among Seahawk One, Ltd. and various other lenders therein defined and a

related guarantee by NCL Corporation Ltd. (incorporated herein by reference to Exhibit 10.33 to
Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 29, 2016 (File No. 001-35784))+

10.25

Second Supplemental Agreement, dated August 15, 2019, to Seahawk Two Credit Agreement, dated July

14, 2014, by and among Seahawk Two, Ltd. and various other lenders therein defined and a related
guarantee by NCL Corporation Ltd. (incorporated herein by reference to Exhibit 10.1 to Norwegian
Cruise Line Holdings Ltd.’s Form 10-Q filed on November 8, 2019 (File No. 001-35784))#

10.26

Amendment and Restatement Agreement, dated October 31, 2014, but effective as of November 19, 2014,

relating to the loan agreement originally dated July 18, 2008, among Riviera New Build, LLC, as
borrower, the banks and financial institutions listed in Schedule 1 as lenders, Crédit Agricole Corporate
and Investment Bank and Société Générale, as mandated lead arrangers and Crédit Agricole Corporate
and Investment Bank as agent and SACE agent (incorporated herein by reference to Exhibit 10.72 to
Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27, 2015 (File No. 001-35784))+

10.27

Guarantee relating to the loan agreement dated July 18, 2008 in respect of the Oceania Riviera, dated
October 31, 2014, but effective November 19, 2014, among NCL Corporation Ltd., as guarantor, the
banks and financial institutions listed in Schedule 1 as lenders, Crédit Agricole Corporate and Investment
Bank and Société Générale, as mandated lead arrangers and Crédit Agricole Corporate and Investment
Bank as agent (incorporated herein by reference to Exhibit 10.73 to Norwegian Cruise Line Holdings
Ltd.’s Form 10-K filed on February 27, 2015 (File No. 001-35784))+

10.28

Amendment and Restatement Agreement, dated October 31, 2014, but effective as of November 19, 2014,

relating to the loan agreement originally dated July 18, 2008, among Marina New Build, LLC, as
borrower, the banks and financial institutions listed in Schedule 1 as lenders, Crédit Agricole Corporate
and Investment Bank and Société Générale, as mandated lead arrangers and Crédit Agricole Corporate
and Investment Bank as agent and SACE agent (incorporated herein by reference to Exhibit 10.74 to
Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27, 2015 (File No. 001-35784))+

10.29

Guarantee relating to the loan agreement dated July 18, 2008 in respect of the Oceania Marina, dated
October 31, 2014, but effective November 19, 2014, among NCL Corporation Ltd., as guarantor, the
banks and financial institutions listed in Schedule 1 as lenders, Crédit Agricole Corporate and Investment
Bank and Société Générale, as mandated lead arrangers and Crédit Agricole Corporate and Investment
Bank as agent (incorporated herein by reference to Exhibit 10.75 to Norwegian Cruise Line Holdings
Ltd.’s Form 10-K filed on February 27, 2015 (File No. 001-35784))+

10.30

Amendment and Restatement Agreement, dated October 31, 2014, but effective as of November 19, 2014,

relating to the loan agreement originally dated July 31, 2013, among Explorer New Build, LLC, as
borrower, the banks and financial institutions listed in Schedule 1 as lenders, Crédit Agricole Corporate
and Investment Bank, Société Générale, HSBC Bank plc, KFW IPEX-Bank GmbH, as joint mandated
lead arrangers and Crédit Agricole Corporate and Investment Bank as agent, SACE agent and security
trustee (incorporated herein by reference to Exhibit 10.76 to Norwegian Cruise Line Holdings Ltd.’s
Form 10-K filed on February 27, 2015 (File No. 001-35784))+

10.31

Guarantee relating to the loan agreement dated July 31, 2013 in respect of the Seven Seas Explorer, dated

October 31, 2014, but effective November 19, 2014, among NCL Corporation Ltd., as guarantor and
Crédit Agricole Corporate and Investment Bank as security trustee (incorporated herein by reference to
Exhibit 10.77 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27, 2015
(File No. 001-35784))

10.32

Explorer Class Newbuild Loan Agreement, dated March 30, 2016, among Explorer II New Build, LLC, as
borrower, the banks and financial institutions listed in Schedule 1 as lenders, Crédit Agricole Corporate
and Investment Bank, Société Générale, HSBC Bank plc, KFW IPEX-Bank GmbH, as joint mandated
lead arrangers and Crédit Agricole Corporate and Investment Bank as agent and security trustee
(incorporated herein by reference to Exhibit 10.6 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q
filed on May 10, 2016 (File No. 001-35784))+

10.33

10.34

Guarantee relating to the Explorer Class Newbuild Loan Agreement, dated March 30, 2016, among NCL
Corporation Ltd., as guarantor, and Crédit Agricole Corporate and Investment Bank as Security Trustee
(incorporated herein by reference to Exhibit 10.7 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q
filed on May 10, 2016 (File No. 001-35784))+

Amendment No. 1, dated November 21, 2017, to Leonardo One Loan Agreement, dated April 12, 2017,
by and among Leonardo One, Ltd., as borrower, the banks and financial institutions listed in Schedule 1,
as lenders, Crédit Agricole Corporate and Investment Bank, BNP Paribas Fortis S.A./N.V., HSBC Bank
plc, KfW IPEX-Bank GmbH and Cassa Depositi e Prestiti S.p.A., as joint mandated lead arrangers and
Crédit Agricole Corporate and Investment Bank as agent and SACE agent (incorporated herein by
reference to Exhibit 10.35 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27,
2018 (File No. 001-35784))+

10.35

Guarantee relating to the Leonardo One Loan Agreement, dated April 12, 2017, by and among NCL

Corporation Ltd., as guarantor and Crédit Agricole Corporate and Investment Bank as security trustee
(incorporated herein by reference to Exhibit 10.4 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q
filed on May 10, 2017 (File No. 001-35784))+

10.36

10.37

10.38

Amendment No. 1, dated November 21, 2017, to Leonardo Two Loan Agreement, dated April 12, 2017,
by and among Leonardo Two, Ltd., as borrower, the banks and financial institutions listed in Schedule 1,
as lenders, Crédit Agricole Corporate and Investment Bank, BNP Paribas Fortis S.A./N.V., HSBC Bank
plc, KfW IPEX-Bank GmbH and Cassa Depositi e Prestiti S.p.A., as joint mandated lead arrangers and
Crédit Agricole Corporate and Investment Bank as agent and SACE agent (incorporated herein by
reference to Exhibit 10.37 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27,
2018 (File No. 001-35784))+

Guarantee relating to the Leonardo Two Loan Agreement, dated April 12, 2017, by and among NCL
Corporation Ltd., as guarantor and Crédit Agricole Corporate and Investment Bank as security trustee
(incorporated herein by reference to Exhibit 10.6 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q
filed on May 10, 2017 (File No. 001-35784))+

Amendment No. 1, dated November 21, 2017, to Leonardo Three Loan Agreement, dated April 12, 2017,
by and among Leonardo Three, Ltd., as borrower, the banks and financial institutions listed in Schedule 1,
as lenders, BNP Paribas Fortis S.A./N.V., HSBC Bank plc, KfW IPEX-Bank GmbH and Cassa Depositi e
Prestiti S.p.A., as joint mandated lead arrangers and BNP Paribas S.A. as agent and SACE agent
(incorporated herein by reference to Exhibit 10.39 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K
filed on February 27, 2018 (File No. 001-35784))+

10.39

Guarantee relating to the Leonardo Three Loan Agreement, dated April 12, 2017, by and among NCL

Corporation Ltd., as guarantor and BNP Paribas S.A. as security trustee (incorporated herein by reference
to Exhibit 10.8 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on May 10, 2017 (File No.
001-35784))+

10.40

Amendment No. 1, dated November 21, 2017, to Leonardo Four Loan Agreement, dated April 12, 2017,
by and among Leonardo Four, Ltd., as borrower, the banks and financial institutions listed in Schedule 1,
as lenders, BNP Paribas Fortis S.A./N.V., HSBC Bank plc, KfW IPEX-Bank GmbH and Cassa Depositi e
Prestiti S.p.A., as joint mandated lead arrangers and BNP Paribas S.A. as agent and SACE agent
(incorporated herein by reference to Exhibit 10.41 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K
filed on February 27, 2018 (File No. 001-35784))+

10.41

Guarantee relating to the Leonardo Four Loan Agreement, dated April 12, 2017, by and among NCL

Corporation Ltd., as guarantor and BNP Paribas S.A. as security trustee (incorporated herein by reference
to Exhibit 10.10 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on May 10, 2017 (File No.
001-35784))+

10.42

10.43

10.44

10.45

10.46

Leonardo Five Loan Agreement, dated as of December 19, 2018, but effective as of January 8, 2019,
among Leonardo Five, Ltd., as borrower, the banks and financial institutions listed in Schedule 1 as
lenders, Crédit Agricole Corporate and Investment Bank, BNP Paribas Fortis S.A./N.V., HSBC Bank plc,
KFW IPEX-Bank GmbH, Cassa Depositi E Prestiti S.P.A., Banco Santander, S.A. and Société Générale,
as joint mandated lead arrangers, BNP Paribas as agent and HSBC Corporate Trustee Company (UK)
Limited as security trustee (incorporated herein by reference to Exhibit 10.44 to Norwegian Cruise Line
Holdings Ltd.’s Form 10-K filed on February 27, 2019 (File No. 001-35784))+

Guarantee relating to the Leonardo Five Loan Agreement, dated as of December 19, 2018, but effective as
of January 8, 2019, among NCL Corporation Ltd., as guarantor, and HSBC Corporate Trustee Company
(UK) Limited as security trustee (incorporated herein by reference to Exhibit 10.45 to Norwegian Cruise
Line Holdings Ltd.’s Form 10-K filed on February 27, 2019 (File No. 001-35784))+

Leonardo Six Loan Agreement, dated as of December 19, 2018, but effective as of January 8, 2019,
among Leonardo Six, Ltd., as borrower, the banks and financial institutions listed in Schedule 1 as
lenders, Crédit Agricole Corporate and Investment Bank, BNP Paribas Fortis S.A./N.V., HSBC Bank plc,
KFW IPEX-Bank GmbH, Cassa Depositi E Prestiti S.P.A., Banco Santander, S.A. and Société Générale,
as joint mandated lead arrangers, BNP Paribas as agent and HSBC Corporate Trustee Company (UK)
Limited as security trustee (incorporated herein by reference to Exhibit 10.46 to Norwegian Cruise Line
Holdings Ltd.’s Form 10-K filed on February 27, 2019 (File No. 001-35784))+

Guarantee relating to the Leonardo Six Loan Agreement, dated as of December 19, 2018, but effective as
of January 8, 2019, among NCL Corporation Ltd., as guarantor, and HSBC Corporate Trustee Company
(UK) Limited as security trustee (incorporated herein by reference to Exhibit 10.47 to Norwegian Cruise
Line Holdings Ltd.’s Form 10-K filed on February 27, 2019 (File No. 001-35784))+

O Class Plus One Loan Agreement, dated as of December 19, 2018, but effective as of January 8, 2019,
among O Class Plus One, LLC, as borrower, the banks and financial institutions listed in Schedule 1 as
lenders, Crédit Agricole Corporate and Investment Bank, BNP Paribas Fortis S.A./N.V., HSBC Bank plc,
KFW IPEX-Bank GmbH, Cassa Depositi E Prestiti S.P.A., Banco Santander, S.A. and Société Générale,
as joint mandated lead arrangers, BNP Paribas as agent and HSBC Corporate Trustee Company (UK)
Limited as security trustee (incorporated herein by reference to Exhibit 10.48 to Norwegian Cruise Line
Holdings Ltd.’s Form 10-K filed on February 27, 2019 (File No. 001-35784))+

10.47

Guarantee relating to the O Class Plus One Loan Agreement, dated as of December 19, 2018, but

effective as of January 8, 2019, among NCL Corporation Ltd., as guarantor, and HSBC Corporate Trustee
Company (UK) Limited as security trustee (incorporated herein by reference to Exhibit 10.49 to
Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27, 2019 (File No. 001-35784))+

10.48

O Class Plus Two Loan Agreement, dated as of December 19, 2018, but effective as of January 8, 2019,
among O Class Plus Two, LLC, as borrower, the banks and financial institutions listed in Schedule 1 as
lenders, Crédit Agricole Corporate and Investment Bank, BNP Paribas Fortis S.A./N.V., HSBC Bank plc,
KFW IPEX-Bank GmbH, Cassa Depositi E Prestiti S.P.A., Banco Santander, S.A. and Société Générale,
as joint mandated lead arrangers, BNP Paribas as agent and HSBC Corporate Trustee Company (UK)
Limited as security trustee (incorporated herein by reference to Exhibit 10.50 to Norwegian Cruise Line
Holdings Ltd.’s Form 10-K filed on February 27, 2019 (File No. 001-35784))+

10.49

Guarantee relating to the O Class Plus Two Loan Agreement, dated as of December 19, 2018, but

effective as of January 8, 2019, among NCL Corporation Ltd., as guarantor, and HSBC Corporate Trustee
Company (UK) Limited as security trustee (incorporated herein by reference to Exhibit 10.51 to
Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27, 2019 (File No. 001-35784))+

10.50

$230 million Credit Agreement, dated January 10, 2019, among NCL Corporation Ltd., as borrower,

Nordea Bank ABP, New York Branch, as administrative agent and collateral agent and the other lenders
party thereto as joint bookrunners, arrangers, co-documentation agents and lenders (incorporated herein

10.51

10.52

10.53

by reference to Exhibit 10.52 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27,
2019 (File No. 001-35784))+

Explorer III New Build Loan Agreement, dated as of December 19, 2018, but effective as of January 15,
2019, among Explorer III New Build, LLC, as borrower, the banks and financial institutions listed in
Schedule 1 as lenders, Crédit Agricole Corporate and Investment Bank, BNP Paribas Fortis S.A./N.V.,
HSBC Bank plc, KFW IPEX-Bank GmbH, Cassa Depositi E Prestiti S.P.A., Banco Santander, S.A. and
Société Générale, as joint mandated lead arrangers, BNP Paribas as agent and HSBC Corporate Trustee
Company (UK) Limited as security trustee (incorporated herein by reference to Exhibit 10.53 to
Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27, 2019 (File No. 001-35784))+

Guarantee relating to the Explorer III New Build Loan Agreement, dated as of December 19, 2018, but
effective as of January 15, 2019, among NCL Corporation Ltd., as guarantor, and HSBC Corporate
Trustee Company (UK) Limited as security trustee (incorporated herein by reference to Exhibit 10.54 to
Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27, 2019 (File No. 001-35784))+

$260 million Credit Agreement, dated May 15, 2019, among NCL Corporation Ltd., as borrower, Bank of
America, N.A., as administrative agent and collateral agent and the other lenders party thereto as joint
bookrunners, arrangers, co-documentation agents and lenders (incorporated herein by reference to Exhibit
10.1 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on August 8, 2019 (File No. 001-
35784))#

10.54

Amended and Restated Regent Trademark License Agreement, dated February 21, 2011, by and between

Regent Hospitality Worldwide, LLC and Seven Seas Cruises, S. DE R.L. (incorporated herein by
reference to Exhibit 10.17 to Prestige Cruises International, Inc.’s Amendment No. 1 to Form S-1 filed on
March 24, 2014 (File No. 333-193479))

10.55

Employment Agreement by and between NCL (Bahamas) Ltd. and Andrew Stuart, entered into on

September 16, 2016 (incorporated herein by reference to Exhibit 10.2 to Norwegian Cruise Line Holdings
Ltd.’s Form 8-K filed on September 19, 2016 (File No. 001-35784))*

10.56

Employment Agreement by and between NCL (Bahamas) Ltd. and T. Robin Lindsay, entered into on

October 18, 2015 (incorporated herein by reference to Exhibit 10.2 to Norwegian Cruise Line Holdings
Ltd.’s Form 10-Q filed on May 10, 2017 (File No. 001-35784))*

10.57

Employment Agreement by and between Prestige Cruise Services, LLC and Jason Montague, entered into

on September 16, 2016 (incorporated herein by reference to Exhibit 10.3 to Norwegian Cruise Line
Holdings Ltd.’s Form 8-K filed on September 19, 2016 (File No. 001-35784))*

10.58

Amended and Restated Executive Employment Agreement by and between Oceania Cruises, Inc. and

Frank J. Del Rio, entered into on June 5, 2014 (incorporated herein by reference to Exhibit 10.1 to Seven
Seas Cruises S. DE R.L.’s Form 8-K filed on June 10, 2014 (File No. 333-178244))*

10.59

Letter Regarding Frank Del Rio’s Executive Employment Agreement, dated September 2, 2014

(incorporated herein by reference to Exhibit 10.89 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K
filed on February 27, 2015 (File No. 001-35784))*

10.60

10.61

Letter Regarding Amendment to Frank J. Del Rio’s Executive Employment Agreement, dated August 4,
2015 (incorporated herein by reference to Exhibit 10.1 to Norwegian Cruise Line Holdings Ltd.’s Form
10-Q filed on November 4, 2015 (File No. 001-35784))*

Letter Regarding Amendment to Frank J. Del Rio’s Executive Employment Agreement, dated August 1,
2017 (incorporated herein by reference to Exhibit 10.1 to Norwegian Cruise Line Holdings Ltd.’s Form
10-Q filed on November 9, 2017 (File No. 001-35784))*

10.62

Employment Agreement by and between NCL (Bahamas) Ltd. and Mark Kempa, entered into on

September 10, 2018 (incorporated herein by reference to Exhibit 10.1 to Norwegian Cruise Line Holdings
Ltd.’s Form 8-K filed on September 11, 2018 (File No. 001-35784))*

10.63

Employment Agreement by and between Prestige Cruise Services, LLC and Robert J. Binder, entered into

on September 16, 2016 (incorporated herein by reference to Exhibit 10.1 to Norwegian Cruise Line
Holdings Ltd.’s Form 8-K filed on September 19, 2016 (File No. 001-35784))*

10.64**

Amendment to Employment Agreement by and between Prestige Cruise Services, LLC and Robert J.

