2 0 2 2 A N N U A L R E P O R T
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
fl eet of 30 ships and over 61,000 berths, these brands
offer itineraries to more than 500 destinations
worldwide. The Company has seven additional ships
on order for its three award-winning brands.
MISSION
To provide exceptional vacation
experiences, delivered by passionate
team members committed to
world-class hospitality and innovation
VISION
To be the vacation of choice for
everyone around the world
Flawless Execution
Dedication to Family and Community
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 56 years.
Most notably, the cruise line revolutionized the industry by offering
guests the freedom and fl exibility to design their ideal vacation on
their preferred schedule with no assigned dining and entertainment
times and no formal dress codes. Today, its fl eet of 18 contemporary
ships sails to nearly 400 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 seven small, luxurious ships carry a
maximum of 1,238 guests and feature the fi nest cuisine at sea and
destination-rich itineraries that span the globe. Expertly curated
travel experiences aboard the designer-inspired, small ships call
on more than 600 marquee and boutique ports in more than 100
countries on 7 continents on voyages that range from 7 to more than
200 days. The brand has a second 1,200-guest Allura Class ship on
order for delivery in 2025.
Regent Seven Seas Cruises is the leader in luxury cruise experiences,
delivering An Unrivaled Experience® for over 30 years. Carrying between
496 to 746 guests, Seven Seas Navigator®, Seven Seas Mariner®,
Seven Seas Voyager®, Seven Seas Explorer®, Seven Seas Splendor®
and — arriving in 2023 — Seven Seas Grandeur™ form The World’s
Most Luxurious Fleet™. Offering Unrivaled Space at Sea™, guests enjoy
all-suite accommodations, 99% with private balconies that are among
the largest at sea, as well as highly personalized service throughout
lavish public areas and expansive outdoor spaces. Unique to Regent
Seven Seas Cruises, unlimited complimentary shore excursions are
available in every port, which is just the beginning of an extensive list
of included luxuries — from round-trip air and gourmet cuisine to
unlimited WiFi and valet laundry service — that make it the only truly
all-inclusive cruise line.
Norwegian Prima, Miami, Florida
Riviera, Valletta, Malta
Seven Seas Splendor®, Miami, Florida
D E A R F E L L O W
S H A R E H O L D E R S ,
2022 was a year of many significant milestones and accomplishments for Norwegian Cruise Line
Holdings Ltd. Our entire fleet successfully returned to service, capping our nearly yearlong Great Cruise
Comeback. We christened the highly anticipated Norwegian Prima, the first of six Prima Class ships to
be delivered through 2028. We advanced our Sail & Sustain program by announcing our commitment
to pursue net zero greenhouse gas emissions by 2050. We achieved key financial milestones and made
meaningful progress on our post-pandemic financial recovery including through additional balance
sheet optimization transactions. Lastly, we ended the year with a record booked position for 2023,
positioning the Company for a promising year ahead.
These accomplishments are even more impressive when considering the unexpected obstacles and
challenges we faced, from supply chain constraints to the conflict in Ukraine to rising inflation and
fears about an impending recession. Through each challenge, we have continued to demonstrate
our resilience. Our ability to quickly adapt and find solutions to the unexpected is a testament to our
talented, passionate and innovative shipboard and shoreside teams worldwide.
Looking ahead to 2023, we are focused on capitalizing on the robust demand for our three award-
winning brands, executing on our medium- and long-term financial recovery strategy and positioning
our Company for long-term sustainable success. We are also excited for the transformational growth
we have in store and are preparing to welcome three new ships to our world-class fleet in 2023:
Norwegian Viva, Oceania Cruises’ Vista and Regent’s Seven Seas Grandeur™.1
1 Statements in this letter regarding, among other things, financial performance, our future investments and fleet additions are forward-looking. See “Cautionary Statement Concerning
Forward-Looking Statements” in this Annual Report regarding the risks related to these statements.
G R E A T C R U I S E
C O M E B A C K
In May 2022, we became the first major cruise operator to
return our entire fleet back to service. This was a herculean
effort which began in July 2021 after an unprecedented
500 days on the sidelines during the pandemic.
We were disciplined and methodical
with our phased voyage resumption
to ensure we prioritized the health
and safety of our guests, crew and
communities we visit, protected
our long-term brand equity and
industry-leading pricing and delivered
exceptional service to our guests as
they rediscovered why cruising on
our three brands provides the best
vacation experience on land or at sea.
The completion of this 10-month-long
process was no small feat and could
not have been possible without
the unwavering support of our
loyal guests, valued travel partners,
suppliers, financial partners and all
of our key stakeholders. Even more
impressive was our team’s ability
to drive some of the highest guest
satisfaction scores, ticket revenue
and onboard spend in our history
during this challenging period. I thank
each and every team member across
our organization, from shipboard to
shoreside, for all of their efforts to
successfully complete our Great Cruise
Comeback and position our company
to thrive in the years to come.
W O R L D - C L A S S N O R W E G I A N
P R I M A J O I N S F L E E T
Our newest ship, Norwegian Prima, was welcomed into the Norwegian Cruise Line
fl eet in July 2022, the fi rst of six ships in the game-changing Prima Class.
Upon its sales debut, Norwegian Prima became the most in-demand ship in the cruise line’s history, with record
bookings on the fi rst day and week of sales, doubling the previous record held by Norwegian Bliss.
Norwegian Prima also made history as the fi rst major cruise ship christened in Reykjavík, Iceland, debuting to
more than 2,500 guests who enjoyed an immersive experience in the beautiful Icelandic capital and a christening
celebration like no other, which included a performance from her Godmother, pop sensation Katy Perry.
With capacity for 3,100 guests, Norwegian Prima offers the highest staffi ng levels and space ratio of any
contemporary-category cruise ship. She boasts the largest variety of suite categories available at sea as well as a
redefi ned The Haven by Norwegian®, the line’s ultra-premium ship-within-a-ship concept. Onboard recreational
activities, including the fastest slides at sea — The Rush and The Drop — and the Prima Speedway, provide guests
with adrenaline-pumping moments. Spaces like Ocean Boulevard; The Concourse, which boasts a multimillion-dollar
outdoor sculpture garden; and expansive pool decks and infi nity-style pools at Infi nity Beach offer guests a chance
to sit back and relax.
Norwegian Prima, Miami, Florida
“Art of Iceland” Evening at Harpa Cultural Center, Reykjavík, Iceland
Frank Del Rio, Katy Perry, Harry Sommer and Elvis Duran, Reykjavík, Iceland
Norwegian Prima Inaugural, Galveston, Texas
Oceania Vista, Norway
A T T R A C T I V E
G R O W T H P R O F I L E
We are excited to deliver on our industry-leading growth profi le of seven
additional world-class ships for delivery through 2028.