Binder, entered into on May 7, 2019*

10.65

Form of Indemnification Agreement by and between Norwegian Cruise Line Holdings Ltd. and each of its
directors, executive officers and certain other officers (incorporated herein by reference to Exhibit 10.89
to amendment no. 5 to Norwegian Cruise Line Holdings Ltd.’s registration statement on Form S-1 filed
on January 8, 2013 (File No. 333-175579))

10.66

Norwegian Cruise Line Holdings Ltd. Amended and Restated 2013 Performance Incentive Plan

(incorporated herein by reference to Exhibit 10.1 to Norwegian Cruise Line Holdings Ltd.’s Form 8-K
filed on May 24, 2016 (File No. 001-35784))*

10.67

Form of Notice of Grant of Option and Terms and Conditions of Option (incorporated herein by reference
to Exhibit 10.1 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on May 8, 2013 (File No. 001-
35784))*

10.68

Form of Director Restricted Share Award Agreement (incorporated herein by reference to Exhibit 10.2 to

Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on July 30, 2013 (File No. 001-35784))*

10.69

Norwegian Cruise Line Holdings Ltd. Employee Stock Purchase Plan (incorporated herein by reference to
Exhibit 10.3 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on July 31, 2014 (File No. 001-
35784))*

10.70**

Directors’ Compensation Policy (effective January 1, 2020)*

10.71

10.72

10.73

Form of Director Restricted Share Unit Award Agreement (incorporated herein by reference to Exhibit
10.62 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 29, 2016 (File No. 001-
35784))*

Form of Norwegian Cruise Line Holdings Ltd. Time and Performance-based Restricted Share Unit Award
Agreement (incorporated herein by reference to Exhibit 10.2 to Norwegian Cruise Line Holdings Ltd.’s
Form 10-Q filed on November 4, 2015 (File No. 001-35784))*

Form of Notice of Grant of Norwegian Cruise Line Holdings Ltd. Time and Performance-based Option
and Terms and Conditions (incorporated herein by reference to Exhibit 10.3 to Norwegian Cruise Line
Holdings Ltd.’s Form 10-Q filed on November 4, 2015 (File No. 001-35784))*

10.74

Form of Norwegian Cruise Line Holdings Ltd. Time-based Restricted Share Unit Award Agreement

(2017) (incorporated herein by reference to Exhibit 10.52 to Norwegian Cruise Line Holdings Ltd.’s Form
10-K filed on February 27, 2017 (File No. 001-35784))*

10.75

Form of Norwegian Cruise Line Holdings Ltd. Performance-based Restricted Share Unit Award

Agreement (2017) (incorporated herein by reference to Exhibit 10.53 to Norwegian Cruise Line Holdings
Ltd.’s Form 10-K filed on February 27, 2017 (File No. 001-35784))*

10.76

Form of Norwegian Cruise Line Holdings Ltd. Performance-based Restricted Share Unit Award

Agreement (August 2017) (incorporated herein by reference to Exhibit 10.2 to Norwegian Cruise Line
Holdings Ltd.’s Form 10-Q filed on November 9, 2017 (File No. 001-35784))*

10.77**

Form of Norwegian Cruise Line Holdings Ltd. Time-based Restricted Share Unit Award Agreement

(2020)*

10.78**

Form of Norwegian Cruise Line Holdings Ltd. Performance-based Restricted Share Unit Award

Agreement (2020)*

21.1**

List of Subsidiaries of Norwegian Cruise Line Holdings Ltd.

23.1**

Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm

24.1**

Power of Attorney (included on Signatures page of this Annual Report on Form 10-K)

31.1**

Certification of the Annual Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the

President and Chief Executive Officer

31.2**

Certification of the Annual Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the

Executive Vice President and Chief Financial Officer

32.1***

Certification of the Annual Report Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by the

Chief Executive Officer and Chief Financial Officer

101**

The following materials from Norwegian Cruise Line Holdings Ltd.’s Annual Report on Form 10‑K
formatted in Inline XBRL:

(i) the Consolidated Statements of Operations of NCLH for the years ended December 31, 2019, 2018
and 2017;

(ii) the Consolidated Statements of Comprehensive Income of NCLH for the years ended
December 31, 2019, 2018 and 2017;

(iii) the Consolidated Balance Sheets of NCLH as of December 31, 2019 and 2018;

(iv) the Consolidated Statements of Cash Flows of NCLH for the years ended December 31, 2019, 2018
and 2017;

(v) the Consolidated Statements of Changes in Shareholders’ Equity of NCLH for the years ended
December 31, 2019, 2018 and 2017;

(vi) the Notes to the Consolidated Financial Statements; and

(vii) Schedule II Valuation and Qualifying Accounts.

104**

The cover page from Norwegian Cruise Line Holdings Ltd.’s Annual Report on Form 10-K for the year
ended December 31, 2019, formatted in Inline XBRL and included in the interactive data files submitted
as Exhibit 101.

+ Confidential treatment has been granted with respect to certain portions of this exhibit. Omitted portions have been

filed separately with the SEC.

# Certain portions of this document that constitute confidential information have been redacted in accordance with

Regulation S-K Item 601(b)(10).

* Management contract or compensatory plan.
** Filed herewith.
*** Furnished herewith.

Item 16. Form 10-K Summary

None.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this annual report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly
authorized, in Miami, Florida, on February 27, 2020.

SIGNATURES

NORWEGIAN CRUISE LINE HOLDINGS LTD.

/s/ Frank J. Del Rio

By:
Name:Frank J. Del Rio
Title: Director, President and Chief Executive Officer

POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints Frank J. Del Rio, Mark A. Kempa, Daniel S.

Farkas and Faye L. Ashby, and each of them, his or her true and lawful attorneys-in-fact and agents, each with full
power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities,
to sign any and all amendments to this annual report on Form 10-K, and to file the same, with exhibits thereto and other
documents in connection therewith, with the SEC, granting unto said attorneys-in-fact and agents, and each of them, full
power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that each of said
attorneys-in-fact and agents or their substitute or substitutes may lawfully so or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this annual report on Form

10-K has been signed below by the following persons in the capacities and on the date indicated.

Signature

Title

/s/ Frank J. Del Rio

Frank J. Del Rio

Director, President and Chief Executive Officer
(Principal Executive Officer)

Date

February 27, 2020

/s/ Mark A. Kempa

Mark A. Kempa

Executive Vice President and Chief Financial Officer February 27, 2020
(Principal Financial Officer)

/s/ Faye L. Ashby

Faye L. Ashby

Senior Vice President and Chief Accounting Officer
(Principal Accounting Officer)

February 27, 2020

/s/ Adam M. Aron

Director

Adam M. Aron

/s/ John Chidsey

Director

John Chidsey

/s/ Chad A. Leat

Director

Chad A. Leat

/s/ Steve Martinez

Director

Steve Martinez

/s/ David M. Abrams

Director

David M. Abrams

/s/ Stella David

Director

Stella David

/s/ Russell W. Galbut

Director

Russell W. Galbut

/s/ Pamela Thomas-Graham

Director

Pamela Thomas-Graham

/s/ Mary E. Landry

Director

Mary E. Landry

February 27, 2020

Norwegian Cruise Line Holdings Ltd.
Schedule II Valuation and Qualifying Accounts (in thousands)

Additions

Charged to

Description

Balance

12/31/16

costs and Charged to
expenses other accounts Deductions (a)

Balance
12/31/17

Valuation allowance on deferred tax assets

$ 64,573 $

— $

(22,419) $ 42,154

Description

Balance

12/31/17

Charged to
costs and
expenses other accounts Deductions (a)

Charged to

Balance
12/31/18

Valuation allowance on deferred tax assets

$ 42,154 $

— $

276 $

(506) $ 41,924

Description

Balance
12/31/18

Charged to
costs and
expenses other accounts Deductions (a)

Charged to

Balance
12/31/19

Valuation allowance on deferred tax assets

$ 41,924 $

— $

(36,077) $ 5,847

(a) Amount relates to (i) utilization of deferred tax assets, (ii) revaluation of deferred tax assets from their functional

currency to U.S. dollars and (iii) reversal of valuation allowances.

Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

Consolidated Statements of Operations for the years ended December 31, 2019, 2018 and 2017

Consolidated Statements of Comprehensive Income for the years ended December 31, 2019, 2018 and 2017

Consolidated Balance Sheets as of December 31, 2019 and 2018

Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017

Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2019, 2018
and 2017

Notes to the Consolidated Financial Statements

Page

F-1

F-4

F-5

F-6

F-7

F-8

F-9

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Norwegian Cruise Line Holdings Ltd.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Norwegian Cruise Line Holdings Ltd. and its
subsidiaries (the “Company”) as of December 31, 2019 and 2018, and the related consolidated statements of operations,
of comprehensive income, of changes in shareholders’ equity and of cash flows for each of the three years in the period
ended December 31, 2019, including the related notes and financial statement schedule listed in the index appearing
under Item 15(2) (collectively referred to as the “consolidated financial statements”). We also have audited the
Company's internal control over financial reporting as of December 31, 2019, based on criteria established in Internal
Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2019 in conformity with accounting principles generally
accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal
Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 5 to the consolidated financial statements, the Company changed the manner in which it accounts
for leases in 2019.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting,
included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 9A. Our
responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal
control over financial reporting based on our audits. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of
material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was
maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements. Our audit of internal control over financial reporting included obtaining an understanding of
internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the
design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing
such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable
basis for our opinions.

F-1

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies
and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated
financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to
accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially
challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our
opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit
matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they
relate.

Ship Accounting - Improvement Costs

As described in Notes 2 and 7 to the consolidated financial statements, the Company capitalized approximately $458.9
million of costs associated with ship improvements during 2019. As disclosed by management, ship improvement costs
which add value to the ship are capitalized and depreciated over the shorter of the improvements’ estimated useful lives
or the remaining useful life of the ship. The useful lives of ship improvements are estimated based on the economic
lives of the new components. In addition, to determine the useful lives of the ship or ship components, management
considers the impact of the historical useful lives of similar assets, manufacturer recommended lives and anticipated
changes in technological conditions.

The principal considerations for our determination that performing procedures relating to ship accounting - improvement
costs is a critical audit matter are there was significant judgment by management in determining whether costs associated
with ship improvements add value to the Company’s ships and in estimating the useful lives assigned. This in turn led to
a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence
relating to whether capitalization and useful lives assigned were appropriate.

F-2

Goodwill Impairment Assessment - Oceania Cruises Reporting Unit

As described in Note 2 to the consolidated financial statements, the Company’s goodwill balance for the Oceania
Cruises reporting unit was $523.0 million as of December 31, 2019. Management reviews goodwill for impairment on
an annual basis or earlier if there is an event or change in circumstances that would indicate that the carrying value of
these assets may not be fully recoverable. For the 2019 annual goodwill impairment evaluation, management conducted
a quantitative assessment comparing the fair value of the Oceania Cruises reporting unit to its carrying value, including
goodwill. This assessment consists of a combined approach using discounted future cash flows and market multiples to
determine the fair value of the reporting units. The market approach considers revenue and EBITDA multiples from an
appropriate peer group. The discounted cash flow valuation reflects management’s principal assumptions related to (i)
forecasted future operating results and growth rates, (ii) forecasted capital expenditures for fleet growth and ship
improvements, and (iii) a weighted average cost of capital of market participants, adjusted for an optimal capital
structure. Management believes that the combined approach is the most representative method to assess fair value as it
utilizes expectations of long-term growth as well as current market conditions.

The principal considerations for our determination that performing procedures relating to the goodwill impairment
assessment of the Oceania Cruises reporting unit is a critical audit matter are there was significant judgment by
management when developing the fair value of the reporting unit. This in turn led to a high degree of auditor judgment,
subjectivity and effort in performing procedures and in evaluating audit evidence relating to management’s future cash
flow projections and selected market multiples and the significant assumptions, including revenue and EBITDA
multiples from an appropriate peer group, forecasted future operating results and growth rates, forecasted capital
expenditures for fleet growth and ship improvements, and the weighted average cost of capital of market participants. In
addition, the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing
these procedures and evaluating the audit evidence obtained from these procedures.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our
overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls
relating to management’s goodwill impairment assessment for Oceania Cruises, including controls over the valuation of
the Company’s reporting unit. These procedures also included, among others, testing management’s process for
developing the fair value estimate of the Oceania Cruises reporting unit; evaluating the appropriateness of the discounted
future cash flow and market multiples approaches; testing the completeness, accuracy and relevance of underlying data
used in the approaches; and evaluating the reasonableness of the significant assumptions used by management, including
revenue and EBITDA multiples from an appropriate peer group, forecasted future operating results and growth rates,
capital expenditures for fleet growth and ship improvements, and the weighted average cost of capital of market
participants. Evaluating management’s assumptions related to revenue and EBITDA multiples from an appropriate peer
group, forecasted future operating results and growth rates, capital expenditures for fleet growth and ship improvements,
and the weighted average cost of capital of market participants involved evaluating whether the assumptions used by
management were reasonable considering (i) the current and past performance of the reporting unit, (ii) the consistency
with external market and industry data, and (iii) whether these assumptions were consistent with evidence obtained in
other areas of the audit. Professionals with specialized skill and knowledge were used to assist in the evaluation of the
Company’s discounted future cash flow and market multiples approaches and certain significant assumptions, including
the weighted average cost of capital of market participants.

/s/ PricewaterhouseCoopers LLP

Miami, Florida
February 27, 2020

We have served as the Company’s auditor since at least 1988. We have not been able to determine the specific year we
began serving as auditor of the Company.

F-3

Norwegian Cruise Line Holdings Ltd.
Consolidated Statements of Operations
(in thousands, except share and per share data)

Revenue

Passenger ticket
Onboard and other
Total revenue

Cruise operating expense

Commissions, transportation and other
Onboard and other
Payroll and related
Fuel
Food
Other

Total cruise operating expense

Other operating expense

Marketing, general and administrative
Depreciation and amortization

Total other operating expense

Operating income

Non-operating income (expense)

Interest expense, net
Other income (expense), net

Total non-operating income (expense)

Net income before income taxes
Income tax benefit (expense)
Net income
Weighted-average shares outstanding

Basic
Diluted

Earnings per share

Basic
Diluted

Year Ended December 31,
2018

2019

2017

4,517,393 $
1,944,983
6,462,376

4,259,815 $
1,795,311
6,055,126

3,750,030
1,646,145
5,396,175

1,120,886
394,673
924,157
409,602
222,602
591,341
3,663,261

974,850
646,188
1,621,038
1,178,077

998,948
348,656
881,606
392,685
216,031
539,150
3,377,076

897,929
561,060
1,458,989
1,219,061

(272,867)
6,155
(266,712)
911,365
18,863
930,228 $

(270,404)
20,653
(249,751)
969,310
(14,467)
954,843 $

894,406
319,293
803,632
361,032
198,357
486,924
3,063,644

773,755
509,957
1,283,712
1,048,819

(267,804)
(10,401)
(278,205)
770,614
(10,742)
759,872

214,929,977
216,475,076

223,001,739
224,419,205

228,040,825
229,418,326

$
$

4.33 $
4.30 $

4.28 $
4.25 $

3.33
3.31

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

F-4

Norwegian Cruise Line Holdings Ltd.
Consolidated Statements of Comprehensive Income
(in thousands)

Net income
Other comprehensive income (loss):

Shipboard Retirement Plan
Cash flow hedges:

Net unrealized gain (loss)
Amount realized and reclassified into earnings
Total other comprehensive income (loss)

Total comprehensive income

Year Ended December 31,
2018

2017

2019

$ 930,228 $ 954,843 $ 759,872

(1,930)

2,697

(40)

(123,015)
(8,898)
(133,843)

304,684
36,795
341,439
$ 796,385 $ 766,230 $ 1,101,311

(161,214)
(30,096)
(188,613)

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

F-5

Norwegian Cruise Line Holdings Ltd.
Consolidated Balance Sheets
(in thousands, except share data)

Assets
Current assets:

Cash and cash equivalents
Accounts receivable, net
Inventories
Prepaid expenses and other assets

Total current assets
Property and equipment, net
Goodwill
Tradenames
Other long-term assets

Total assets

Liabilities and shareholders’ equity
Current liabilities:

Current portion of long-term debt
Accounts payable
Accrued expenses and other liabilities
Advance ticket sales

Total current liabilities

Long-term debt
Other long-term liabilities

Total liabilities

Commitments and contingencies (Note 13)
Shareholders’ equity:

December 31,

2019

2018

252,876 $
75,109
95,427
306,733
730,145
13,135,337
1,388,931
817,525
612,661

163,851
55,249
90,202
241,011
550,313
12,119,253
1,388,931
817,525
329,948
$ 16,684,599 $ 15,205,970

746,358 $
100,777
782,275
1,954,980
3,584,390
6,055,335
529,295
10,169,020

681,218
159,564
716,499
1,593,219
3,150,500
5,810,873
281,596
9,242,969

Ordinary shares, $0.001 par value; 490,000,000 shares authorized; 237,533,270
shares issued and 213,082,411 shares outstanding at December 31, 2019 and
235,484,613 shares issued and 217,650,644 shares outstanding at
December 31, 2018
Additional paid-in capital
Accumulated other comprehensive income (loss)
Retained earnings
Treasury shares (24,450,859 and 17,833,969 ordinary shares at December 31, 2019
and December 31, 2018, respectively, at cost)
Total shareholders’ equity

Total liabilities and shareholders’ equity

237
4,235,690
(295,490)
3,829,068

235
4,129,639
(161,647)
2,898,840

(1,253,926)
6,515,579

(904,066)
5,963,001
$ 16,684,599 $ 15,205,970

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

F-6

Norwegian Cruise Line Holdings Ltd.
Consolidated Statements of Cash Flows
(in thousands)

Year Ended December 31,
2018

2017

2019

Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash provided by operating
activities:

930,228 $

954,843 $

759,872

Depreciation and amortization expense
Deferred income taxes, net
Loss on extinguishment of debt
Provision for bad debts and inventory obsolescence
Gain on involuntary conversion of assets
Share-based compensation expense
Net foreign currency adjustments
Changes in operating assets and liabilities:

Accounts receivable, net
Inventories
Prepaid expenses and other assets
Accounts payable
Accrued expenses and other liabilities
Advance ticket sales

Net cash provided by operating activities

Cash flows from investing activities
Additions to property and equipment, net
Cash received on settlement of derivatives
Cash paid on settlement of derivatives
Other

Net cash used in investing activities

Cash flows from financing activities
Repayments of long-term debt
Proceeds from long-term debt
Proceeds from employee related plans
Net share settlement of restricted share units
Purchases of treasury shares
Early redemption premium
Deferred financing fees

Net cash used in financing activities
Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

647,102
(26,134)
13,397
3,884
(4,152)
95,055
(1,934)

566,972
1,508
6,346
5,570
—
115,983
(5,537)

521,484
9,153
22,211
2,431
—
87,039
—

(14,104)
(6,155)
(74,295)
(58,635)
(29,028)
347,376
1,822,605

(15,886)
(9,052)
(29,519)
106,387
114,953
262,603
2,075,171

15,050
(17,129)
(22,714)
14,047
55,791
154,012
1,601,247

(1,637,170)
289
(47,085)
3,774
(1,680,192)

(1,566,796)
64,796
(1,719)
1,011
(1,502,708)

(1,372,214)
2,346
(35,694)
664
(1,404,898)

(3,806,732)
4,122,297
31,937
(20,939)
(349,860)
(6,829)
(23,262)
(53,388)
89,025
163,851
252,876 $

(1,716,244)
1,904,865
28,819
(13,855)
(664,811)
(5,154)
(118,422)
(584,802)
(12,339)
176,190
163,851 $

(1,916,885)
1,816,390
30,032
(6,342)
—
(15,506)
(56,195)
(148,506)
47,843
128,347
176,190

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

F-7

Norwegian Cruise Line Holdings Ltd.
Consolidated Statements of Changes in Shareholders’ Equity
(in thousands)

Additional

Accumulated
Other

Comprehensive Retained
Income (Loss) Earnings

Treasury

Total
Shareholders’
Equity

Balance, December 31, 2016
Share-based compensation
Issuance of shares under employee
related plans
Net share settlement of restricted
share units
Cumulative change in accounting
policy
Other comprehensive income, net
Net income
Balance, December 31, 2017
Share-based compensation
Issuance of shares under employee
related plans
Treasury shares
Net share settlement of restricted
share units
Cumulative change in accounting
policy
Other comprehensive income, net
Net income
Balance, December 31, 2018
Share-based compensation
Issuance of shares under employee
related plans
Treasury shares
Net share settlement of restricted
share units
Other comprehensive loss, net
Net income
Balance, December 31, 2019

Ordinary
Paid-in
Shares Capital
$

232 $ 3,890,119 $

—

87,039

30,031

—

(6,342)

—
—
—
233
—

(2,153)
—
—
3,998,694
115,983

2
—

—

28,817
—

(13,855)

—
—
—
235
—

—
—
—
4,129,639
95,055

2
—

—
—
—

31,935
—

(20,939)
—
—

237 $ 4,235,690 $

(314,473) $ 1,201,103 $ (239,255) $ 4,537,726
87,039

—

30,032

(6,342)

—
341,439
—
26,966

2,153
—
759,872
1,963,128
—

—
—
—
(239,255)
—

—
341,439
759,872
5,749,766
115,983

—
—

—

—
—

—

—
(664,811)

28,819
(664,811)

—

(13,855)

(12)
(188,601)
—
(161,647)
—

(19,131)
—
954,843
2,898,840
—

—
—
—
(904,066)
—

(19,143)
(188,601)
954,843
5,963,001
95,055

—
—

—
(349,860)

31,937
(349,860)

—
(133,843)
—

(20,939)
(133,843)
930,228
(295,490) $ 3,829,068 $ (1,253,926) $ 6,515,579

—
—
930,228

—
—
—

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

F-8

Norwegian Cruise Line Holdings Ltd.
Notes to the Consolidated Financial Statements

1. Description of Business and Organization

Seven Seas Splendor was delivered in January 2020. We refer you to Note 18 – “Subsequent Events” for additional
information. We have one additional Explorer Class Ship on order for delivery in the fall of 2023. We have two Allura
Class Ships on order for delivery in the winter of 2022 and spring of 2025. Project Leonardo will introduce an additional
six ships with expected delivery dates through 2027. The addition of these 10 ships to our fleet will increase our total
Berths to approximately 82,000.

Norwegian commenced operations from Miami in 1966. In February 2011, NCLH, a Bermuda limited company, was
formed with the issuance to the Sponsors of, in aggregate, 10,000 ordinary shares, with a par value of $0.001 per share.
In January 2013, NCLH completed its IPO and the ordinary shares of NCLC, all of which were owned by the Sponsors,
were exchanged for the ordinary shares of NCLH, and NCLH became the owner of 100% of the ordinary shares and
parent company of NCLC (the “Corporate Reorganization”). At the same time, NCLH contributed $460.0 million to
NCLC and the historical financial statements of NCLC became those of NCLH. The Corporate Reorganization was
affected solely for the purpose of reorganizing our corporate structure. As a result of the Secondary Equity Offerings, as
of December 2018, the Sponsors no longer owned the ordinary shares they held in NCLH.

2. Summary of Significant Accounting Policies

Basis of Presentation

Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in
the United States of America and contain all normal recurring adjustments necessary for a fair presentation of the results
for the periods presented. Estimates are required for the preparation of consolidated financial statements in accordance
with generally accepted accounting principles and actual results could differ from these estimates. All significant
intercompany accounts and transactions are eliminated in consolidation.

Cash and Cash Equivalents

Cash and cash equivalents are stated at cost and include cash and investments with original maturities of three months or
less at acquisition and also include amounts due from credit card processors.

Accounts Receivable, Net

Accounts receivable are shown net of an allowance for doubtful accounts of $10.6 million and $9.6 million as of
December 31, 2019 and 2018, respectively.

Inventories

Inventories mainly consist of provisions, supplies and fuel and are carried at the lower of cost or net realizable value
using the first-in, first-out method of accounting.

F-9

Advertising Costs

Advertising costs are expensed as incurred except for those that result in tangible assets, including brochures, which are
treated as prepaid expenses and charged to expense as consumed. Advertising costs of $5.9 million and $0.8 million as
of December 31, 2019 and 2018, respectively, are included in prepaid expenses and other assets. Expenses related to
advertising costs totaled $400.6 million, $327.3 million and $289.1 million for the years ended December 31, 2019, 2018
and 2017, respectively.

Earnings Per Share

Basic earnings per share is computed by dividing net income by the basic weighted-average number of shares
outstanding during each period. Diluted earnings per share is computed by dividing net income by diluted weighted-
average shares outstanding.

A reconciliation between basic and diluted earnings per share was as follows (in thousands, except share and per share
data):

Net income
Basic weighted-average shares outstanding
Dilutive effect of share awards
Diluted weighted-average shares outstanding
Basic earnings per share
Diluted earnings per share

Year Ended December 31,
2018
954,843 $

2019
930,228 $

$
$

214,929,977
1,545,099
216,475,076

4.33 $
4.30 $

2017
759,872
223,001,739 228,040,825
1,377,501
224,419,205 229,418,326
3.33
3.31

4.28 $
4.25 $

1,417,466

For the years ended December 31, 2019, 2018 and 2017, a total of 4.0 million, 4.7 million and 5.6 million shares,
respectively, have been excluded from diluted weighted-average shares outstanding because the effect of including them
would have been anti-dilutive.

Property and Equipment, Net

Property and equipment are recorded at cost. Ship improvement costs that we believe add value to our ships are
capitalized to the ship and depreciated over the shorter of the improvements’ estimated useful lives or the remaining
useful life of the ship while costs of repairs and maintenance, including Dry-dock costs, are charged to expense as
incurred. During ship construction, certain interest is capitalized as a cost of the ship. Gains or losses on the sale of
property and equipment are recorded as a component of operating income (expense) in our consolidated statements of
operations. The useful lives of ship improvements are estimated based on the economic lives of the new components. In
addition, to determine the useful lives of the ship or ship components, we consider the impact of the historical useful
lives of similar assets, manufacturer recommended lives and anticipated changes in technological conditions.

Depreciation is computed on a straight-line basis over the estimated useful lives of the assets, after a 15% reduction for
the estimated residual values of ships as follows:

Ships
Computer hardware and software
Other property and equipment
Leasehold improvements
Ship improvements

Useful Life
30 years
3‑10 years
3‑40 years
Shorter of lease term or asset life
Shorter of asset life or life of the ship

Long-lived assets are reviewed for impairment, based on estimated future undiscounted cash flows, whenever events or
changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Assets are grouped and

F-10

evaluated at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of
other groups of assets. We consider historical performance and future estimated results in our evaluation of potential
impairment and then compare the carrying amount of the asset to the estimated future cash flows expected to result from
the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, we
measure the amount of the impairment by comparing the carrying amount of the asset to its fair value. We estimate fair
value based on the best information available utilizing estimates, judgments and projections as necessary. Our estimate
of fair value is generally measured by discounting expected future cash flows at discount rates commensurate with the
associated risk.

Goodwill and Tradenames

Goodwill represents the excess of cost over the fair value of net assets acquired. Goodwill and other indefinite-lived
assets, principally tradenames, are reviewed for impairment on an annual basis or earlier if there is an event or change in
circumstances that would indicate that the carrying value of these assets may not be fully recoverable. We use the Step 0
Test which allows us to first assess qualitative factors to determine whether it is more likely than not (i.e., more than
50%) that the fair value of a reporting unit is less than its carrying value. For tradenames we also provide a qualitative
assessment to determine if there is any indication of impairment.

In order to make this evaluation, we consider the following circumstances as well as others:

 Changes in general macroeconomic conditions such as a deterioration in general economic conditions;
limitations on accessing capital; fluctuations in foreign exchange rates; or other developments in equity and
credit markets;

 Changes in industry and market conditions such as a deterioration in the environment in which an entity
operates; an increased competitive environment; a decline in market-dependent multiples or metrics (in both
absolute terms and relative to peers); a change in the market for an entity’s products or services; or a
regulatory or political development;

 Changes in cost factors that have a negative effect on earnings and cash flows;

 Decline in overall financial performance (for both actual and expected performance);

 Entity and reporting unit specific events such as changes in management, key personnel, strategy, or

customers; litigation; or a change in the composition or carrying amount of net assets; and

 Decline in share price (in both absolute terms and relative to peers).

We believe that the combined approach is the most representative method to assess fair value as it utilizes expectations
of long-term growth as well as current market conditions. For the tradenames, we may also use a quantitative
assessment, which utilizes the relief from royalty method and includes the same forecasts and discount rates from the
discounted cash flow valuation in the goodwill assessment along with a tradename royalty rate assumption.

F-11

Revenue and Expense Recognition

Deposits on advance ticket sales are deferred when received and are subsequently recognized as revenue ratably during
the voyage sailing days as services are rendered over time on the ship. Cancellation fees are recognized in passenger
ticket revenue in the month of the cancellation. Goods and services associated with onboard revenue are generally
provided at a point in time and revenue is recognized when the performance obligation is satisfied. A receivable is
recognized for onboard goods and services rendered when the voyage is not completed before the end of the period. All
associated direct costs of a voyage are recognized as incurred in cruise operating expenses.

Disaggregation of Revenue

Revenue and cash flows are affected by economic factors in various geographical regions.

Revenues by destination consisted of the following (in thousands):

Year Ended December 31,
2018

2017

2019

North America
Europe
Asia-Pacific
Other
Total revenue

Segment Reporting

$ 3,807,576 $ 3,543,282 $ 3,285,903
1,347,381
394,631
368,260
$ 6,462,376 $ 6,055,126 $ 5,396,175

1,462,698
721,404
327,742

1,666,751
500,842
487,207

We have concluded that our business has a single reportable segment. Each brand, Norwegian, Oceania Cruises and
Regent, constitutes a business for which discrete financial information is available and management regularly reviews
the brand level operating results and, therefore, each brand is considered an operating segment. Our operating segments
have similar economic and qualitative characteristics, including similar long-term margins and similar products and
services; therefore, we aggregate all of the operating segments into one reportable segment.

Although we sell cruises on an international basis, our passenger ticket revenue is primarily attributed to U.S.-sourced
guests who make reservations in the U.S. Revenue attributable to U.S.-sourced guests was 81%, 77% and 77% for
the years ended December 31, 2019, 2018 and 2017, respectively. No other individual country’s revenues exceeded 10%
in any of our last three years.

Substantially all of our long-lived assets are located outside of the U.S. and consist primarily of our ships. We had 19
ships with Bahamas registry with a carrying value of $10.2 billion as of December 31, 2019 and 18 ships with Bahamas
registry with a carrying value of $9.1 billion as of December 31, 2018. We had seven ships with Marshall Island registry
with a carrying value of $1.9 billion as of December 31, 2019 and 2018. We also had one ship with U.S. registry with a
carrying value of $0.3 billion as of December 31, 2019 and 2018.

F-12

Debt Issuance Costs

Debt issuance costs related to a recognized debt liability are presented in the consolidated balance sheets as a direct
deduction from the carrying amount of that debt liability, consistent with debt discounts. For line of credit arrangements
and for those debt facilities not fully drawn we defer and present debt issuance costs as an asset. These deferred issuance
costs are amortized over the life of the loan. The amortization of deferred financing fees is included in depreciation and
amortization expense in the consolidated statements of cash flows; however, for purposes of the consolidated statements
of operations it is included in interest expense, net.

Foreign Currency

The majority of our transactions are settled in U.S. dollars. Gains or losses resulting from transactions denominated in
other currencies are recognized in other income (expense), net at each balance sheet date. We recognized a loss of $7.0
million, a gain of $19.8 million and a loss of $14.2 million for the years ended December 31, 2019, 2018 and 2017,
respectively.

Derivative Instruments and Hedging Activity

We enter into derivative contracts to reduce our exposure to fluctuations in foreign currency exchange rates, interest
rates and fuel prices. The criteria used to determine whether a transaction qualifies for hedge accounting treatment
includes the correlation between fluctuations in the fair value of the hedged item and the fair value of the related
derivative instrument and its effectiveness as a hedge. As the derivative is marked to fair value, we elected an accounting
policy to net the fair value of our derivatives when a master netting arrangement exists with our counterparties.