Our new capacity will grow our fl eet by approximately 50% compared to 2019, adding over 20,000
berths across our three brands. These ships will enhance the premium cabin mix of our fl eet, provide
additional streams for onboard revenue generation with new and innovative experiences and improve
operating effi ciency versus our existing fl eet. The excitement and “buzz” around each new ship’s
delivery is also a signifi cant demand driver with a halo effect for the existing fl eet. We have historically
demonstrated our success in not only absorbing capacity, but also translating it into outsized revenue,
Adjusted EBITDA2 and operating cash fl ow growth that signifi cantly outpace the growth in capacity.
We expect to continue this trend and drive meaningful growth to the top and bottom lines with the
addition of this exciting new capacity.
Seven Seas Grandeur™ Float Out Ceremony, Ancona, Italy
Norwegian Viva, Italy
Oceania Cruises, the world’s leading culinary- and destination-focused cruise line, will be debuting its new ship
Vista to the fl eet in Spring 2023, marking the fi rst newbuild addition to the brand’s fl eet in over a decade. Vista
is the fi rst of two 1,200-guest next-generation Allura Class ships and will depart on her inaugural voyage from
Rome, Italy. Vista set a new all-time single-day booking record for the brand with her sales debut, and all of her
maiden season voyages have now been sold out or waitlisted. Oceania Cruises’ second ship, Allura, is scheduled
to debut in Spring 2025.
Regent Seven Seas Cruises, the world’s leading luxury ocean cruise line, will debut Seven Seas Grandeur™ in late
2023. Inspired by Regent’s heritage of perfection, Grandeur will harmonize elegance, comfort, unrivaled space,
unparalleled service, exceptional cuisine and transformative experiences that will continue to delight our guests
for years to come. She will be the last in a trio of luxury Explorer-class ships for the brand.
Mirroring the upscale design and structure of her record-breaking sister ship Norwegian Prima, Norwegian Viva
will debut in summer 2023 with a capacity of 3,100 guests. The remaining four larger Prima Class vessels are
scheduled for delivery through 2028.
2 Adjusted EBITDA is a non-GAAP fi nancial measure. A reconciliation to the most directly comparable GAAP fi nancial measure and other associated disclosures are contained in “Management’s Discussion and Analysis
of Financial Condition and Results of Operation.
C O M M I T M E N T
T O E S G I N I T I A T I V E S
While we are focused on our operational and fi nancial recovery from the pandemic,
we are also more focused now than ever on driving a positive impact on society and
the environment through our global sustainability program, Sail & Sustain.
Harry Sommer and Kelly Clarkson with the Giving Joy winners
Reducing
Environmental
Impact
Sailing
Safely
Empowering
People
Strengthening
Communities
Operating with
Integrity and
Accountability
NCL Australia beach cleanup
In 2022, we continued to enhance our disclosures
within our Environmental, Social and Governance
(ESG) Report and inaugural Task Force on Climate-
Related Financial Disclosures (TCFD) Report.
In April 2022, we announced our commitment to
pursue net zero greenhouse gas emissions by 2050,
which will truly be one of the most defi ning voyages
our Company will ever embark on. Our net zero
ambition spans across not only our operations but also
our entire value chain as we aim to bring key partners,
including our vast network of global suppliers and
approximately 39,000 team members, along with us
on this transformational journey. Our Compensation
Committee further doubled down on this commitment
by including an ESG metric tied to our progress on
setting greenhouse gas reduction targets as part of our
2022 short-term management incentive compensation
plan, an important step toward shared accountability
for this critical effort within the Company.
Getting to net zero will be complex, requiring
signifi cant innovation, investment and collaboration
with partners such as shipyards, engine manufacturers
and classifi cation societies to accelerate the technological
advancement needed to get us to this goal, but we are
committed to doing our part in this shared global effort.
Earlier this year, we took an important and exciting step
toward net zero with modifi cation of the fi nal
two Prima Class ships, expected to be delivered
in 2027 and 2028, to reconfi gure the ships to
accommodate the use of green methanol. We also
signed a Memorandum of Understanding with our
long-time partner MAN Energy Solutions to assess
the feasibility of retrofi tting a MAN engine to operate
with dual-fuels, diesel and methanol. In addition,
we have successfully completed tests on several of
our ships using biofuel blends supplied by our partner
World Fuel Services. We will continue to evaluate and
explore opportunities to accelerate our decarbonization
efforts and support our path to net zero.
We also believe it is our responsibility to contribute
to the communities around the world where we live,
work, visit and serve. In 2022, we pledged $100,000
to Save the Children’s Ukraine Crisis Relief Fund,
contributed over $100,000 to the American Red
Cross to assist in Hurricane Ian relief efforts and
$100,000 to Belize to assist in Hurricane Lisa relief
efforts, launched our first-ever Military Appreciation
Program at Norwegian Cruise Line to recognize active
and retired U.S. military members and rewarded
hardworking educators with Norwegian’s Giving Joy
program. We also continue to offer all of our U.S.
shoreside team member employees a Paid Volunteer
Day to further reinforce our commitment to giving
back to our communities.
As we continue our ESG journey, we are committed to
being responsible corporate citizens and ESG leaders
which we believe go hand in hand with delivering
long-term value for all of our stakeholders.
I N V E S T I N G
I N T H E F U T U R E
We continue to focus on enhancing and elevating the
guest experience through enriched destination experiences,
meaningful ship enhancements, infrastructure development
and technological innovation.
We continue to strategically strengthen our foothold
in the premium Alaska market, a destination which
anchors one of the most popular itineraries for our
guests. In 2022, we announced the signing of a
Memorandum of Agreement to develop berthing and
upland facilities in Whittier, Alaska, in partnership with
the Huna Totem Corporation, one of the most successful
Native village corporations in Alaska. This development
project will consist of a marine vessel docking facility
able to berth vessels from our three brands, along with
related structures including a cruise ship terminal, as
well as facilities for rail and bus access. We also donated
undeveloped waterfront property in Juneau to Huna
Totem Corporation for new pier development and a
welcome center. Once development is complete, we will
receive preferential berthing at the pier.
Revitalizing and elevating our existing fl eet also remains
a key priority for us. As part of OceaniaNEXT, we are
undergoing a stem-to-stern re-inspiration of both
Riviera and Marina. Riviera debuted better than new
in December 2022 with Marina expected to follow in
November 2024. Every suite and stateroom will be
entirely new and public spaces will be refreshed.
Our two private island destinations are also tremendous
assets with further opportunity for development. Our
private island oasis at Great Stirrup Cay, Bahamas, is
a highlight of our Eastern Caribbean and Bahamas
itineraries. We are also the only major cruise operator
to have a private resort destination in the Western
Caribbean with Harvest Caye in southern Belize.