A derivative instrument that hedges a forecasted transaction or the variability of cash flows related to a recognized asset
or liability may be designated as a cash flow hedge. Changes in fair value of derivative instruments that are designated as
cash flow hedges are recorded as a component of accumulated other comprehensive income (loss) until the underlying
hedged transactions are recognized in earnings. To the extent that an instrument is not effective as a hedge, gains and
losses are recognized in other income (expense), net in our consolidated statements of operations. Realized gains and
losses related to our effective fuel hedges are recognized in fuel expense. For presentation in our consolidated statements
of cash flows, we have elected to classify the cash flows from our cash flow hedges in the same category as the cash
flows from the items being hedged.

Concentrations of Credit Risk

We monitor concentrations of credit risk associated with financial and other institutions with which we conduct
significant business. Credit risk, including but not limited to counterparty non-performance under derivative instruments,
our Revolving Loan Facility and new ship progress payment guarantees, is not considered significant, as we primarily
conduct business with large, well-established financial institutions and insurance companies that we have well-
established relationships with and that have credit risks acceptable to us or the credit risk is spread out among a large
number of creditors. We do not anticipate non-performance by any of our significant counterparties.

Insurance

We use a combination of insurance and self-insurance for a number of risks including claims related to crew and guests,
hull and machinery, war risk, workers’ compensation, property damage, employee healthcare and general liability.
Liabilities associated with certain of these risks, including crew and passenger claims, are estimated actuarially based
upon known facts, historical trends and a reasonable estimate of future expenses. While we believe these accruals are
adequate, the ultimate losses incurred may differ from those recorded.

F-13

Income Taxes

Deferred tax assets and liabilities are calculated in accordance with the liability method. Deferred taxes are recorded
using the currently enacted tax rates that apply in the periods that the differences are expected to reverse. Deferred taxes
are not discounted.

We provide a valuation allowance on deferred tax assets when it is more likely than not that such assets will not be
realized. With respect to acquired deferred tax assets, changes within the measurement period that result from new
information about facts and circumstances that existed at the acquisition date shall be recognized through a
corresponding adjustment to goodwill. Subsequent to the measurement period, all other changes shall be reported as a
reduction or increase to income tax expense in our consolidated statements of operations.

Share-Based Compensation

We recognize expense for our share-based compensation awards using a fair-value-based method. Share-based
compensation expense is recognized over the requisite service period for awards that are based on a service period and
not contingent upon any future performance. We refer you to Note 11— “Employee Benefits and Share-Based
Compensation.”

Recently Issued Accounting Guidance

In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
No. 2017-04, Intangibles—Goodwill and Other (Topic 350) — Simplifying the Test for Goodwill Impairment, which
simplifies the test for goodwill impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a
goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of
that goodwill. The guidance is effective for annual or any interim goodwill impairment tests in years beginning after
December 15, 2019, with early adoption permitted for interim or annual goodwill impairment tests performed on testing
dates after January 1, 2017. The Company has not early adopted this guidance. The Company will evaluate, upon
adoption of this guidance, the impact of this guidance on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of
Credit Losses on Financial Instruments, which will require an entity to present the net amount expected to be collected
for certain financial assets, including trade receivables. Under this update, on initial recognition and at each reporting
period, an entity will be required to recognize an allowance that reflects the entity’s current estimate of credit losses
expected to be incurred over the life of the financial instrument. The update will be applied prospectively with a
cumulative-effect adjustment to retained earnings. This update will be effective for the Company for fiscal years
beginning after December 15, 2019 and interim periods within those fiscal years. The adoption of this standard will not
have a material impact on the Company’s consolidated financial statements.

3. Revenue and Expense from Contracts with Customers

Nature of Goods and Services

We offer our guests a multitude of cruise fare options when booking a cruise. Our cruise ticket prices generally include
cruise fare and a wide variety of onboard activities and amenities, meals, entertainment and port fees and taxes. In some
instances, cruise ticket prices include round-trip airfare to and from the port of embarkation, complimentary beverages,
unlimited shore excursions, free internet, pre-cruise hotel packages, and on some of the exotic itineraries, pre- or post-
land packages. Prices vary depending on the particular cruise itinerary, stateroom category selected and the time of year
that the voyage takes place. Passenger ticket revenue also includes full ship charters as well as port fees and taxes.

During the voyage, we generate onboard and other revenue for additional products and services which are not included
in the cruise fare, including casino operations, certain food and beverage, gift shop purchases, spa services, photo
services, Wi-Fi services and other similar items. Food and beverage, casino operations, photo services and shore
excursions are generally managed directly by us while retail shops, spa services, art auctions and internet services may

F-14

be managed through contracts with third-party concessionaires. These contracts generally entitle us to a percentage of
the gross sales derived from these concessions, which is recognized on a net basis. While some onboard goods and
services may be prepaid prior to the voyage, we utilize point-of-sale systems for discrete purchases made onboard.
Certain of our product offerings are bundled and we allocate the value of the bundled goods and services between
passenger ticket revenue and onboard and other revenue based upon the relative standalone selling prices of those goods
and services.

Timing of Satisfaction of Performance Obligations and Significant Payment Terms

The payment terms and cancellation policies vary by brand, stateroom category, length of voyage, and country of
purchase. A deposit for a future booking is required at or soon after the time of booking. Final payment is generally due
between 120 days and 180 days before the voyage. Deposits on advance ticket sales are deferred when received and
include amounts that are refundable. Deferred amounts are subsequently recognized as revenue ratably during the
voyage sailing days as services are rendered over time on the ship. Deposits are generally cancellable and refundable
prior to sailing, but may be subject to penalties, depending on the timing of cancellation. The inception of substantive
cancellation penalties generally coincides with the dates that final payment is due, and penalties generally increase as the
voyage sail date approaches. Cancellation fees are recognized in passenger ticket revenue in the month of the
cancellation.

Goods and services associated with onboard revenue are generally provided at a point in time and revenue is recognized
when the performance obligation is satisfied. Onboard goods and services rendered may be paid at disembarkation. A
receivable is recognized for onboard goods and services rendered when the voyage is not completed before the end of
the period.

Cruises that are reserved under full ship charter agreements are subject to the payment terms of the specific agreement
and may be either cancelable or non-cancelable. Deposits received on charter voyages are deferred when received and
included in advance ticket sales. Deferred amounts are subsequently recognized as revenue ratably over the voyage
sailing dates.

Contract Balances

Receivables from customers are included within accounts receivables, net. As of December 31, 2019 and
December 31, 2018, our receivables from customers were $15.3 million and $17.3 million, respectively.

Contract liabilities represent the Company’s obligation to transfer goods and services to a customer. A customer deposit
held for a future cruise is generally considered a contract liability only when final payment is both due and paid by the
customer and is usually recognized in earnings within 180 days of becoming a contract. Other deposits held and included
within advance ticket sales or other long-term liabilities are not considered contract liabilities as they are largely
cancelable and refundable. Our contract liabilities are included within advance ticket sales. As of December 31, 2019
and December 31, 2018, our contract liabilities were $1.4 billion and $1.2 billion, respectively. Of the amounts included
within contract liabilities, approximately 55% were refundable in accordance with our cancellation policies.
Approximately $1.2 billion of the December 31, 2018 contract liability balance has been recognized in revenue for
the year ended December 31, 2019.

Our revenue is seasonal and based on the demand for cruises. Historically, the seasonality of the North American cruise
industry generally results in the greatest demand for cruises during the Northern Hemisphere’s summer months. This
predictable seasonality in demand has resulted in fluctuations by quarter in our revenue and results of operations. The
seasonality of our results is increased due to ships being taken out of service for regularly scheduled Dry-docks, which
we typically schedule during non-peak demand periods. This seasonality will result in higher contract liability balances
as a result of an increased number of reservations preceding these peak demand periods. The addition of new ships also
increases the contract liability balances prior to a new ship’s delivery, as staterooms are made available for reservation
prior to the inaugural cruise. Norwegian Encore, with approximately 4,000 Berths, was delivered on October 30, 2019
and added 7% capacity to our fleet.

F-15

Practical Expedients and Exemptions

We do not disclose information about remaining performance obligations that have original expected durations of
one year or less. We recognize revenue in an amount that corresponds directly with the value to the customer of our
performance completed to date. Variable consideration, which will be determined based on a future rate and passenger
count, is excluded from the disclosure and these amounts are not material. These variable non-disclosed contractual
amounts relate to our non-cancelable charter agreements and a leasing arrangement with a certain port, both of which are
long-term in nature. Amounts that are fixed in nature due to the application of minimum guarantees are also not material
and are not disclosed.

Contract Costs

Management expects that incremental commissions and credit card fees paid as a result of obtaining ticket contracts are
recoverable; therefore, we recognize these amounts as assets when they are paid prior to the voyage. Costs of air tickets,
port taxes and other fees that fulfill future performance obligations are also considered recoverable and are recorded as
assets. Costs incurred to obtain customers were $143.5 million and $116.3 million as of December 31, 2019 and 2018,
respectively. Costs to fulfill contracts with customers were $49.7 million and $32.5 million as of December 31, 2019 and
2018, respectively. Both costs to obtain and fulfill contracts with customers are recognized within prepaid expenses and
other assets. Incremental commissions, credit card fees, air ticket costs, and port taxes and fees are recognized ratably
over the voyage sailing dates, concurrent with associated revenue, and are primarily in commissions, transportation and
other expense.

4. Goodwill and Intangible Assets

Goodwill and tradenames are not subject to amortization. As of December 31, 2019 and 2018, the carrying values were
$1.4 billion for goodwill and $0.8 billion for tradenames.

The gross carrying amounts of intangible assets included within other long-term assets, the related accumulated
amortization, the net carrying amounts and the weighted-average amortization periods of the Company’s intangible
assets are listed in the following tables (in thousands, except amortization period):

December 31, 2019

Customer relationships
License
Total intangible assets subject to amortization

120,000 $
750
120,750 $

(110,169) $
(331)
(110,500) $

9,831
419
10,250

Gross Carrying Accumulated Net Carrying

Amount

Amortization Amount

Weighted-
Average
Amortization
Period (Years)
6.0
10.0

Customer relationships
Licenses
Total intangible assets subject to amortization

120,000 $
3,368
123,368 $

(94,630) $

28,244
494
28,738

Amount

Gross Carrying Accumulated Net Carrying Amortization
Period (Years)
Amortization Amount
6.0
5.6

(91,756) $

(2,874)

December 31, 2018

Weighted-
Average

F-16

The aggregate amortization expense is as follows (in thousands):

Amortization expense

Year Ended December 31,
2018
26,163 $

2019
18,488 $

2017
31,232

The following table sets forth the Company’s estimated aggregate amortization expense for each of the five years below
(in thousands):

Year ended December 31,
2020
2021
2022
2023
2024

5. Leases

Amortization

Expense

9,906
75
75
75
75

On January 1, 2019, we adopted ASU No. 2016-02, Leases (“Topic 842”). Topic 842 supersedes the lease accounting
requirements in Accounting Standards Codification (“ASC”) 840—Leases. In August 2018, the FASB issued ASU
2018-11, Targeted Improvements to Topic 842, which included an option to apply the new leases standard at the
adoption date using a modified retrospective approach, which the Company elected.

Nature of Leases

We have finance leases for certain ship equipment and a corporate office. We have operating leases for port facilities,
corporate offices, warehouses, and certain equipment. Many of our leases include both lease and non-lease components.
We have adopted the practical expedient which allows us to combine lease and non-lease components by class of asset.
We have applied this expedient for office leases, port facilities, and certain equipment.

Significant Assumptions and Judgments in Applying Topic 842 and Practical Expedients Elected

Our leases contain both fixed and variable payments. Fixed payments and variable lease payments that depend on a rate
or index are included in the calculation of the right-of-use asset. Other variable payments are excluded from the
calculation unless there is an unavoidable fixed minimum cost related to those payments such as a minimum annual
guarantee. Our lease assets are amortized on a straight-line basis except for our rights to use port facilities. The expenses
related to port facilities are amortized based on passenger counts as this basis represents the pattern in which the
economic benefit is derived from the right to use the underlying asset.

For non-consecutive lease terms, which relate to our rights to use certain port facilities, the term of the lease is based on
the number of days on which we have the right to use a specified asset. We have adopted the practical expedient to
exclude leases with terms of less than one year from being included on the balance sheet. Lease expense for agreements
that are short-term are disclosed below and include both fixed and variable payments.

Certain leases include one or more options to extend or terminate and are primarily in five-year increments. Lease
extensions and terminations, including auto-renewing lease terms, were only included in the calculation of the right-of-
use asset to the extent that the right to renew or terminate was at the option of the lessor only or where there was a more
than insignificant penalty for termination.

As our leases do not have a readily determinable implicit rate, we used our weighted average cost of debt to determine
the net present value of the lease payments at the adoption date. Our weighted average cost of debt is similar to the

F-17

incremental borrowing rate we would have obtained if we had borrowed collateralized debt over the lease term to
purchase the asset, and the rate was adjusted for longer term leases.

We have also adopted the practical expedient which allows us, by class of asset, to not separate lease and non-lease
components when we are the lessor in the underlying transaction, the transactions would otherwise be accounted for
under ASC 606–Revenue Recognition and the non-lease components are the predominant components of the
agreements. We have applied this practical expedient to transactions with cruise passengers and concession service
providers related to the use of our ships. We refer you to Note 3 – “Revenue and Expense from Contracts with
Customers.”

Impacts on Financial Statements

As a result of the adoption of Topic 842 on January 1, 2019, we recorded operating lease right-of-use assets of
$235.0 million and operating lease liabilities of $243.8 million. Another $8.8 million was reclassified to the operating
right-of-use assets from other asset and liability accounts relating to the existing leases. The adoption of Topic 842 did
not result in the identification of new finance leases. The adoption does not significantly change the timing, classification
or amount of expense recognized in our consolidated financial statements nor does it change the timing, classification or
amount of cash payments included within the consolidated statement of cash flows.

The components of lease expense and revenue were as follows (in thousands):

Operating lease expense
Variable lease expense
Short-term lease expense
Finance lease cost:

Amortization of right-of-use assets
Interest on lease liabilities

Operating lease revenue
Sublease income

Lease balances were as follows (in thousands):

Year Ended
December 31, 2019
31,596
$
14,284
50,832

1,765
1,239
446
1,615

Operating leases
Right-of-use assets
Current operating lease liabilities
Non-current operating lease liabilities

Finance leases
Right-of-use assets
Current finance lease liabilities
Non-current finance lease liabilities

Balance Sheet location

December 31, 2019

Other long-term assets
Accrued expenses and other liabilities
Other long-term liabilities

Property and equipment, net
Current portion of long-term debt
Long-term debt

236,604
39,126
207,243

13,873
6,419
8,812

F-18

Supplemental cash flow information related to leases was as follows (in thousands):

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash outflows from operating leases
Operating cash outflows from finance leases
Financing cash outflows from finance leases

Right-of-use assets obtained in exchange for lease obligations:

Operating leases
Finance leases

Year Ended

December 31, 2019

75,539
1,051
2,826

24,834
705

As of December 31, 2019, maturities of lease liabilities, weighted-average remaining lease terms and discount rates for
our leases were as follows (in thousands, except lease terms and discount rates):

2020
2021
2022
2023
2024
Thereafter
Total
Less: Present value discount
Present value of lease liabilities
Weighted average remaining lease term (years)
Weighted average discount rate

Finance

Operating
leases
47,796
32,144
31,844
31,740
31,753
112,718
287,995
(41,626)
$ 246,369
8.30
3.76 %

leases

6,141
4,912
3,957
730
677
629
17,046
(1,815)
15,231
3.65
7.47 %

As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018, future minimum
lease payments for operating leases having initial or remaining noncancelable lease terms in excess of one year were as
follows under the previous lease accounting standard (ASC 840) (in thousands):

Year
2019
2020
2021
2022
2023
Thereafter
Total minimum annual rentals

Leases That Have Not Yet Commenced

December 31, 2018

16,651
16,105
15,315
14,391
13,462
52,626
128,550

We have multiple agreements that have been executed where the lease term has not commenced as of
December 31, 2019. These are primarily related to our rights to use certain port facilities currently under construction.
Although we may have provided design input, construction management services, or advances related to these assets, we
have determined that we do not control these assets during the period of construction. These port facilities are expected
to open for use during 2020 and include undiscounted minimum annual guarantees of approximately $1.1 billion of
passenger fees.

F-19

6. Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) was as follows (in thousands):

Year Ended December 31, 2019

Change

Accumulated
Other

Change Related to
Related to Shipboard
Comprehensive Cash Flow Retirement
Income (Loss) Hedges

Plan

Accumulated other comprehensive income (loss) at beginning of
period
Current period other comprehensive loss before reclassifications
Amounts reclassified into earnings
Accumulated other comprehensive income (loss) at end of period

(161,647) $ (157,449) $
(123,015)
(125,323)
(8,898)(1)
(8,520)
(295,490) $ (289,362)(3) $

(4,198)
(2,308)

378 (2)

(6,128)

Year Ended December 31, 2018

Change

Accumulated
Other

Change Related to
Related to Shipboard
Comprehensive Cash Flow Retirement
Income (Loss) Hedges

Plan

Accumulated other comprehensive income (loss) at beginning of
period
Current period other comprehensive income (loss) before
reclassifications
Amounts reclassified into earnings
Accumulated other comprehensive income (loss) at end of period

26,966 $ 33,861 $

(6,895)

(161,214)

(158,943)
(29,670)
(30,096)(1)
(161,647) $ (157,449) $

2,271

426 (2)

(4,198)

Year Ended December 31, 2017

Change

Accumulated
Other

Change Related to
Related to Shipboard
Comprehensive Cash Flow Retirement
Income (Loss) Hedges

Plan

(314,473) $ (307,618) $

(6,855)

304,684
304,226
36,795 (1)
37,213
26,966 $ 33,861 $

(458)
418 (4)

(6,895)

(1) We refer you to Note 10— “Fair Value Measurements and Derivatives” in these notes to consolidated financial

statements for the affected line items in the consolidated statements of operations.

(2) Amortization of prior-service cost and actuarial loss reclassified to other income (expense), net.
(3) Includes $16.5 million of loss expected to be reclassified into earnings in the next 12 months.
(4) Amortization of prior-service cost and actuarial loss reclassified to payroll and related expense.

F-20

7. Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

Ships
Ships improvements
Ships under construction
Land and land improvements
Other

Less: accumulated depreciation
Property and equipment, net

December 31,

2019

2018

$ 14,154,578 $ 13,032,555
1,407,989
491,632
34,936
558,052
15,525,164
(3,405,911)
$ 13,135,337 $ 12,119,253

1,865,272
387,749
38,375
672,975
17,118,949
(3,983,612)

The increase in ships was primarily due to the addition of Norwegian Encore. The Company capitalized approximately
$458.9 million of costs associated with ship improvements. Depreciation expense for the years ended
December 31, 2019, 2018 and 2017 was $627.7 million, $534.9 million and $478.7 million, respectively. Repairs and
maintenance expenses including Dry-dock expenses were $199.7 million, $199.5 million and $157.2 million for
the years ended December 31, 2019, 2018 and 2017, respectively, and were recorded within other cruise operating
expense.

Ships under construction include progress payments to the shipyard, planning and design fees and other associated costs.
Capitalized interest costs which were primarily associated with the construction or revitalization of ships amounted to
$32.9 million, $30.4 million and $29.0 million for the years ended December 31, 2019, 2018 and 2017, respectively.

F-21

8. Long-Term Debt

Long-term debt consisted of the following:

$875.0 million senior secured revolving credit facility
$75.0 million revolving credit line
Term Loan A
$375.0 million Term Loan B (1)
$700.0 million 4.750% senior unsecured notes
$565.0 million 3.625% senior unsecured notes
€662.9 million Norwegian Epic term loan (2)
$260 million Norwegian Jewel term loan
$230 million Pride of America term loan
€529.8 million Breakaway one loan (2)
€529.8 million Breakaway two loan (2)
€590.5 million Breakaway three loan (2)
€729.9 million Breakaway four loan (2)
€710.8 million Seahawk 1 term loan (2)
€748.7 million Seahawk 2 term loan (2)
Leonardo newbuild one loan
Leonardo newbuild two loan
Leonardo newbuild three loan
Leonardo newbuild four loan
Sirena loan
Explorer newbuild loan
Marina newbuild loan (3)
Riviera newbuild loan (4)
Finance lease and license obligations
Total debt
Less: current portion of long-term debt
Total long-term debt

Interest Rate
December 31,

2019

2018

Maturities
Through

Balance
December 31,

2019

2018

(in thousands)

—
2.75 %
3.06 %
—
—
3.63 %
—
2.54 %
2.81 %
2.84 %
4.10 %
2.98 %
2.98 %
3.92 %
3.92 %
2.68 %
2.77 %
1.22 %
1.31 %
—
3.43 %
2.75 %
2.48 %

—

—
—

3.96 % 2024
2020
4.01 % 2024
4.26 % 2021
4.75 % 2021
2024
4.58 % 2022
2022
2021
4.09 % 2025
4.50 % 2026
2.98 % 2027
2.98 % 2029
3.92 % 2030
3.92 % 2031
2.68 % 2034
2.77 % 2035
1.22 % 2036
1.31 % 2037
2.75 % 2019
3.43 % 2028
3.07 % 2023
3.32 % 2024
2028

75,000
1,565,512
—
—
558,781
—
221,860
229,621
305,969
370,531
478,665
630,088
692,150
856,188
48,009
48,009
42,700
42,700
—
242,449
156,319
202,233
34,909

— $ 130,000
—
1,256,167
368,982
561,021
—
259,394
—
—
360,680
426,503
537,223
694,536
756,061
187,612
48,009
48,009
43,667
43,667
13,856
268,970
201,007
247,203
39,524
6,801,693 6,492,091
(681,218)
$ 6,055,335 $ 5,810,873

(746,358)

Various Various

(1) Includes original issue discount of $0.7 million as of December 31, 2018.
(2) Currently U.S. dollar-denominated.
(3) Includes premium of $0.1 million as of December 31, 2019 and 2018.
(4) Includes premium of $0.1 million and $0.2 million as of December 31, 2019 and 2018, respectively.

On December 16, 2019, NCLC issued $565.0 million aggregate principle amount of 3.625% senior unsecured notes due
December 2024 (the “Notes”) in a private offering (the “Offering”) at par. NCLC used the net proceeds from the
Offering, after deducting the initial purchasers’ discount and estimated fees and expenses, together with cash on hand, to
redeem $565.0 million principal amount of outstanding 4.75% Senior Notes due 2021 at a price equal to 100% of the
principal amount being redeemed and paid the premium of $6.7 million. The redemption also resulted in a write-off of
$2.7 million of deferred fees.

NCLC will pay interest on the Notes at 3.625% per annum, semiannually on June 15 and December 15 of each year,
commencing on June 15, 2020, to holders of record at the close of business on the immediately preceding June 1 and
December 1, respectively. NCLC may redeem the Notes, in whole or part, at any time prior to December 15, 2021, at a
price equal to 100% of the principal amount of the Notes redeemed plus accrued and unpaid interest to, but not
including, the redemption date and a “make-whole premium.” NCLC may redeem the Notes, in whole or in part, on or

F-22

after December 15, 2021, at the redemption prices set forth in the indenture governing the Notes. At any time (which
may be more than once) on or prior to December 15, 2021, NCLC may choose to redeem up to 40% of the aggregate
principal amount of the Notes at a redemption price equal to 103.625% of the face amount thereof with an amount equal
to the net proceeds of one or more equity offerings, so long as at least 60% of the aggregate principal amount of the
Notes issued remains outstanding following such redemption. The indenture governing the Notes contains covenants that
limit NCLC’s ability to, among other things: (i) create liens on certain assets to secure debt; (ii) enter into sale leaseback
transactions; and (iii) consolidate, merge, sell or otherwise dispose of all or substantially all of its assets. The indenture
governing the Notes also provides for events of default, which, if any of them occurs, would permit or require the
principal, premium (if any), interest and other monetary obligations on all of the then-outstanding Notes to become due
and payable immediately.

On October 30, 2019, we took delivery of Norwegian Encore. We had export financing in place for 80% of the contract
price. The associated $882.9 million term loan bears interest at a fixed rate of 3.92% with a maturity date of October 30,
2031. Principal and interest payments are payable semiannually.

In October 2019, we entered into a $75 million revolving credit line agreement that matures in October 2020 and bears
interest at LIBOR plus a margin of 0.95%.

NCLC entered into a $260 million credit agreement, dated as of May 15, 2019, with Bank of America, N.A., as
administrative agent and collateral agent, and certain other lenders. The proceeds of this term loan were used to prepay
the then outstanding principal and accrued interest of the Norwegian Epic term loan. The $260 million term loan is
secured by Norwegian Jewel Limited, bears interest at LIBOR plus a margin of 0.80%, and matures on May 15, 2022.
The transaction resulted in a loss on extinguishment of debt of $1.1 million.

NCLC entered into a $230 million credit agreement, dated as of January 10, 2019, with Nordea Bank ABP, New York
Branch, as administrative agent and collateral agent, and certain other lenders. The proceeds of this term loan will be
used for general corporate purposes, including to finance the pre-delivery installments due to the builder under the
Company’s shipbuilding contracts. The $230 million term loan is secured by Pride of America Ship Holding, LLC and
bears interest at LIBOR plus a margin of 1.00%. The term loan matures on January 10, 2021; however, NCLC may elect
to extend the maturity date to January 10, 2022 provided certain conditions are met. Should NCLC elect to extend the
maturity date, the interest rate will be LIBOR plus a margin of 1.10% for the third year.

NCLC entered into a Fourth Amended and Restated Credit Agreement, dated as of January 2, 2019, with a subsidiary of
NCLC, as co-borrower and JPMorgan Chase Bank, N.A., as administrative agent, and certain other lenders. This revised
facility, among other things, (a) reduced the pricing of our existing $875 million Revolving Loan Facility, (b) reduced
the pricing and increased the approximately $1.3 billion principal amount outstanding under the term loan A facility to
$1.6 billion, and (c) extended the maturity dates for our Revolving Loan Facility and our term loan A facility to 2024,
subject to certain conditions. We used the proceeds from the increase in our term loan A facility to prepay all of the then
outstanding amounts under our term loan B facility. The transaction resulted in a loss on extinguishment of debt of $2.9
million.

The applicable margin under the new term loan A facility and new Revolving Loan Facility is determined by reference
to a total leverage ratio, with an applicable margin of between 1.75% and 1.00% with respect to Eurocurrency loans and
between 0.75% and 0.00% with respect to base rate loans. The margin as of December 31, 2019 for borrowings under
the new term loan A facility and new Revolving Loan Facility was 1.25% with respect to Eurocurrency borrowings. In
addition to paying interest on outstanding principal under the borrowings, we are obligated to pay a quarterly
commitment fee at a rate determined by reference to a total net leverage ratio, with a maximum commitment fee of
0.30%.

Interest expense, net for the year ended December 31, 2019 was $272.9 million which included $27.5 million of
amortization of deferred financing fees and a $16.7 million loss on extinguishment and modification of debt. Interest
expense, net for the year ended December 31, 2018 was $270.4 million which included $31.4 million of amortization of
deferred financing fees and a $6.3 million loss on extinguishment of debt. Interest expense, net for the year ended

F-23

December 31, 2017 was $267.8 million which included $32.5 million of amortization of deferred financing fees and a
$23.9 million loss on extinguishment and modification of debt.

The following are scheduled principal repayments on long-term debt including finance lease obligations as of
December 31, 2019 for each of the next five years (in thousands):

Year
2020
2021
2022
2023
2024
Thereafter
Total

Amount

746,358
899,206
667,456
574,492
2,260,295
1,778,870
6,926,677

We had an accrued interest liability of $33.3 million and $37.2 million as of December 31, 2019 and 2018, respectively.

9. Related Party Disclosures

Transactions with Genting HK and Apollo

In December 2018, as part of a public equity offering of NCLH’s ordinary shares owned by Apollo and Genting HK,
NCLH repurchased 1,683,168 of its ordinary shares sold in the offering for approximately $85.0 million pursuant to its
Repurchase Program.

In March 2018, as part of a public equity offering of NCLH’s ordinary shares owned by Apollo and Genting HK, NCLH
repurchased 4,722,312 of its ordinary shares sold in the offering for approximately $263.5 million pursuant to its then
existing share repurchase program.

10. Fair Value Measurements and Derivatives

Fair value is defined as the price at which an orderly transaction to sell an asset or to transfer a liability would take place
between market participants at the measurement date under current market conditions (that is, an exit price at the
measurement date from the perspective of a market participant that holds the asset or owes the liability).

Fair Value Hierarchy

The following hierarchy for inputs used in measuring fair value should maximize the use of observable inputs and
minimize the use of unobservable inputs by requiring that the most observable inputs be used when available:

Level 1 — Quoted prices in active markets for identical assets or liabilities that are accessible at the measurement dates.
Level 2 — Significant other observable inputs that are used by market participants in pricing the asset or liability based
on market data obtained from independent sources.
Level 3 — Significant unobservable inputs we believe market participants would use in pricing the asset or liability
based on the best information available.

F-24

Derivatives

We are exposed to market risk attributable to changes in interest rates, foreign currency exchange rates and fuel prices.
We attempt to minimize these risks through a combination of our normal operating and financing activities and through
the use of derivatives. We assess whether derivatives used in hedging transactions are “highly effective” in offsetting
changes in the cash flow of our hedged forecasted transactions. We use regression analysis for this hedge relationship
and high effectiveness is achieved when a statistically valid relationship reflects a high degree of offset and correlation
between the fair values of the derivative and the hedged forecasted transaction. Cash flows from the derivatives are
classified in the same category as the cash flows from the underlying hedged transaction. If it is determined that the
hedged forecasted transaction is no longer probable of occurring, then the amount recognized in accumulated other
comprehensive income (loss) is released to earnings. There are no amounts excluded from the assessment of hedge
effectiveness and there are no credit-risk-related contingent features in our derivative agreements. We monitor
concentrations of credit risk associated with financial and other institutions with which we conduct significant business.
Credit risk, including but not limited to counterparty non-performance under derivatives, is not considered significant, as
we primarily conduct business with large, well-established financial institutions with which we have established
relationships, and which have credit risks acceptable to us, or the credit risk is spread out among many creditors. We do
not anticipate non-performance by any of our significant counterparties.

As of December 31, 2019, we had fuel swaps, which are used to mitigate the financial impact of volatility of fuel prices
pertaining to approximately 1.1 million metric tons of our projected fuel purchases, maturing through December 31,
2022.

As of December 31, 2019, we had foreign currency forward contracts, matured foreign currency options and matured
foreign currency collars which are used to mitigate the financial impact of volatility in foreign currency exchange rates
related to our ship construction contracts denominated in euros. The notional amount of our foreign currency forward
contracts was €1.8 billion, or $2.0 billion based on the euro/U.S. dollar exchange rate as of December 31, 2019.

As of December 31, 2019, we had interest rate swaps and collars, which are used to hedge our exposure to interest rate
movements and manage our interest expense. The notional amount of our outstanding debt associated with the interest
rate swaps and collars was $1.7 billion as of December 31, 2019.

The derivatives measured at fair value and the respective location in the consolidated balance sheets includes the
following (in thousands):

Balance Sheet Location

2019

2018

2019

2018

Assets

Liabilities

December 31, December 31, December 31, December 31,

Derivative Contracts Designated as Hedging Instruments

Fuel contracts

Foreign currency contracts

Interest rate contracts

Prepaid expenses and other assets
Other long-term assets
Accrued expenses and other liabilities
Other long-term liabilities

Total derivatives designated as hedging instruments

—
277
2,300
683

—
—
—
169

—
—
—
—
3,429

2,583
197
1,173
933

5,285
3,514
112
2,874

519
27
—
—
17,217

—
—
18,257
17,763

—
—
33,475
118,500

—
—
2,178
1,861
192,034

1
29
19,547
51,184

1,497
—
5,145
40,476

—
—
—
—
117,879

The fair values of swap and forward contracts are determined based on inputs that are readily available in public markets
or can be derived from information available in publicly quoted markets. The Company determines the value of options

F-25

and collars utilizing an option pricing model based on inputs that are either readily available in public markets or can be
derived from information available in publicly quoted markets. The option pricing model used by the Company is an
industry standard model for valuing options and is used by the broker/dealer community. The inputs to this option
pricing model are the option strike price, underlying price, risk-free rate of interest, time to expiration, and volatility. The
fair value of option contracts considers both the intrinsic value and any remaining time value associated with those
derivatives that have not yet settled. The Company also considers counterparty credit risk and its own credit risk in its
determination of all estimated fair values.

Our derivatives and financial instruments were categorized as Level 2 in the fair value hierarchy, and we had no
derivatives or financial instruments categorized as Level 1 or Level 3. Our derivative contracts include rights of offset
with our counterparties. We have elected to net certain assets and liabilities within counterparties when the rights of
offset exist. We are not required to post cash collateral related to our derivative instruments.