Penthouse Suite, Oceania Riviera
Great Stirrup Cay, Bahamas
Norwegian Prima
L O O K I N G A H E A D
2023 will mark a transition both at the Company and for me personally. In March, I announced that I will be
retiring and stepping down as President and CEO of Norwegian Cruise Line Holdings effective June 30, 2023.
It has been an extraordinary privilege and honor to lead fi rst the Oceania Cruises’ team since its founding in 2002,
then the combined Oceania Cruises and Regent Seven Seas Cruises’ team at Prestige Cruise Holdings and fi nally
the broader Norwegian Cruise Line Holdings team since 2015. This has been in the works for some time, and our
deep and talented executive team along with our Board of Directors has been preparing for months to ensure a
seamless transition.
Harry Sommer, a long-time cruise industry veteran who led our largest brand, Norwegian Cruise Line, will succeed
me as President and CEO of NCLH. Having worked with Harry for decades, I can confi dently say the Company is
in very good hands. Harry is one of the most talented, intelligent and hardest-working people I have come across
during my career, and I have no doubt that he, along with the rest of the executive team, will take this world-class
organization to new heights.
As we look to the future, our entire team is mobilized, energized and ready to execute fl awlessly. While the
macroeconomic environment remains more uncertain than usual, we are an extremely resilient company, as is
our industry, and we are ready to adapt and pivot, as needed. We will continue to be disciplined and strategic as
we work to set our company up for long-term success and maximize value for all stakeholders.
As always, thank you for your continued support.
Frank Del Rio
President and Chief Executive Offi cer
Norwegian Cruise Line Holdings Ltd.
NORWEGIAN CRUISE LINE
FLEET
NORWEGIAN PRIMA PLUS CLASS III-VI – Coming 2025-2028
NORWEGIAN VIVA – Coming Summer 2023
NORWEGIAN PRIMA
NORWEGIAN ENCORE
NORWEGIAN BLISS
NORWEGIAN JOY
NORWEGIAN ESCAPE
NORWEGIAN GETAWAY
NORWEGIAN BREAKAWAY
NORWEGIAN EPIC
NORWEGIAN CRUISE LINE
FLEET
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
SEVEN SEAS GRANDEURTM – Coming November 2023
SEVEN SEAS SPLENDOR®
SEVEN SEAS EXPLORER®
SEVEN SEAS VOYAGER®
SEVEN SEAS MARINER®
SEVEN SEAS NAVIGATOR®
Regent Suite, Seven Seas Grandeur™
OCEANIA CRUISES
FLEET
VISTA – Coming April 2023
ALLURA – Coming 2025
RIVIERA
MARINA
SIRENA
NAUTICA
REGATTA
INSIGNIA
Grand Dining Room, Vista
©2023 NORWEGIAN CRUISE LINE HOLDINGS LTD. SHIPS’ REGISTRY: BAHAMAS, MARSHALL ISLANDS AND USA 736224 4/23
THIS PAGE INTENTIONALLY LEFT BLANK
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, 2022
OR
☐ 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing
reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by
any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).
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 30, 2022, 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 $4.6 billion.
There were 421,929,861 ordinary shares outstanding as of February 16, 2023.
Documents Incorporated by Reference
Portions of the Proxy Statement for the registrant’s 2023 Annual General Meeting of Shareholders, to be filed with the Securities and Exchange Commission not
later than 120 days after December 31, 2022, 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
[Reserved]
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
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
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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82
83
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, and (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).
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, “British Pound Sterling” or “£” are to the official currency of the U.K. and “euros” or “€”
are to the official currency of the Eurozone.
This annual report includes certain non-GAAP financial measures, such as Adjusted Gross Margin, Net Cruise Cost,
Adjusted Net Cruise Cost Excluding Fuel, Adjusted EBITDA, Adjusted Net Loss 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:
•
•
2024 Senior Secured Notes. On May 14, 2020, pursuant to an indenture among NCLC, as issuer, the
guarantors party thereto, and U.S. Bank National Association, as trustee and security agent, NCLC issued
$675.0 million aggregate principal amount of 12.25% senior secured notes due 2024. All of the outstanding
2024 Senior Secured Notes were redeemed in February 2022.
2026 Senior Secured Notes. On July 21, 2020, pursuant to an indenture among NCLC, as issuer, the
guarantors party thereto, and U.S. Bank National Association, as trustee and security agent, NCLC issued
$750.0 million aggregate principal amount of 10.25% senior secured notes due 2026. All of the outstanding
2026 Senior Secured Notes were redeemed in February 2022.
• 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 Loss divided by the number of diluted weighted-average shares outstanding.
• Adjusted Gross Margin. Gross margin adjusted for payroll and related, fuel, food, other and ship
depreciation. Gross margin is calculated pursuant to GAAP as total revenue less total cruise operating
expense and ship depreciation.
• Adjusted Net Cruise Cost Excluding Fuel. Net Cruise Cost Excluding Fuel adjusted for supplemental
adjustments.
• Adjusted Net Loss. Net loss adjusted for supplemental adjustments.
• Allura Class Ships. Oceania Cruises’ Vista and Oceania Cruises’ Allura.
3
• 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. Berths available for sale multiplied by the number of cruise days for the period for ships in
service.
• CDC. The U.S. Centers for Disease Control and Prevention.
• 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. Loss per share.
• Explorer Class Ships. Regent’s Seven Seas Explorer, Seven Seas Splendor, and Seven Seas Grandeur.
• 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.
•
•
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.
• Occupancy or 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.
• Prima Class Ships. Norwegian Prima, Norwegian Viva and four additional ships on order.
4
• Private Exchangeable Notes. On May 28, 2020, pursuant to an indenture among NCLC, as issuer, NCLH,
as guarantor, and U.S. Bank National Association, as trustee, NCLC issued $400.0 million aggregate
principal amount of exchangeable senior notes due 2026. The Private Exchangeable Notes were
repurchased in March 2021.
• Revolving Loan Facility. $875.0 million senior secured revolving credit facility.
•
•
SEC. U.S. Securities and Exchange Commission.
Senior Secured Credit Facility. The Credit Agreement, originally dated as of May 24, 2013, as amended
and restated on October 31, 2014, June 6, 2016, October 10, 2017, January 2, 2019 and May 8, 2020, and
as further amended on January 29, 2021, March 25, 2021, November 12, 2021 and December 6, 2022, by
and among NCLC and Voyager Vessel Company, LLC, as co-borrowers, JPMorgan Chase Bank, N.A., as
administrative agent and as collateral agent, and various lenders and agents, providing for a senior secured
credit facility consisting of (i) the Revolving Loan Facility and (ii) the Term Loan A Facility.
•
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.
• Term Loan A Facility. The senior secured term loan A facility having an outstanding principal amount of
approximately $1.5 billion as of December 31, 2022.
5
Cautionary Statement Concerning Forward-Looking Statements
Some of the statements, estimates or projections contained in this report are “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 report, including, without limitation, those regarding our business strategy,
financial position, results of operations, plans, prospects, actions taken or strategies being considered with respect to
our liquidity position, valuation and appraisals of our assets and objectives of management for future operations
(including those regarding expected fleet additions, our expectations regarding the impacts of the COVID-19
pandemic, Russia’s invasion of Ukraine and general macroeconomic conditions, our expectations regarding cruise
voyage occupancy, the implementation of and effectiveness of our health and safety protocols, operational position,
demand for voyages, plans or goals for our sustainability program and decarbonization efforts, our expectations for
future cash flows and profitability, financing opportunities and extensions, and future cost mitigation and cash
conservation efforts and efforts to reduce operating expenses and capital expenditures) 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 general economic factors, such as fluctuating or increasing levels of interest rates, inflation,
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, pandemics and viral outbreaks, including the COVID-19 pandemic, and their
effect on the ability or desire of people to travel (including on cruises), which is expected to continue to
adversely impact our results, operations, outlook, plans, goals, growth, reputation, cash flows, liquidity,
demand for voyages and share price;
implementing precautions in coordination with regulators and global public health authorities to protect the
health, safety and security of guests, crew and the communities we visit and to comply with regulatory
restrictions related to the pandemic;
our indebtedness and restrictions in the agreements governing our indebtedness that require us to maintain
minimum levels of liquidity and be in compliance with maintenance covenants and otherwise limit our
flexibility in operating our business, including the significant portion of assets that are collateral under
these agreements;
our ability to work with lenders and others or otherwise pursue options to defer, renegotiate, refinance or
restructure our existing debt profile, near-term debt amortization, newbuild related payments and other
obligations and to work with credit card processors to satisfy current or potential future demands for
collateral on cash advanced from customers relating to future cruises;
our need for additional financing or financing to optimize our balance sheet, which may not be available on
favorable terms, or at all, and our outstanding exchangeable notes and any future financing which may be
dilutive to existing shareholders;
the unavailability of ports of call;
future increases in the price of, or major changes, disruptions or reduction in, commercial airline services;
changes involving the tax and environmental regulatory regimes in which we operate, including new
regulations aimed at reducing greenhouse gas emissions;
6
•
•
•
•
•
•
•
the accuracy of any appraisals of our assets as a result of the impact of the COVID-19 pandemic or
otherwise;
our success in controlling operating expenses and capital expenditures;
trends in, or changes to, future bookings and our ability to take future reservations and receive deposits
related thereto;
adverse events impacting the security of travel, or customer perceptions of the security of travel, such as
terrorist acts, armed conflict, such as Russia’s invasion of Ukraine, and threats thereof, acts of piracy, and
other international events;
adverse incidents involving cruise ships;
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;
our inability to recruit or retain qualified personnel or the loss of key personnel or employee relations
issues;
our inability to obtain adequate insurance coverage;
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;
any further impairment of our trademarks, trade names or goodwill;
our reliance on third parties to provide hotel management services for certain ships and certain other
services;
fluctuations in foreign currency exchange rates;
our expansion into new markets and investments in new markets and land-based destination projects;
overcapacity in key markets or globally; and
other factors set forth under “Risk Factors” herein.
Additionally, many of these risks and uncertainties are currently amplified by and will continue to be amplified by,
or in the future may be amplified by, the COVID-19 pandemic, Russia’s invasion of Ukraine and the impact of
general macroeconomic conditions. It is not possible to predict or identify all such risks. There may be additional
risks that we consider immaterial or which are unknown.
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
7
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.
WEBSITE REFERENCES
In this Annual Report on Form 10-K, we make references to our website at http://www.nclhltd.com. References to
our website through this Form 10-K are provided for convenience only and the content on our website does not
constitute a part of, and shall not be deemed incorporated by reference into, this Annual Report on Form 10-K.
8
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. In
January 2013, NCLH completed its IPO and the ordinary shares of NCLC 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”). In November 2014, we completed the Acquisition of Prestige.
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. Due to COVID-19, we temporarily suspended all global cruise voyages from March 2020 until July
2021, when we resumed cruise voyages on a limited basis. In early May 2022, we completed the phased relaunch of our
entire fleet with all ships now in operation with guests on board. We refer you to “—Impact of COVID-19” for further
information.
As of December 31, 2022, we had 29 ships with approximately 62,000 Berths and had orders for eight additional ships to
be delivered. We have converted some double occupancy cabins to studio cabins and we expect to convert
approximately 900 additional cabins in early 2023. Additionally, in February 2023, we amended the delivery dates of the
last two Prima Class Ships to 2027 and 2028. These ships will be lengthened and re-configured to accommodate the use
of methanol as an alternative fuel source in the future. While additional modifications will be needed in the future to
fully enable the use of methanol in addition to traditional marine fuel, this reinforces our commitment to reduce
greenhouse gas emissions.
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.
We have eight ships on order across our portfolio of brands. For the Norwegian brand, we have five Prima Class Ships
on order, with currently scheduled delivery dates from 2023 through 2028. For Regent Seven Seas Cruises, we have one
Explorer Class Ship on order for delivery in 2023. For Oceania Cruises, we have two Allura Class Ships on order for
delivery in 2023 and 2025. These additions to our fleet will increase our total Berths to approximately 82,000.
Corporate 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.
9
Impact of COVID-19
Safe Resumption of Operations
Due to the impact of COVID-19, travel restrictions and limited access to ports around the world, in March 2020, we
implemented a voluntary suspension of all cruise voyages across our three brands. In the third quarter of 2021, we began
a phased relaunch of certain cruise voyages with ships initially operating at reduced occupancy levels. In early May
2022, we completed the phased relaunch of our entire fleet with all ships now in operation with guests on board.
Occupancy levels have sequentially increased in recent quarters, most recently averaging 87% in the fourth quarter 2022,
with the Company expecting to return to historical Occupancy levels for the second quarter of 2023.
During 2022, we benefitted from significant improvements in the public health environment which allowed for the
removal of most COVID-19 related health and safety protocols by year-end, unless required by local jurisdictions. For
example, in July 2022, the CDC announced that its voluntary COVID-19 Program for Cruise Ships Operating in U.S.
Waters was no longer in effect. We will continue to modify and evolve our health and safety protocols as needed along
with the broader public health and regulatory environments. We continue to prioritize the health and safety of our guests,
crew and communities we visit and follow applicable travel guidelines and local protocols as required by the ports and
destinations we visit.