The gross and net amounts recognized within assets and liabilities include the following (in thousands):

December 31, 2019
Assets
Liabilities

December 31, 2018
Assets
Liabilities

Gross

Gross
Amounts

Amounts Offset
277 $
$

— $

192,034

(3,152)

Gross
Total Net
Amounts
Amounts Not Offset Net Amounts
277
39,019

(149,863)

188,882

277 $

— $

Gross

Amounts Total Net Amounts

Amounts Offset
$ 12,125 $
116,352

Amounts Not Offset Net Amounts
3,726
75,542

(1,527) $ 10,598 $
(5,092)

(6,872) $

111,260

(35,718)

The effects of cash flow hedge accounting on accumulated other comprehensive income (loss) include the following (in
thousands):

Derivatives

Location of Gain
(Loss) Reclassified
from Accumulated

Other Comprehensive

Income (Loss) into
Income

Amount of Gain (Loss)
Recognized in Other
Comprehensive Income
Year Ended December 31,
2018
2019

2017

Fuel contracts

$ 46,154 $ (52,949) $ 50,263 Fuel

Amount of Gain (Loss) Reclassified
from Accumulated Other
Comprehensive
Income (Loss) into Income
Year Ended December 31,
2018
$ 34,410

2017
$ (29,721)

2019

$ 14,093

Foreign currency contracts
Interest rate contracts
Total gain (loss) recognized in other
comprehensive income

(163,197) (108,911) 254,070
351

(5,972)

646

Depreciation and
amortization
Interest expense, net

(3,062)
(2,133)

(3,463)
(851)

(4,077)
(2,997)

$ (123,015) $ (161,214) $ 304,684

8,898

$ 30,096

$ (36,795)

F-26

The effects of cash flow hedge accounting on the consolidated statements of operations include the following (in
thousands):

Year Ended December 31, 2019

Year Ended December 31, 2018

Depreciation
and

Interest

Depreciation
and

Interest

Fuel

Amortization Expense, net Fuel

Amortization Expense, net

Total amounts of income and expense line items presented
in the consolidated statements of operations in which the
effects of cash flow hedges are recorded

Amount of gain (loss) reclassified from accumulated other
comprehensive income (loss) into income

$ 409,602

646,188

272,867

$ 392,685

561,060

270,404

Fuel contracts
Foreign currency contracts
Interest rate contracts

14,093
—
—

—
(3,062)
—

—
—
(2,133)

34,410
—
—

—
(3,463)
—

—
—
(851)

The effects of cash flow hedge accounting on the consolidated statements of operations include the following (in
thousands):

Total amounts of income and expense line items presented in the consolidated statements
of operations in which the effects of cash flow hedges are recorded

361,032

509,957

267,804

Amount of gain (loss) reclassified from accumulated other comprehensive income (loss)
into income

Year Ended December 31, 2017

Depreciation

Fuel

Amortization Expense, net

and

Interest

Fuel contracts
Foreign currency contracts
Interest rate contracts

Other

(29,721)
—
—

—
(4,077)
—

—
—
(2,997)

The carrying amounts reported in the consolidated balance sheets of all other financial assets and liabilities approximate
fair value.

Long-Term Debt

As of December 31, 2019 and 2018, the fair value of our long-term debt, including the current portion, was $6,957.8
million and $6,601.9 million, respectively, which was $31.3 million higher and $8.4 million lower, respectively, than the
carrying values. The difference between the fair value and carrying value of our long-term debt is due to our fixed and
variable rate debt obligations carrying interest rates that are above or below market rates at the measurement dates.
Market risk associated with our long-term variable rate debt is the potential increase in interest expense from an increase
in interest rates. The fair value of our long-term debt was calculated based on estimated rates for the same or similar
instruments with similar terms and remaining maturities, which represent Level 2 inputs in the fair value hierarchy.

Non-Recurring Measurements of Non-Financial Assets

Goodwill and other indefinite-lived assets, principally tradenames, are reviewed for impairment on an annual basis or
earlier if there is an event or change in circumstances that would indicate that the carrying value of these assets may not
be fully recoverable.

We believe our estimates and judgments with respect to our long-lived assets, principally ships, and goodwill and other
indefinite-lived intangible assets are reasonable. Nonetheless, if there was a material change in assumptions used in the
determination of such fair values or if there is a material change in the conditions or circumstances that influence such
assets, we could be required to record an impairment charge. We estimate fair value based on the best information

F-27

available utilizing estimates, judgments and projections as necessary. As of December 31, 2019, our annual review
supports the carrying value of these assets.

11. Employee Benefits and Share-Based Compensation

Amended and Restated 2013 Performance Incentive Plan

In January 2013, NCLH adopted the 2013 Performance Incentive Plan, which provided for the issuance of up to
15,035,106 of NCLH’s ordinary shares pursuant to awards granted under the plan, with no more than 5,000,000 shares
being granted to one individual in any calendar year. In May 2016, the plan was amended and restated (“Restated 2013
Plan”) pursuant to approval from the Board of Directors and NCLH’s shareholders. Among other things, under the
Restated 2013 Plan, the number of NCLH’s ordinary shares that may be delivered pursuant to all awards granted under
the plan was increased by an additional 12,430,000 shares to a new maximum aggregate limit of 27,465,106 shares.
Additionally, the expiration date of the Restated 2013 Plan was extended to March 30, 2026. Share options under the
plan are granted with an exercise price equal to the closing market price of NCLH shares at the date of grant. The vesting
period for time-based options is typically set at three, four or five years with a contractual life ranging from seven to 10
years. The vesting period for time-based and performance-based restricted share units is generally three years. Forfeited
awards will be available for subsequent awards under the Restated 2013 Plan.

Share Option Awards

There were no time-based share option awards granted for the years ended December 31, 2019, 2018 and 2017 or
performance-based share option awards granted for the year ended December 31, 2019. The performance-based options
awarded to our President and Chief Executive Officer in August 2015 were subject to performance conditions such that
the number of awards that ultimately vested depended on the adjusted earnings per share (“Adjusted EPS”) and adjusted
return on invested capital (“Adjusted ROIC”) achieved by the Company during the performance period compared to
targets established at the award date. Although the terms of the performance-based awards provide the compensation
committee with the discretion to make certain adjustments to the performance calculation, it was determined that a
mutual understanding of the key terms and conditions of the awards had been ascertained. In 2018, the grant date was
therefore established for performance-based awards granted in prior years. The fair value of each performance-based
option award is estimated on the date of grant using the Black-Scholes option-pricing model. The estimated fair value of
the share options is amortized over the requisite service period using the straight-line method. The assumptions used
within the option-pricing model for the performance-based awards are as follows:

Dividend yield
Expected share price volatility
Risk-free interest rate
Expected term

2017
—%

2018
—%
31.50% - 32.20%
2.48% - 2.58%
3.72 - 4.22 years 4.20 years

25.97%
1.81%

Expected volatility was determined based on the historical share prices in our industry. The risk-free rate was based on
U.S. Treasury zero coupon issues with a remaining term equal to the expected option term at grant date. The expected
term was calculated under the simplified method.

F-28

The following table sets forth a summary of option activity under NCLH’s Restated 2013 Plan for the period presented:

Weighted-

Outstanding as of January 1, 2019

Exercised
Forfeited and cancelled

Performance- Market- Time- Performance- Market- Contractual

Weighted-Average Exercise Price Average

Number of Share Option Awards
Time-
Based
Awards
5,686,793
(636,073)
(132,166)

410,499
(138,759)
(156,251)

Based
Awards

Based
Based
Awards Awards

208,333 $ 50.65 $
40.30
56.13

—
—

Based
Awards

Based
Awards
45.67 $ 59.43
—
19.00
—
59.43

Aggregate
Intrinsic
Value
(in thousands)
13,946

Term
(years)

6.22 $

Outstanding as of
December 31, 2019
Vested and expected to vest as of
4,918,554
December 31, 2019
Exercisable as of December 31, 2019 4,917,721

4,918,554

115,489

208,333 $ 51.84 $

59.11 $ 59.43

5.42 $

33,413

115,489
115,489

— $ 51.84 $
— $ 51.84 $

59.11 $
59.11 $

—
—

5.41 $
5.41 $

33,413
33,411

The weighted-average grant-date fair value of performance-based options granted (or where a grant date had not been
previously established, the fair value recognized) during the years ended December 31, 2018 and 2017 was $15.20 and
$8.55, respectively. The total intrinsic value of share options exercised during 2019, 2018 and 2017 was $13.3 million,
$16.7 million and $18.9 million, respectively, and total cash received by the Company from exercises was $28.3 million,
$25.8 million and $27.4 million, respectively. As of December 31, 2019, there was no unrecognized compensation cost,
related to options granted under our share-based incentive plans.

Restricted Ordinary Share Awards

The following is a summary of NCLH’s restricted ordinary share activity for the period presented:

Non-vested as of January 1, 2019

Vested

Non-vested as of December 31, 2019

Restricted Share Unit (“RSU”) Awards

Number of
Time-
Based
Awards

Weighted-
Average Grant
Date Fair Value
58.41
58.41
—

429 $
(429)

— $

On March 1, 2019, NCLH granted to certain employees 1.9 million time-based RSU awards which vest equally over
three years. Also on March 1, 2019, NCLH granted to certain members of our management team 0.5 million
performance-based RSU awards, which vest upon the achievement of certain pre-established performance targets and
which amount assumes the maximum level of achievement.

The fair value of the time-based and performance-based RSUs is equal to the closing market price of NCLH shares at the
date of grant. The performance-based RSUs awarded to certain members of our management team are subject to
performance conditions such that the number of shares that ultimately vest depends on the Adjusted EPS and Adjusted
ROIC achieved by the Company during the performance period compared to targets established at the award date.
Although the terms of the performance-based RSU awards provide the compensation committee with the discretion to
make certain adjustments to the performance calculation, it was determined that a mutual understanding of the key terms
and conditions of the awards has been ascertained. In 2018, the grant date was therefore established for performance-
based RSU awards granted in prior years. The Company remeasures the probability and the cumulative share-based
compensation expense of the awards each reporting period until vesting or forfeiture occurs.

F-29

The following table sets forth a summary of RSU activity for the period presented:

Non-vested as of January 1, 2019

Granted
Vested
Forfeited or expired

Non-vested as of December 31, 2019
Non-vested and expected to vest as of
December 31, 2019

Weighted-

Number of

Number of Weighted-
Time-Based Average Grant Performance- Average Grant
Awards

Weighted-
Average Grant
Date Fair Value Based Awards Date Fair Value Based Awards Date Fair Value
59.43
—
—
—
59.43

2,973,032 $
1,929,495
(1,430,291)
(226,611)
3,245,625 $

825,614 $
462,282 (1)
(121,000)
(37,500)
1,129,396 $

50,000 $
—
—
—
50,000 $

56.58
55.27
56.27
56.27
56.09

53.98
55.00
53.02
55.04
54.94

Number of
Market-

3,245,625 $

54.94

483,976 $

56.61

— $

—

(1) Number of performance-based restricted share units included assumes maximum achievement of performance

targets.

As of December 31, 2019, there was total unrecognized compensation costs related to non-vested time-based, non-vested
performance-based and market-based RSUs of $106.5 million, $9.2 million and $0, respectively. The costs are expected
to be recognized over a weighted-average period of 1.8 years, 1.1 years and 0 years, respectively, for the time-based,
performance-based and market-based RSUs. Taxes paid pursuant to net share settlements in 2019, 2018 and 2017 were
$20.9 million, $13.9 million and $6.3 million, respectively.

Employee Stock Purchase Plan (“ESPP”)

In April 2014, NCLH’s shareholders approved the ESPP. The purpose of the ESPP is to provide eligible employees with
an opportunity to purchase NCLH’s ordinary shares at a favorable price and upon favorable terms in consideration of the
participating employees’ continued services. A maximum of 2,000,000 of NCLH’s ordinary shares may be purchased
under the ESPP. To be eligible to participate in an offering period, on the grant date of that period, an individual must be
customarily employed by the Company or a participating subsidiary for more than twenty hours per week and for more
than five months per calendar year. Participation in the ESPP is also subject to certain limitations. The ESPP is
considered to be compensatory based on: a) the 15% purchase price discount and b) the look-back purchase price
feature. Since the plan is compensatory, compensation expense must be recorded in the consolidated statements of
operations on a straight-line basis over the six-month withholding period. As of December 31, 2019 and 2018, we had a
liability for payroll withholdings received of $2.1 million and $1.9 million, respectively.

The compensation expense recognized for share-based compensation for the periods presented include the following (in
thousands):

Classification of expense
Payroll and related (1)
Marketing, general and administrative (2)
Total share-based compensation expense

Year Ended December 31,
2018

2017

2019

17,597
77,458
95,055

15,629
100,354
115,983

9,455
77,584
87,039

(1) Amounts relate to equity granted to certain of our shipboard officers.
(2) Amounts relate to equity granted to certain of our corporate employees.

Employee Benefit Plans

We offer annual incentive bonuses pursuant to our Restated 2013 Plan for our executive officers and other key
employees. Bonuses under the plan become earned and payable based on the Company’s performance during the
applicable performance period and the individual’s continued employment. Company performance criteria include the
attainment of certain financial targets and other strategic objectives.

Certain employees are employed pursuant to agreements that provide for severance payments. Severance is generally
only payable upon an involuntary termination of the employment by us without cause or a termination by the employee

F-30

for good reason. Severance generally includes a series of cash payments based on the employee’s base salary (and in
some cases, bonus), and our payment of the employee’s continued medical benefits for the applicable severance period.

We maintain a 401(k) Plan for our shoreside employees, including our executive officers. Participants may contribute up
to 100% of eligible compensation each pay period, subject to certain limitations. We make matching contributions equal
to 100% of the first 3% and 50% of amounts greater than 3% to and including 10% of each participant’s contributions
subject to certain limitations. In addition, we may make discretionary supplemental contributions to the 401(k) Plan,
which shall be allocated pro rata to each eligible participant based on the compensation of the participant relative to the
total compensation of all participants. Our matching contributions are vested according to a five-year schedule. The
401(k) Plan is subject to the provisions of ERISA and is intended to be qualified under section 401(a) of the U.S.
Internal Revenue Code (the “Code”).

Our matching contributions are reduced by amounts forfeited by those employees who leave the 401(k) Plan prior to
vesting fully in the matching contributions. Forfeited contributions of $0.2 million, $0.3 million and $0.3 million were
utilized in the years ended December 31, 2019, 2018 and 2017, respectively.

We recorded total expenses related to the above 401(k) Plan of $9.1 million, $9.3 million and $7.3 million for the years
ended December 31, 2019, 2018 and 2017, respectively.

Effective January 2009, we implemented the Shipboard Retirement Plan which computes benefits based on years of
service, subject to eligibility requirements. The Shipboard Retirement Plan is unfunded with no plan assets. The current
portion of the projected benefit obligation of $0.9 million and $1.0 million was included in accrued expenses and other
liabilities as of December 31, 2019 and 2018, respectively, and $27.8 million and $23.3 million was included in other
long-term liabilities in our consolidated balance sheets as of December 31, 2019 and 2018, respectively.

The amounts related to the Shipboard Retirement Plan were as follows (in thousands):

As of or for the Year Ended December 31,
2018

2019

2017

Pension expense:
Service cost
Interest cost
Amortization of prior service cost
Amortization of actuarial loss
Total pension expense
Change in projected benefit obligation:
Projected benefit obligation at beginning of year
Service cost
Interest cost
Actuarial gain (loss)
Direct benefit payments
Projected benefit obligation at end of year
Amounts recognized in the consolidated balance sheets:
Projected benefit obligation

2,135 $
1,001
378
—
3,514 $

2,167 $
857
378
51
3,453 $

1,987
887
378
40
3,292

24,318 $

24,587 $

2,135
1,001
2,308
(1,067)
28,695 $

2,167
857
(2,271)
(1,022)
24,318 $

22,605
1,987
887
458
(1,350)
24,587

28,695 $

24,318 $

24,587

For the Year Ended December 31,
2018

2017

2019

Amounts recognized in accumulated other comprehensive income (loss):
Prior service cost
Accumulated actuarial loss
Accumulated other comprehensive income (loss)

(3,781) $
(3,413)
(7,194) $

(4,159) $
(1,105)
(5,264) $

(4,537)
(3,426)
(7,963)

The discount rates used in the net periodic benefit cost calculation for the years ended December 31, 2019, 2018 and
2017 were 4.2%, 3.6% and 4.0%, respectively, and the actuarial loss is amortized over 18.91 years. The discount rate is

F-31

used to measure and recognize obligations, including adjustments to other comprehensive income (loss), and to
determine expense during the periods. It is determined by using bond indices which reflect yields on a broad maturity
and industry universe of high-quality corporate bonds.

The pension benefits expected to be paid in each of the next five years and in aggregate for the five years thereafter are
as follows (in thousands):

Year
2020
2021
2022
2023
2024
Next five years

12. Income Taxes

Amount

922
949
1,045
1,208
1,340
10,585

We are incorporated in Bermuda. Under current Bermuda law, we are not subject to tax on income and capital gains. We
have received from the Minister of Finance under The Exempted Undertakings Tax Protection Act 1966, as amended, an
assurance that, in the event that Bermuda enacts legislation imposing tax computed on profits, income, any capital asset,
gain or appreciation, or any tax in the nature of estate duty or inheritance, then the imposition of any such tax shall not
be applicable to us or to any of our operations or shares, debentures or other obligations, until March 31, 2035.