The relaxation of protocols, continued easing of travel restrictions and reopening of most ports around the globe to cruise
ships has improved travel experiences, expanded the addressable cruise market, allowed us to expand the variety of our
itineraries and provided additional catalysts on the road to recovery.
The level of occupancy on our ships will depend on a number of factors including, but not limited to, the duration and
extent of the COVID-19 pandemic, further resurgences of COVID-19 or the emergence of other public health crises, our
ability to comply with governmental regulations and implement new health and safety protocols, port availability, travel
restrictions, bans and advisories, our ability to staff certain ships and additionally the impact of other events impacting
travel or consumer discretionary spending, such as Russia’s ongoing invasion of Ukraine, and general macroeconomic
conditions discussed below under “Macroeconomic Trends and Uncertainties.”
Execution of Financial Action Plan
In 2022 and 2023, we continued to take actions to bolster our financial condition as part of our long-term post-pandemic
financial recovery strategy. In February 2022, we received additional financing through various debt financings,
collectively totaling $2.1 billion in gross proceeds, which was used to redeem all of the outstanding 2024 Senior Secured
Notes and 2026 Senior Secured Notes and to make scheduled principal payments on debt maturing in 2022, including, in
each case, to pay any accrued and unpaid interest thereon, as well as related premiums, fees and expenses.
In December 2022, we amended the Senior Secured Credit Facility to extend approximately $1.4 billion of maturities by
one year to January 2025. The amendment also updated certain financial covenants and increased our ability to incur
additional debt. Each of our export-credit backed facilities were also amended to conform the financial covenants with
the Senior Secured Credit Facility. In February 2023, a commitment of $82.5 million in aggregate principal amount of
the Revolving Loan Facility that was not previously extended was obtained to assign the commitment to a new lender
under the same terms as the extending lenders.
In February 2023, NCLC issued $600 million aggregate principal amount of 8.375% senior secured notes due 2028. The
proceeds from the notes were used to repay the loans outstanding under our Term Loan A Facility that otherwise would
have become due in January 2024, including to pay any accrued and unpaid interest thereon, as well as related
premiums, fees and expenses.
In July 2022, we amended our $1 billion commitment, which provided additional liquidity to the Company through
March 31, 2023. In February 2023, the commitment was further extended through February 2024, with an option for
NCLC to further extend the commitments through February 2025 at its election. Simultaneously, the amount of the
commitment was reduced to $650 million, which may be drawn in up to two draws, and in connection with the execution
10
of the amended commitment letter, NCLC issued $250 million aggregate principal amount of senior secured notes due
2028. NCLC will use the net proceeds for general corporate purposes.
In February 2023, NCLC entered into a backstop agreement (the “Backstop Agreement”) with Morgan Stanley & Co.,
LLC (“MS”), pursuant to which MS has agreed to provide backstop committed financing to refinance and/or repay in
whole or in part up to $300 million of amounts outstanding under the Senior Secured Credit Facility.
Refer to Note 8 – “Long-Term Debt” for further details about the above transactions. Refer to “Item 7—Management’s
Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” for more
detail regarding our financial action plan.
Strategy for Significant Operational Challenges
Operating Efficiency Improvement Initiative
We are currently undergoing a broad and ongoing effort to improve operating efficiencies, including cost minimization
initiatives, to strengthen the foundation for sustained, profitable growth and mitigate the impact of inflation and supply
chain disruptions. The Company has various planned initiatives both shoreside and shipboard, either already
implemented or in process, which will contribute to this broader efficiency improvement effort while continuing to
provide value to our guests.
Russia’s Invasion of Ukraine
The conflict from Russia’s ongoing invasion of Ukraine resulted in the cancellation or modification of approximately 60
sailings in 2022, which included all voyages with calls to ports in Russia. Three ships were redeployed as a result of the
conflict including Norwegian Getaway to Port Canaveral, Oceania Cruises’ Marina to the British Isles and Regent’s
Seven Seas Splendor to Northern Europe. In addition, we have also removed all calls to ports in Russia from our
itineraries in 2023 and 2024.
Macroeconomic Trends and Uncertainties
As a result of conditions associated with global events, including the downstream effects of the COVID-19 pandemic
and Russia’s ongoing invasion of Ukraine and actions taken by the United States and other governments in response to
the invasion, the global economy, including the financial and credit markets, has experienced significant volatility and
disruptions, including increases in inflation rates, fuel prices, and interest rates. Our costs have been, and are expected to
continue to be, adversely impacted by these increases. We have used, and may continue to use, derivative instruments to
attempt to mitigate the risk of adverse changes in fuel prices and interest expense. In an attempt to mitigate risks related
to inflation, our supply chain department has negotiated contracts with varying terms, with a goal of providing us with
the ability to take advantage of cost declines when they occur, and diversified our sourcing options. These strategies may
not fully offset the impact of current macroeconomic conditions. Furthermore, we are exposed to fluctuations in the euro
exchange rate for certain portions of ship construction contracts that have not been hedged. See “Item 1A—Risk
Factors” for additional information.
11
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 Viva (2)
Norwegian Prima
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 Vista (3)
Oceania Riviera
Oceania Marina
Oceania Nautica
Oceania Sirena
Oceania Regatta
Year
Built
2023
2022
2019
2018
2017
2015
2014
2013
2010
2007
2006
2006
2005
2005
2002
2001
2001
1999
1998
Primary Areas of Operation
The Bahamas, Caribbean, Europe
The Bahamas, Bermuda, Canada & New England, Caribbean, Europe
Alaska, The Bahamas, Caribbean, Central America, Mexico-Pacific, U.S. West Coast
Alaska, Caribbean, Central America, Europe, Mexico-Pacific, U.S. West Coast
The Bahamas, Bermuda, Canada & New England, Caribbean, Central America, Mexico-
Pacific, U.S. West Coast
The Bahamas, Bermuda, Canada & New England, Caribbean, Europe
The Bahamas, Bermuda, Canada & New England, Caribbean, Europe
Bermuda, Canada & New England, Caribbean, Europe
Bermuda, Caribbean, Europe
The Bahamas, Bermuda, Canada & New England, Caribbean, Central America, Europe
Africa, Asia, The Bahamas, Caribbean, Europe
The Bahamas, Bermuda, Canada & New England, Caribbean, Central America, Europe
Alaska, Asia, Caribbean, Central America, Mexico-Pacific, U.S. West Coast
Hawaii
Africa, Asia, Caribbean, Europe
Antarctica, Europe, South America
Alaska, Asia, Central America, South America, U.S. West Coast
Asia, The Bahamas, Canada & New England, Caribbean, Central America, Europe
Alaska, Asia, Australia & New Zealand, Hawaii, South Pacific
2023
The Bahamas, Bermuda, Canada & New England, Caribbean, Central America, Europe,
Mexico-Pacific
2012
2011
2000
Africa, Alaska, Asia, The Bahamas, Bermuda, Caribbean, Europe
Africa, Antarctica, Caribbean, Central America, Europe, South America
Africa, Asia, Australia & New Zealand, Bermuda, Canada & New England, Caribbean,
Central America, Europe, Hawaii, South America, South Pacific
1999
1998
The Bahamas, Bermuda, Caribbean, Central America, Europe, South America
Alaska, Asia, Australia & New Zealand, Hawaii, Mexico-Pacific, South Pacific, U.S.
West Coast
Oceania Insignia
1998
Africa, Alaska, Antarctica, Asia, Australia & New Zealand, Bermuda, Canada & New
England, Caribbean, Central America, Europe, Hawaii, Mexico-Pacific, South America,
South Pacific, U.S. West Coast
Regent
Seven Seas Grandeur (4)
2023
The Bahamas, Bermuda, Canada & New England, Caribbean, Central America, Europe,
Mexico-Pacific
Seven Seas Splendor
2020
Antarctica, The Bahamas, Bermuda, Canada & New England, Caribbean, Central
America, Europe, Mexico-Pacific, South America
Seven Seas Explorer
2016
Africa, Alaska, Asia, Australia & New Zealand, The Bahamas, Caribbean, Central
Seven Seas Voyager
Seven Seas Mariner
2003
2001
America, Europe, Mexico-Pacific
Africa, Antarctica, Bermuda, Europe, South America
Africa, Alaska, Asia, Australia & New Zealand, The Bahamas, Bermuda, Canada & New
England, Caribbean, Central America, Europe, Hawaii, Mexico-Pacific, South America,
South Pacific, U.S. West Coast
Seven Seas Navigator
1999
Africa, Asia, Australia & New Zealand, Bermuda, Canada & New England, Caribbean,
Europe, South America, South Pacific
(1) The table above does not include the five additional ships on order.
(2) The second of the Prima Class Ships, which is expected to be delivered in the summer of 2023.
(3) The first of the Allura Class Ships, which is expected to be delivered in the spring of 2023.
(4) The last of the Explorer Class Ships, which is expected to be delivered in the fall of 2023.
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Our Mission, Competitive Strengths & Business Strategies
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.
Enhanced Product Offering and Guest Experience
Our portfolio of ships is comprised of a young and enhanced 29-vessel fleet. We have invested in revitalizations to our
ships, which provides an enhanced product offering that we believe delivers higher guest satisfaction and, in turn, higher
pricing.
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 business class air on
intercontinental flights, unlimited shore excursions, 1-night pre-cruise hotel package in Concierge Suites and higher,
specialty restaurants, unlimited beverages, including fine wines and spirits, pre-paid gratuities, unlimited Wi-Fi, transfers
between airport and ship, valet laundry service and other amenities. Historically, we have continually looked for ways to
enhance our already strong product offering and onboard guest experience across our three brands and in the destinations
we visit. We have done so through ship refurbishments, enhancements to dining and entertainment and enrichment
offerings, expansion of immersive shore excursion and land program offerings and more.
The Norwegian, Oceania Cruises and Regent brands all offer a high level of onboard service and we collaborate amongst
our 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.
Rich Stateroom Mix
The Norwegian, Oceania Cruises and Regent fleets offer an attractive mix of staterooms, suites and villas. 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, 12 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, the Breakaway Plus Class Ships and the Prima Class Ship, The Haven also
includes a private lounge and fine dining restaurant. Norwegian’s accommodations also 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.
The spacious and elegant accommodations on Oceania Cruises’ six award-winning ships 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.
Itinerary Optimization & Premium Itinerary Mix
We manage our ships’ deployments to promote a better breadth of itineraries, sell cruises further in advance and
maximize profitability while also considering our efforts to reduce greenhouse gas emissions. We offer a diverse
selection of premium itineraries with worldwide deployment and voyages ranging from three days to a 180-day around-
the-world cruise. Our vessels call on ports including Scandinavia, Northern Europe, the Mediterranean, the Greek Isles,
13
Alaska, Canada and New England, Hawaii, Asia, Tahiti and the South Pacific, Australia and New Zealand, Africa, India,
South America, the Panama Canal and the Caribbean. 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 are also focused on destination development and have created two private destinations to enhance the shore
experience for our guests. We were the first cruise line to develop a private island, Great Stirrup Cay in The Bahamas.
This private destination is the Company’s private island featuring over 1,500 feet of accessible beachfront with white
sand beaches; over 50 cabana and villa options; an array of shore excursions including a new over water zipline
experience that extends nearly 3,000 feet in length; and on-island food and beverage offerings. In 2019, we launched
Silver Cove, the latest enhancement designed to elevate the guest experience. This exclusive oceanfront lagoon area
includes private beachfront villas, a Mandara Spa with beachfront treatments as well as the exclusive Moët & Chandon
Bar and upscale Silver Cove Restaurant and Bar. The 38 luxury air-conditioned villas range from studios to larger one-
and-two-bedroom villas, all of which include a private bathroom, daybed, club chairs, televisions with on-demand
entertainment, outdoor patio and lounge seating, retractable glass walls providing unobstructed views and access to the
private beachfront lagoon. In 2016, we introduced Harvest Caye, the Company’s private resort-style destination in
Southern Belize. The 75-acre 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.
Disciplined Fleet Expansion
For the Norwegian brand, we have five Prima Class Ships on order, each ranging from approximately 143,500 to
169,000 Gross Tons with 3,100 or more Berths, with currently scheduled delivery dates from 2023 through 2028. For the
Regent brand, we have one Explorer Class Ship on order to be delivered in 2023, which 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
2023 and 2025. Each of the Allura Class Ships will be approximately 67,000 Gross Tons and 1,200 Berths. The impacts
of COVID-19 on the shipyards where our ships are under construction (or will be constructed), Russia’s ongoing
invasion of Ukraine, initiatives to improve environmental sustainability and modifications the Company plans to make to
its newbuilds and/or other macroeconomic events have resulted in delays in expected ship deliveries. These and other
impacts could result in additional delays in ship deliveries in the future, which may be prolonged.
We believe these new ships will allow us to continue expanding the reach of our brands, position us for accelerated
growth and provide an optimized return on invested capital. We have obtained or expect to obtain fixed rate export-
credit backed financing which is expected to fund approximately 80% of the contract price of each ship currently
scheduled to be delivered through 2028, subject to certain conditions.