The components of net income before income taxes consist of the following (in thousands):

Year Ended December 31,
2018

2017

2019

Bermuda
Foreign - Other

Net income before income taxes

— $

—
770,614
$ 911,365 $ 969,310 $ 770,614

911,365

969,310

— $

The components of the provision for income taxes consisted of the following benefit (expense) (in thousands):

Current:

Bermuda
United States
Foreign - Other

Total current:
Deferred:
Bermuda
United States
Foreign - Other

Total deferred:
Income tax benefit (expense)

Year Ended December 31,
2018

2017

2019

— $

(975)
(6,294)
(7,269)

(7,409)
(5,371)
(12,780)

—
1,828
(4,617)
(2,789)

—
—
—
(8,439)
(1,912)
25,785
486
225
347
(7,953)
(1,687)
26,132
18,863 $ (14,467) $ (10,742)

F-32

Our reconciliation of income tax expense computed by applying our Bermuda statutory rate and reported income tax
benefit (expense) was as follows (in thousands):

Year Ended December 31,
2018

2017

2019

Tax at Bermuda statutory rate
Foreign income taxes at different rates
Tax contingencies
Return to provision adjustments
Benefit (expense) from change in tax rate
Valuation allowance
Income tax benefit (expense)

Deferred tax assets and liabilities were as follows (in thousands):

Deferred tax assets:
Loss carryforwards
Other

Valuation allowance
Total net deferred assets
Deferred tax liabilities:

Property and equipment
Total deferred tax liabilities
Net deferred tax asset (liability)

— $

—
(18,630)
(28,188)
(206)
11,184
2,014
(1,397)
(14)
7,659
—
35,699
18,863 $ (14,467) $ (10,742)

(17,540)
(5)
2,961
117
—

As of December 31,

2019

2018

54,342 $

3,573
(5,847)
52,068

63,201
2,535
(41,924)
23,812

(39,571)
(39,571)
12,497 $

(37,448)
(37,448)
(13,636)

We have U.S. net operating loss carryforwards of $238.8 million and $278.3 million for the years ended
December 31, 2019 and 2018, respectively, which begin to expire in 2031, a portion of which relate to Prestige discussed
further below. We have state net operating loss carryforwards of $3.4 million and $4.8 million for the years ended
December 31, 2019 and 2018, respectively, which expire between 2025 through 2035.

Included above are deferred tax assets associated with our operations in Norway for which we have provided a full
valuation allowance. We have Norway net operating loss carryforwards of $13.3 million and $13.9 million for the years
ended December 31, 2019 and 2018, respectively, which can be carried forward indefinitely.

Included above are deferred tax assets associated with our branch operations in the U.K. for which we have provided a
full valuation allowance. We have U.K. net operating loss carryforwards of $5.5 million and $7.5 million for the years
ended December 31, 2019 and 2018, respectively, which can be carried forward indefinitely.

Included above are deferred tax assets associated with Prestige. We have U.S. net operating loss carryforwards of $145.0
million and $177.5 million for the years ended December 31, 2019 and 2018, respectively, which begin to expire in
2031. Utilization of the Prestige net operating loss carryforwards may be subject to a substantial annual limitation due to
ownership change limitations that have occurred previously and/or that could occur in the future, as provided by
Section 382 of the Internal Revenue Code of 1986 (“Section 382”). Ownership changes may limit the amount of net
operating loss carryforwards that can be utilized to offset future taxable income and tax, respectively. In general, an
ownership change, as defined by Section 382, results from transactions increasing the ownership of certain shareholders
or public groups in the stock of a corporation by more than 50 percentage points over a three-year period. If we have
experienced an ownership change, utilization of Prestige’s net operating loss carryforwards would be subject to an
annual limitation under Section 382. Any limitation may result in expiration of a portion of the net operating loss
carryforwards before utilization. Subsequent ownership changes could further impact the limitation in future years. We
implemented certain tax restructuring strategies that created our ability to utilize the net operating loss carryforwards of
Prestige, for which we had previously provided a full valuation allowance. In March 2019, we completed a Section 382
study that determined the amount of the Prestige net operations loss carryforwards that can be utilized against future

F-33

taxable income resulting in a tax benefit of $35.7 million in connection with the reversal of substantially all of the
Prestige valuation allowance.

In December 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted. Among other provisions, the Act reduces the
U.S. federal corporate tax rate from 35% to 21%. Also in December 2017, the SEC staff issued SAB No. 118, which
addresses the recognition of provisional amounts when a company does not have the necessary information available,
prepared or analyzed (including computations) in reasonable detail to complete its accounting for the effect of the
changes in the Act. The measurement period ends when a company has obtained, prepared and analyzed the information
necessary to finalize its accounting, but cannot extend beyond one year. The Company completed the accounting for the
tax effects of enactment of the Act. There is no material change to the $7.4 million reduction of the value of net deferred
tax liabilities (which represents future tax expenses) recorded in 2017 as a discrete tax benefit resulting from the federal
corporate income tax rate reduction. Other aspects of the Act were either not applicable or did not have a material impact
on the Company’s consolidated financial statements.

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits (in thousands):

Unrecognized tax benefits, beginning of the year
Gross increases in tax positions from prior periods
Unrecognized tax benefits, end of year

As of December 31,

2019

2018

532 $
200
732 $

532
—
532

If the $0.7 million of unrecognized tax benefits at December 31, 2019 were recognized, our effective tax rate would be
minimally affected. We believe that there will not be a significant increase or decrease to the tax positions within
12 months of the reporting date. We recognize interest and penalties related to unrecognized tax benefits in income tax
benefit (expense).

We file income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions and foreign jurisdictions. We
are generally no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by authorities
for years prior to 2016, except for years in which NOLs generated prior to 2016 are utilized.

Due to our international structure as well as the existence of international tax treaties that exempt taxation on certain
activities, the repatriation of earnings from our subsidiaries would have no tax impact.

We derive our income from the international operation of ships. We are engaged in a trade or business in the U.S. and
receive income from sources within the U.S. Under Section 883, certain foreign corporations are exempt from U. S.
federal income or branch profits tax on U.S.-source income derived from or incidental to the international operation of
ships. Applicable U.S. treasury regulations provide that a foreign corporation will qualify for the benefits of Section 883
if, in relevant part: (i) the foreign country in which the corporation is organized grants an equivalent exemption for
income from the international operation of ships to corporations organized in the U.S., and (ii) the foreign corporation
has one or more classes of stock that are “primarily and regularly traded on an established securities market” in the U.S.
or another qualifying country. We believe that we qualify for the benefits of Section 883 because we are incorporated in
qualifying countries and our ordinary shares are primarily and regularly traded on an established securities market in the
U.S.

13. Commitments and Contingencies

Ship Construction Contracts

For the Norwegian Brand, Project Leonardo will introduce an additional six ships, each approximately 140,000 Gross
Tons with approximately 3,300 Berths, with expected delivery dates from 2022 through 2027, subject to certain
conditions. The effectiveness of the contracts to construct two of the ships, expected to be delivered in 2026 and 2027, is
contingent upon certain Italian government approvals. For the Regent brand, we have an Explorer Class Ship, Seven
Seas Splendor, with approximately 55,000 Gross Tons and 750 Berths, which was delivered in January 2020. We refer

F-34

you to Note 18 – “Subsequent Events” for additional information. We have one additional order for an Explorer
Class Ship to be delivered in 2023. For the Oceania Cruises brand, we have orders for two Allura Class Ships to be
delivered in 2022 and 2025, one of which is contingent upon certain Italian government approvals. Each of the Allura
Class Ships will be approximately 67,000 Gross Tons and 1,200 Berths.

The combined contract prices of the 10 ships on order for delivery, including Seven Seas Splendor, which was delivered
in January 2020, was approximately €7.4 billion, or $8.3 billion based on the euro/U.S. dollar exchange rate as of
December 31, 2019.

We have obtained export credit financing for the ships on order which is expected to fund approximately 80% of each
contract price, subject to certain conditions. We do not anticipate any contractual breaches or cancellation to occur.
However, if any such events were to occur, it could result in, among other things, the forfeiture of prior deposits or
payments made by us and potential claims and impairment losses which may materially impact our business, financial
condition and results of operations.

As of December 31, 2019, minimum annual payments for non-cancelable ship construction contracts with initial or
remaining terms in excess of one year were as follows (in thousands):

Year
2020
2021
2022
2023
2024
Thereafter
Total minimum annual payments

Port Facility Commitments

Amount

556,784
279,254
1,595,262
1,439,097
888,790
829,303
5,588,490

As of December 31, 2019, future commitments to pay for usage of certain port facilities were as follows (in thousands):

Year
2020
2021
2022
2023
2024
Thereafter
Total port facility future commitments

Other Commitments

Amount

79,418
67,671
68,049
70,100
75,112
1,726,575
2,086,925

The FMC requires evidence of financial responsibility for those offering transportation on passenger ships operating out
of U.S. ports to indemnify passengers in the event of non-performance of the transportation. Accordingly, each of our
three brands are required to maintain a $32.0 million third-party performance guarantee in respect of liabilities for non-
performance of transportation and other obligations to passengers. The guarantee requirements are subject to additional
consumer price index-based adjustments. Also, our brands have a legal requirement to maintain security guarantees
based on cruise business originated from the U.K., and we are required to establish financial responsibility by certain
jurisdictions to meet liability in the event of non-performance of our obligations to passengers from those jurisdictions.
As of December 31, 2019, approximately British Pound Sterling 41.5 million was in place as security guarantees as well
as a consumer protection policy covering up to €110.0 million.

F-35

Litigation

Helms-Burton Act

On August 27, 2019, two lawsuits were filed against Norwegian Cruise Line Holdings Ltd. in the United States District
Court for the Southern District of Florida under Title III of the Cuban Liberty and Solidarity (Libertad) Act of 1996, also
known as the Helms-Burton Act. The complaint filed by Havana Docks Corporation alleges it holds an interest in the
Havana Cruise Port Terminal and the complaint filed by Javier Garcia-Bengochea alleges that he holds an interest in the
Port of Santiago, Cuba, both of which were expropriated by the Cuban Government. The complaints further allege that
the Company “trafficked” in those properties by embarking and disembarking passengers at these facilities. The
plaintiffs seek all available statutory remedies, including the value of the expropriated property, plus interest, treble
damages, attorneys’ fees and costs. On January 7, 2020, the United States District Court for the Southern District of
Florida dismissed the claim by Havana Docks Corporation. We believe that the plaintiff plans to appeal the order.
Although we believe we have meritorious defenses to the claims and intend to vigorously defend these matters, as of
December 31, 2019, we are unable to reasonably estimate any potential contingent loss from these matters due to a lack
of legal precedence.

Other

14. Other Income (Expense), Net

Other income (expense), net was income of $6.2 million, income of $20.7 million, and expense of $10.4 million for
the years ended December 31, 2019, 2018 and 2017, respectively. In 2019, the income was primarily due to gains from
insurance proceeds and a litigation settlement partially offset by losses on foreign currency exchange. In 2018, the
income was primarily due to foreign currency exchange gains. In 2017, the expense was primarily related to foreign
currency exchange losses.

15. Concentration Risk

We contract with a single vendor to provide many of our hotel and restaurant services including both food and labor
costs. We incurred expenses of $153.6 million, $153.7 million and $152.3 million for the years ended
December 31, 2019, 2018 and 2017, respectively, which are recorded in payroll and related in our consolidated
statements of operations.

16. Supplemental Cash Flow Information

For the year ended December 31, 2019, we had non-cash investing activities related to property and equipment of $8.2
million. For the year ended December 31, 2019, we paid income taxes of $13.4 million and interest and related fees, net
of capitalized interest, of $291.2 million.

F-36

For the year ended December 31, 2018, we had non-cash investing activities related to property and equipment of $39.7
million and net foreign currency adjustments of $5.5 million related to euro-denominated debt related to the financing of
two of our Project Leonardo ships. For the year ended December 31, 2018, we paid income taxes of $10.0 million and
interest and related fees, net of capitalized interest, of $350.4 million.

For the year ended December 31, 2017, we had non-cash investing activities in connection with property and equipment
of $20.0 million and non-cash investing activities related to capital leases of $13.3 million. For the year ended
December 31, 2017, we paid income taxes of $11.7 million and interest and related fees, net of capitalized interest, of
$284.9 million.

17. Quarterly Selected Financial Data (Unaudited) (in thousands, except per share data)

Total revenue
Operating income
Net income
Earnings per share:

Basic
Diluted

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

2019

2018

2019

2018

2019

2018

2019

2018

$ 1,403,630 $ 1,293,403 $ 1,664,277 $ 1,522,174 $ 1,913,851 $ 1,858,356 $ 1,480,618 $ 1,381,193
199,376 $ 209,580
$ 158,296 $ 167,053 $
121,297 $ 154,634
$ 118,157 $ 103,155 $

308,681 $ 292,152 $ 511,724 $ 550,276 $
240,190 $ 226,676 $ 450,584 $ 470,378 $

$
$

0.54 $
0.54 $

0.45 $
0.45 $

1.11 $
1.11 $

1.02 $
1.01 $

2.10 $
2.09 $

2.12 $
2.11 $

0.57 $
0.56 $

0.70
0.70

The seasonality of the North American cruise industry generally results in the greatest demand for cruises during the
Northern Hemisphere’s summer months. This predictable seasonality in demand has resulted in fluctuations in our
revenue and results of operations. The seasonality of our results is increased due to ships being taken out of service for
regularly scheduled Dry-docks, which we typically scheduled during non-peak demand periods.

18. Subsequent Events

In January 2020, we took delivery of Seven Seas Splendor. We had export financing in place for 80% of the contract
price. The associated $426.0 million term loan bears interest at a fixed rate of 3.01% with a maturity date of January 30,
2032. Principal and interest payments are payable semiannually.

In late January 2020, the COVID-19 coronavirus outbreak began impacting the Company’s financial performance and
operations. The Company has begun to experience costs and lost revenue related to itinerary modifications, travel
restrictions and advisories, the unavailability of ports and/or destinations, cancellations and redeployments. The COVID-
19 coronavirus is also impacting consumer sentiment regarding cruise travel generally. Due to the unknown duration and
extent of the outbreak, the full effect on our financial performance cannot be quantified at this time.

F-37

ANNEX

NORWEGIAN CRUISE LINE HOLDINGS LTD.
NON-GAAP RECONCILING INFORMATION
(Unaudited)

Adjusted Net Income and Adjusted EPS were calculated as follows (in thousands, except share and per
share data):

Net income
Non-GAAP Adjustments:
Non-cash deferred compensation (1)
Non-cash share-based compensation (2)
Secondary Equity Offering expenses
Severance payments and other fees (3)
Extinguishment of debt (4)
Amortization of intangible assets (5)
Redeployment of Norwegian Joy (6)
Other
Adjusted Net Income
Diluted weighted-average shares outstanding - Net income and Adjusted Net Income
Diluted earnings per share
Adjusted EPS

Year Ended
December 31,

2019

930,228

3,514
95,055
-
6,514
16,676
18,414
30,629
-

1,101,030
216,475,076
$
4.30
$
5.09

(1) Non-cash deferred compensation expenses related to the crew pension plan and other crew expenses are
included in payroll and related expense and other income (expense), net.
(2) Non-cash share-based compensation expenses related to equity awards are included in marketing, general and
administrative expense and payroll and related expense.
(3) Severance payments related to restructuring costs are included in marketing, general and administrative
expense.
(4) Losses on extinguishments and modifications of debt are included in interest expense, net.
(5) Amortization of intangible assets related to the Acquisition of Prestige are included in depreciation and
amortization expense.
(6) Expenses related to the redeployment of Norwegian Joy from Asia to the U.S. and the closing of the Shanghai
office, which are included in other cruise operating expense, marketing, general and administrative expense and
depreciation and amortization expense.

NORWEGIAN CRUISE LINE HOLDINGS LTD.
NON-GAAP RECONCILING INFORMATION
(Unaudited)

EBITDA and Adjusted EBITDA were calculated as follows (in thousands):

Net income
Interest expense, net
Income tax (benefit) expense
Depreciation and amortization expense
EBITDA

Other (income) expense, net (1)
Non-GAAP Adjustments:
Non-cash deferred compensation (2)
Non-cash share-based compensation (3)
Secondary Equity Offering expenses
Severance payments and other fees (4)
Redeployment of Norwegian Joy (5)
Other
Adjusted EBITDA

Year Ended
December 31,

2019

930,228
272,867
(18,863)
646,188
1,830,420

(6,155)

2,135
95,055
-
6,514
7,051
-

1,935,020

(1) Primarily consists of gains and losses, net for forward currency exchanges and proceeds from insurance and
litigation settlements.
(2) Non-cash deferred compensation expenses related to the crew pension plan and other crew expenses are
included in payroll and related expense.
(3) Non-cash share-based compensation expenses related to equity awards are included in marketing, general and
administrative expense and payroll and related expense.
(4) Severance payments related to restructuring costs are included in marketing, general and administrative
expense.
(5) Expenses related to the redeployment of Norwegian Joy from Asia to the U.S. and the closing of the Shanghai
office, which are included in other cruise operating expense, and marketing, general and administrative expense.