Two-Pronged Go-to-Market Strategy of Market-to-Fill and Value-Add Bundling
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. Our core go-to-market strategy results in a longer booking curve with enhanced predictability and the
opportunity to increase prices. Our strategy to market-to-fill consists of using marketing instead of price as the main
lever to drive demand. The best price is offered early in the booking cycle with value-added promotions used when
necessary to further reduce the need to compromise on price.
We offer a value-add bundled product for all three brands which we believe leads to higher quality guest bookings. The
Norwegian brand offers guests the choice of a more inclusive, value-add product offering on certain stateroom selections
by allowing guests to choose from multiple amenities through our Free at Sea program.
Our go-to-market 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 revenues achieved.
14
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 marketing strategy that
may include a combination of print, television, radio, digital, website/e-commerce, direct mail, social media, mobile and
e-mail campaigns, partnerships, customer loyalty initiatives, market research, consumer events and business-to-business
events. We continue to enhance and expand our use of digital marketing and social media to drive cost efficiencies.
Additionally, we continue a deliberate approach on marketing and sales outreach to guests with future cruise credits, as a
result of suspended sailings, to encourage redemption of cruise credits towards future sailings.
Building customer loyalty among our past guests is an important element of our marketing strategy. Past guests create a
cost-effective means of attracting business, particularly to our new ships and itineraries as they are familiar with our
brands, products and services and often return to cruise with us. We will continue to optimize our customer databases
and target marketing 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 loyal repeat guest base.
Continued investments in our websites and applications will be 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 post cruise to engage them in booking their next cruise vacation with us.
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 products and experiences, itineraries and
other best-selling practices. Advisors can also easily customize a multitude of consumer marketing materials for their use
in promoting and marketing our products through our online platforms.
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 of the experiences we provide.
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.
We have strategic relationships with travel advisors and tour operators who commit to selling a certain level of inventory
with long lead times. The retail/travel advisor channel represents the majority of our ticket sales. Our travel partner base
is comprised of an extensive network of 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 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 process creates a deeper
understanding of all our product offerings.
We have invested 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. As sailings have resumed, we utilize our 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.
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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 to sell high-quality music experiences to guests. To further grow and expand this
channel, we introduced a new branded initiative “Experiences at Sea,” consisting of Sixthman and the Company’s
Charters, Meetings & Incentives department. Experiences at Sea will focus on corporate, incentive and affinity-focused
clients across all three of our brands.
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.
Strengthening Our Global Footprint
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,
Brazil, India, Japan and Singapore.
Our Commitment to Sustainability
The continued success of our business is linked to our ability to operate and grow sustainably. We are committed to
driving a positive impact on society and the environment through our global sustainability program, Sail & Sustain. The
Sail & Sustain program is centered around five pillars: Reducing Environmental Impact, Sailing Safely, Empowering
People, Strengthening Our Communities and Operating with Integrity and Accountability. The Company’s Board of
Directors is actively engaged in overseeing the Sail & Sustain program and Environmental, Social and Governance
(“ESG”) strategy and implementation through its Technology, Environmental, Safety & Security Committee.
Reducing our environmental impact is a key component of the Sail & Sustain program. All of our ships have
environmental management systems that are certified under the International Organization for Standardization’s 14001
Standard. This voluntary standard sets requirements for the establishment and implementation of a comprehensive
environmental management system. As part of our environmental commitment, we have a long-term climate action
strategy with a commitment to pursue net zero greenhouse gas emissions by 2050. The three components of our climate
action strategy include: Reducing Carbon Intensity, Investing in Technology and Exploring Alternative Fuels, and
Implementing a Voluntary Carbon Offset Program. Each ship in our fleet has a Shipboard Energy Efficiency
Management Plan with the objective to improve the overall operating efficiency of the ship by implementing methods
for energy and fuel savings. We evaluate, monitor, and implement energy-savings projects on our existing ships
including but not limited to HVAC system upgrades, LED lighting, low friction silicone hull coating, hydrodynamic
upgrades, and waste heat recovery projects.
There is no clear path today to achieve net zero for the cruise industry, and this effort will require significant technology
advancements including commercially viable and scalable low or zero emission fuels, but we are committed to doing our
part to facilitate this transition. For example, we have partnered with MAN Energy Solutions on a multi-stage feasibility
assessment and project with the goal of retrofitting an existing engine to use with dual fuels, both diesel and methanol. In
addition, we have successfully tested the use of biofuel blends, blended with approximately 30% biofuel and
approximately 70% marine gas oil, on several ships as a potential “drop-in” solution that does not require modifications
to existing engines. We are also investing in shore power capabilities, which with the appropriate port infrastructure
would allow us to connect to onshore electrical power grids to supply much of the power needed while docked. A total
of 11 ships in our fleet are currently equipped with shore power capabilities and we are targeting approximately 70% of
our fleet to be equipped with this capability by year-end 2025.
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In early 2022, we created a formal governance structure dedicated to the oversight of our climate action and
decarbonization strategy. The Decarbonization Executive Steering Committee is an internal, cross-functional committee
responsible for governing and steering the company-wide climate action and decarbonization strategy. The committee is
comprised of our President and Chief Executive Officer and other executive officers. To supplement the committee, a
Decarbonization Action Group comprised of senior leaders across the organization was also created to enhance cross-
collaboration and coordination in support of our climate action strategy and goals.
In late 2021, we also began climate risks and scenario planning which resulted in the publication of our first disclosure
aligned with the Task Force on Climate-related Financial Disclosures (“TCFD”) framework in April 2022, which can be
found on our website.
We also drive social impact through our philanthropy initiatives, partnerships and community engagement programs in
our local communities and at the destinations we visit worldwide.
We provide regular updates to our stakeholders on our sustainability efforts and promote awareness on important topics,
including environmental stewardship, through our Sail & Sustain program, our annual ESG report and through various
communications regarding important sustainability initiatives across various distribution channels including but not
limited to press releases, social media and our corporate website. We have published disclosures aligned with the
Sustainability Accounting Standards Board framework as well as a TCFD report to provide additional transparency to
our stakeholders. For additional information regarding our sustainability initiatives, please visit our website at
www.nclhltd.com.
Highly Experienced Management Team
Our senior management team is comprised of executives with extensive experience in the cruise, travel, leisure and
hospitality-related industries. Mr. Frank Del Rio is our President and Chief Executive Officer. Mr. Del Rio is a 30-year
cruise industry veteran who founded Oceania Cruises in 2002. Under his leadership, Oceania Cruises grew from a
fledgling start-up to a dominant player in the upscale cruise market. He further led Oceania Cruises’ acquisition of
Regent Seven Seas Cruises. After NCLH acquired Prestige, Mr. Del Rio led the combined company to many milestones
including expanding its fleet with the newest and most innovative ships at sea, introducing the Company’s latest private
destination, Harvest Caye in Belize, leading the Company’s Great Cruise Comeback following the COVID-19 related
global cruise voyage suspension and significantly expanding and strengthening its global footprint.