NORWEGIAN CRUISE LINE HOLDINGS LTD.
NON-GAAP RECONCILING INFORMATION
(Unaudited)

Net Leverage was calculated as follows (in thousands):

Long-term debt, net of current portion
Current portion of long-term

Total debt

Less: Cash and cash equivalents

Net Debt

Adjusted EBITDA (1)

Net Leverage

Year Ended
December 31,
2019
6,055,335
746,358
6,801,693
252,876
6,548,817

1,935,020

3.4x

(1) See the reconciliation of Net income to Adjusted EBITDA presented within.

NORWEGIAN CRUISE LINE HOLDINGS LTD.
NON-GAAP RECONCILING INFORMATION
(Unaudited)

Net Yield is calculated as follows (in thousands, except Capacity Days and Yield data):

2012

2013

2014(1)

2015

2016

2017

2018

2019

Year Ended December 31,

1,582,801
$
693,445
2,276,246

1,784,439
$
785,855
2,570,294

2,176,153
$
949,728
3,125,881

3,129,075
$
1,215,973
4,345,048

3,388,954
$
1,485,386
4,874,340

3,750,030
$
1,646,145
5,396,175

4,259,815
$
1,795,311
6,055,126

4,517,393
$
1,944,983
6,462,376

410,531
173,916
$
1,691,799

455,816
195,526
$
1,918,952

503,722
224,000
$
2,398,159

765,298
272,802
$
3,306,948

813,559
298,886
$
3,761,895

894,406
319,293
$
4,182,476

998,948
348,656
$
4,707,522

1,120,886
394,673
$
4,946,817

9,602,730 10,446,216 12,512,459 14,700,990 16,376,063 17,363,422 18,841,678 19,233,459
257.20
$

191.66

176.18

183.70

224.95

229.72

249.85

240.88

Passenger ticket revenue
Onboard and other revenue
Total revenue
Less:
Commissions, transportation
and other expense
Onboard and other expense
Net Revenue

Capacity Days
Net Yield

(1) The consolidated financial statements as of and for the year ended December 31, 2014 include the financial results of Prestige
commencing on November 19, 2014, the date the Acquisition of Prestige was consummated.

NORWEGIAN CRUISE LINE HOLDINGS LTD.
NON-GAAP RECONCILING INFORMATION
(Unaudited)

Net Ticket Yield was calculated as follows (in thousands, except Capacity Days and Yield data)

Passenger ticket revenue

Less:
Commissions, transportation and other expense

Net Ticket Revenue

Capacity Days

Net Ticket Yield

Year Ended
December 31,
2019
4,517,393

1,120,886
3,396,507

19,233,459

176.59

Net Onboard Yield was calculated as follows (in thousands, except Capacity Days and Yield data)

Onboard and other revenue

Less:
Onboard and other expense
Net Onboard Revenue

Capacity Days

Net Onboard Yield

Year Ended
December 31,
2019
1,944,983

394,673
1,550,310

19,233,459

80.60

GET EXCLUSIVE PERKS.

NORWEGIAN CRUISE LINE HOLDINGS LTD. IS THRILLED TO OFFER
OUR SHAREHOLDERS THE FOLLOWING BENEFITS:

$250 Onboard Credit per Stateroom on Sailings of 15 Days or More.
$100 Onboard Credit per Stateroom on Sailings of 7 to 14 Days.
$50 Onboard Credit per Stateroom on Sailings of 6 Days or Less.

This exclusive benefit is reserved solely for shareholders owning a minimum of 100 shares of
Norwegian Cruise Line Holdings Ltd. at time of sailing. Offer valid for any vacation on Norwegian Cruise Line®,
Oceania Cruises® or Regent Seven Seas Cruises®, excluding charter sailings. Additional terms and
conditions may apply.* To redeem this special offer, simply complete the attached Shareholder Benefit
Request Form and mail or email (with accompanying documentation) request at least 15 days prior to
sailing to:

Mailing Address:
Norwegian Cruise Line
Shareholder Benefit Department
7665 Corporate Center Drive
Miami, FL 33126

Email:
ShareholderBenefit@ncl.com

To learn more about
Norwegian Cruise Line
visit www.ncl.com

Mailing Address:
Oceania Cruises
Shareholder Benefit Department
7665 Corporate Center Drive
Miami, FL 33126

Email:
ShareholderBenefit@
oceaniacruises.com

To learn more about
Oceania Cruises
visit www.oceaniacruises.com

Mailing Address:
Regent Seven Seas Cruises
Shareholder Benefit Department
1401 NW 136th Avenue, Suite 101
Sunrise, FL 33323

Email:
ShareholderBenefit@RSSC.com

To learn more about
Regent Seven Seas Cruises
visit www.rssc.com

*Credit is applied on a per stateroom/suite basis. There can only be one credit per shareholder reservation on any one sailing. If you are requesting shareholder onboard credit for two or more separate staterooms/
suites and shares are held jointly, a minimum of 100 shares per stateroom/suite booked must be held. Singles paying 200% are entitled to full onboard credit value. Any unused credit shall be forfeited and is not
redeemable for cash. Benefit is non-transferable, excludes Reduced Rate programs (e.g. employee rates, interline, friends /family rates, vendor rates, cruises taken via cruise credit certificate, or free cruises
earned through Oceania Cruises loyalty benefits), and travel agent rates, and charters. All shareholder benefit requests must be received at least fifteen days prior to sailing date. The Shareholder must own the
Norwegian Cruise Line Holdings Ltd. stock at time of sailing. Offer is valid only for new reservations made on or after January 7, 2019. It may not be used toward onboard service charges or pre-purchased activities.
Government taxes and fees are additional. Norwegian Cruise Line, Oceania Cruises, and/or Regent Seven Seas Cruises reserve the right to change or withdraw the offer at any time without notice, and are not
responsible for typographical errors or omissions. Other terms and conditions may apply. Offer and combinability with other promotional offers is subject to change at any time per Norwegian Cruise Line, Oceania
Cruises, and/or Regent Seven Seas Cruises discretion. Other terms, restrictions, and conditions may apply. Not applicable to Chartered Dates and incentive Group Types.

Norwegian Cruise Line Job Name: 22520_Shareholder Benefit Flyer Update_V7 Location: Design2:Corporate:22520 NCLH Shareholder Benefit Flyer:22520_Shareholder Benefit Flyer Update_V7

Trim: 8.5" x 11" Bleed: .125" Safety: 0 Color: 4C Vendor: TBD Paper Stock: TBD Quantity: TBD Special Instructions:

Mech Number: 1 Mech Artist: BW Date: November 19, 2014 1:36 PM Due: TBD Current Page Number: TBD

SHAREHOLDER BENEFIT REQUEST FORM
SHAREHOLDER BENEFIT REQUEST FORM

NAME: DATE

(Owner of the 100 shares will receive the onboard credit)

SHIP:

SAILING DATE: RESERVATION #:

HOME ADDRESS:

CITY: STATE: ZIP:

PHONE #: E-MAIL:

Enclosed is the following proof of ownership documentation required to receive shareholder benefit offer:

0 A photocopy of your shareholder proxy card

0 A current brokerage statement (brokerage account number must be blacked out before submitting)

showing proof of ownership of at least 100 shares of Norwegian Cruise Line Holdings Ltd.

I, , hereby certify that the above information is accurate.

(Print name)

Signature:

Please submit Shareholder Benefit Request Form along with proof of ownership by mail or email to:

Mailing Address:
Norwegian Cruise Line
Shareholder Benefit Department
7665 Corporate Center Drive
Mailing Address:
Miami, FL 33126
Norwegian Cruise Line
Shareholder Benefit Department
Email:
7665 Corporate Center Drive
ShareholderBenefit@ncl.com
Miami, FL 33126
To learn more about
Email:
Norwegian Cruise Line®
ShareholderBenefit@ncl.com
visit www.ncl.com

To learn more about
Norwegian Cruise Line
visit www.ncl.com

Mailing Address:
Oceania Cruises
Shareholder Benefit Department
Mailing Address:
8300 NW 33rd Street
Oceania Cruises
Suite 100
Shareholder Benefit Department
Miami, FL 33122
7665 Corporate Center Drive
Miami, FL 33126

Email:
ShareholderBenefit
@oceaniacruises.com

Email:
ShareholderBenefit@
oceaniacruises.com

To learn more about
Oceania Cruises®
visit www.oceaniacruises.com

To learn more about
Oceania Cruises
visit www.oceaniacruises.com

Mailing Address:
Regent Seven Seas Cruises
Shareholder Benefit Department
8300 NW 33rd Street
Suite 100
Miami, FL 33122

Mailing Address:
Regent Seven Seas Cruises
Shareholder Benefit Department
1401 NW 136th Avenue, Suite 101
Sunrise, FL 33323

Email:
ShareholderBenefit@RSSC.com

Email:
To learn more about
ShareholderBenefit@RSSC.com
Regent Seven Seas Cruises®
visit www.rssc.com

To learn more about
Regent Seven Seas Cruises
visit www.rssc.com

22520 10/14

SHAREHOLDER BENEFIT FREQUENTLY ASKED QUESTIONS

1. What is the shareholder benefit?

$250 Onboard Credit per Stateroom on Sailings of 15 Days or More.
$100 Onboard Credit per Stateroom on Sailings of 7 to 14 Days.
$50 Onboard Credit per Stateroom on Sailings of 6 Days or Less.

Offer valid for any cruise vacation on Norwegian Cruise Line®, Oceania Cruises® or Regent
Seven Seas Cruises®, excluding charter sailings. Additional terms and conditions apply.

2. Who is eligible for this benefit?

This exclusive benefit is reserved solely for shareholders owning a minimum of 100 shares
of Norwegian Cruise Line Holdings Ltd. (NCLH) at the time of sailing.

3. How do I redeem this benefit?

To redeem this exclusive offer, simply complete the Shareholder Benefit Request Form
which is available on the Investor Relations website at www.nclhltdinvestor.com and mail
or email with accompanying documentation. You will be asked to provide your name,
address, email address, telephone number, ship and sailing date along with a photocopy
of your shareholder proxy card or photocopy of a current brokerage statement (brokerage
account number must be blacked out before submitting) showing proof of ownership of
at least 100 shares of Norwegian Cruise Line Holdings Ltd. (NCLH). All shareholder benefit
requests must be received at least fifteen days prior to sailing date.

Please submit the Shareholder Benefit Request Form along with proof of ownership by
mail or email to:

Mailing Address:
Norwegian Cruise Line
Shareholder Benefit Department
7665 Corporate Center Drive
Miami, FL 33126

Email:
ShareholderBenefit@ncl.com

To learn more about
Norwegian Cruise Line
visit www.ncl.com

Mailing Address:
Oceania Cruises
Shareholder Benefit Department
7665 Corporate Center Drive
Miami, FL 33126

Email:
ShareholderBenefit@
oceaniacruises.com

To learn more about
Oceania Cruises
visit www.oceaniacruises.com

4. How often can I use this benefit?

Mailing Address:
Regent Seven Seas Cruises
Shareholder Benefit Department
1401 NW 136th Avenue, Suite 101
Sunrise, FL 33323

Email:
ShareholderBenefit@RSSC.com

To learn more about
Regent Seven Seas Cruises
visit www.rssc.com

You may request this exclusive benefit every time you cruise on Norwegian Cruise Line,
Oceania Cruises, or Regent Seven Seas Cruises vacation, excluding any charter sailings.
Additional terms and conditions may apply.

SHAREHOLDER BENEFIT FREQUENTLY ASKED QUESTIONS (continued)

5. Can my family or friends sailing with me redeem the benefit too?

This exclusive benefit is only available for the stateroom in which the shareholder (with
a minimum of 100 shares) is sailing. Onboard credit is applied on a per stateroom basis,
double occupancy. Only one shareholder credit per stateroom/suite on any one sailing.
if you are requesting shareholder onboard credit for two or more separate staterooms/
suites and shares are held jointly, a minimum of 100 shares per stateroom/suite booked
must be held. Singles paying 200% are entitled to full onboard credit value.

6. Is this benefit transferrable?

No. This benefit is non-transferable. Only the stateroom that the shareholder is occupying
will be eligible for the onboard credit.

7. Are there any restrictions?

The Shareholder must own Norwegian Cruise Line Holdings Ltd. (NCLH) stock at the time
of sailing. Benefit is not combinable with any other offer. Shareholders have the option
to choose between the shareholder benefit or the other offer. Benefit is non-transferable
and not available to employees, agents of Norwegian Cruise Line Holdings Ltd. or it
subsidiaries and affiliates, travel agents and tour operators. Onboard credit is calculated
in U.S. dollars and is not redeemable for cash. Certificate value credited to onboard
account at the time of sailing and may not be used toward onboard service charges or
pre-purchased activities. Any unused credit shall be forfeited. Credit is applied on a per
stateroom basis; double occupancy. Single guests paying 200% of applicable fare shall
receive full value of certificate. Only one shareholder credit per stateroom. Only one credit
per shareholder on any one sailing. If you are requesting shareholder onboard credit for
two or more separate staterooms and shares are held jointly, a minimum of 100 shares per
stateroom booked must be held. Other terms and conditions apply.

SHAREHOLDER INFORMATION

CORPORATE OFFICE
Norwegian Cruise Line Holdings Ltd.
7665 Corporate Center Drive
Miami, Florida 33126
USA
(305) 436-4000
www.nclhltd.com

INDEPENDENT PRINCIPAL
AUDITOR
PricewaterhouseCoopers LLP
333 SE 2nd Avenue
Suite 3000
Miami, Florida 33131

TRANSFER AGENT & REGISTRAR
American Stock Transfer &
Trust Company, LLC
6201 15th Avenue
Brooklyn, New York 11219
www.astfinancial.com

INVESTOR INQUIRIES
To access or obtain financial reports,
please visit our Investor Relations website
at www.nclhltdinvestor.com, write to our
Investor Relations Department at our
corporate office or at
investorrelations@nclcorp.com
or call (305) 468-2339

STOCK EXCHANGE INFORMATION
New York Stock Exchange
Symbol: NCLH

ANNUAL MEETING
The annual meeting of shareholders will take
place on Thursday, June 18, 2020, at
9:00 a.m. Eastern Time at PULLMAN HOTEL,
5800 Blue Lagoon Drive, Miami, Florida 33126

EXECUTIVE TEAM

BOARD OF DIRECTORS

N O RW E G I A N C R U I S E L I N E
H O L D I N G S LT D.

FRANK J. DEL RIO
President and Chief Executive Officer

MARK A. KEMPA
Executive Vice President and
Chief Financial Officer

ROBIN LINDSAY
Executive Vice President,

Vessel Operations

DANIEL S. FARKAS
Executive Vice President,

General Counsel and Assistant Secretary

FAYE L. ASHBY
Senior Vice President and

Chief Accounting Officer

N O RW E G I A N C R U I S E L I N E

HARRY SOMMER
President and Chief Executive Officer

O C E A N I A C R U I S E S

ROBERT J. BINDER
President and Chief Executive Officer

Vice Chairman, Oceania Cruises and
Regent Seven Seas Cruises

REGENT SEVEN SEAS CRUISES

JASON MONTAGUE
President and Chief Executive Officer

N O RW E G I A N C R U I S E L I N E H O L D I N G S LT D.

RUSSELL W.
GALBUT
Chairman of
the Board

Managing Principal,
Crescent Heights

FRANK J.
DEL RIO
President and Chief
Executive Officer,

Norwegian Cruise
Line Holdings Ltd.

DAVID M.
ABRAMS
Chief Investment
Officer,

Harris Blitzer Sports
and Entertainment

ADAM M.
ARON
Chief Executive
Officer and
President,

AMC
Entertainment
Holdings, Inc.

JOHN W.
CHIDSEY
Chief Executive
Officer,

Subway
Restaurants

STELLA DAVID
Former Chief
Executive Officer,

William Grant & Sons
Limited

MARY E.
LANDRY
Rear Admiral,
U.S. Coast Guard,
Retired

CHAD A. LEAT
Former Vice Chairman
of Global Banking,

Citigroup Inc.

STEVE
MARTINEZ
Senior Partner,
Private Equity
and Head of Asia
Pacific,

Apollo Global
Management, LLC

PAMELA
THOMAS-
GRAHAM
Former Chief
Marketing and Talent
Officer,

Credit Suisse Group
AG

NORWEGIAN CRUISE LINE HOLDINGS LTD. | 7665 CORPORATE CENTER DRIVE | MIAMI, FL 33126