Mr. Mark A. Kempa, our Executive Vice President and Chief Financial Officer, has been with the Company for over
twenty years holding several positions of increasing responsibility in Norwegian’s finance organization, playing an
instrumental role in several of the Company’s key milestones, including its successful IPO and the Acquisition of
Prestige.
Mr. T. Robin Lindsay, our Executive Vice President, Vessel Operations, is responsible for Marine & Technical
Operations, Hotel Operations, Entertainment, Product Development, and Newbuild and Ship Refurbishment for all three
of the Company's brands. Mr. Lindsay has been with the Company for two decades dating back to 2003, when he joined
Oceania Cruises as Senior Vice President, Hotel Operations.
Mr. Harry Sommer, our President and Chief Executive Officer of Norwegian Cruise Line, is responsible for the
Company’s largest brand including sales, marketing, revenue management, passenger services, itinerary development,
international business development and operations. Mr. Sommer is an over 30-year cruise industry veteran who has held
various executive roles at the Company throughout his tenure including serving as President, International for all three of
our brands.
See “Information about our Executive Officers” below for more information on our highly experienced management
team.
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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, internet, valet laundry services, 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,
Wi-Fi services and other similar items. Food and beverage, casino operations 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, valet laundry and gratuities.
Seasonality
Our operations are seasonal and results for interim periods are not necessarily indicative of the results for the entire fiscal
year. Historically, demand for cruises has been strongest during the Northern Hemisphere’s summer months; however,
our cruise voyages were completely suspended from March 2020 until July 2021 due to the COVID-19 pandemic and
our resumption of cruise voyages was phased in gradually, with our full fleet back in operation in early May 2022.
Competition
Our primary competition includes operators such as Carnival and Royal Caribbean as well as other cruise lines such as
MSC 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.
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
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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 typically 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, airfare, 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 for ship construction expenditures are generally denominated in euros
and other 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 discerning
tastes and high expectations for quality service. We have dedicated 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, crew and the communities we visit. We operate all 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. In order to expand our public health protocols, we have developed an Infectious Disease Management System
that our crew members are trained on prior to returning to service. These policies were certified and audited to DNV’s
Certification in Infection Prevention which further enhances our outbreak prevention and response to all types of
infectious disease including, but not limited to COVID-19, norovirus, acute gastroenteritis, influenza and influenza-like
illnesses.
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 protocols and support documentation 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.
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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 Trade Names
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 trade names 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 trade
name, in conjunction with cruises, in perpetuity, subject to the terms and conditions in the agreement.
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Regulatory Matters
Registration of Our Ships
Twenty 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.
Economic Substance Requirements
NCLH and NCLC are exempted companies formed under the laws of Bermuda and some of their subsidiaries have been
formed in Bermuda, Guernsey, Isle of Man, British Virgin Islands, Cayman Islands or The Bahamas. Pursuant to the
legislation passed in each jurisdiction, entities subject to each jurisdiction’s laws that carry out relevant activities as
specified in such laws, are required to demonstrate substantial economic substance in that jurisdiction. In general terms,
substantial economic substance means: (i) the entity is actually directed and managed in the jurisdiction; (ii) core
income-generating activities relating to the applicable relevant activity are performed in the jurisdiction; (iii) there are
adequate employees in the jurisdiction; (iv) the entity maintains adequate physical presence in the jurisdiction; and (v)
there is adequate operating expenditure in the jurisdiction. We have evaluated the activities of NCLH, NCLC and their
subsidiaries and have concluded that in some cases, those activities are 'relevant activities' for the purposes of the
applicable economic substance laws and that, consequently, certain entities within our organization will be required to
demonstrate compliance with these economic substance requirements. We may be subject to increased costs and our
management team may be required to devote significant time to satisfying economic substance requirements in certain of
these jurisdictions. If such entities cannot establish compliance with these requirements, we may be liable for penalties
and fines in the applicable jurisdictions and/or required to re-domicile such entities to different jurisdictions.
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, wastewater 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 IMO convention entitled Prevention of Pollution from Ships (“MARPOL”)
set a global limit on fuel sulfur content of 0.5%. 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.
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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.
Amendments to MARPOL have made the Baltic Sea a “Special Area” where sewage discharges from passenger ships
will be prohibited unless they comply with Resolution MEPC 227(64) adopted by the Marine Environmental Protection
Committee (“MEPC”) of the IMO. Stricter discharge restrictions went into effect for new passenger ships in 2019, and
for existing passenger ships in 2021.
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. In 2018, the Vessel Incidental Discharge Act
(“VIDA”), which will eventually replace the VGP, was signed into law, and in October 2020, the EPA published a
notice of proposed rulemaking to establish national standards of performance under VIDA that would apply to 20
different types of vessel equipment and systems, as well as general discharge standards that would apply to all types of
vessel incidental discharges. The VGP has been administratively extended while standards under VIDA are being
developed. With certain exceptions, VIDA requires that the new standards be at least as stringent as the VGP
requirements.
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 (“E.U.”) 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
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environmental legislation, the E.U. 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 E.U. requires the use of low sulfur (less than 0.1%) marine gas oil
in E.U. ports. All non-ECA waters have a 0.5% fuel sulfur limit.
As part of its Fit for 55 package, the E.U. is in the process of adopting several rules aimed at reducing greenhouse gas
emissions. Two of the mechanisms that are being used to achieve emissions reductions are the Emissions Trading
System (“ETS”) and the FuelEU Maritime Initiative. We may have increased costs associated with the Fit for 55
regulations but are not able to quantify the impact yet as the various regulations are not finalized and the impact of
certain proposals like the ETS will depend on future market pricing. In addition, strategies to reduce greenhouse gas
emissions as well as ship deployment modifications could mitigate the impact of these regulations.
• ETS: The maritime transport sector was recently approved to be included in the scope of the ETS. Effective
January 2024, ships over 5,000 Gross Tons that transport passengers or cargo to or from E.U. member state
ports would be required to purchase and surrender emissions allowances equivalent to emissions for all or a half
of a covered voyage, depending on whether the voyage was between two E.U. ports or an E.U. and a non-E.U.
port. The requirements will be phased in from 2024 to 2026. Beginning in 2024, covered entities would be
required to procure and surrender allowances equivalent to 40% of their verified carbon emissions, with the
amount increasing to 70% of carbon emissions in 2025 and 100% of greenhouse gas emissions in 2026, with
allowances to be surrendered in the following year. The costs associated with the purchase of allowances are
variable and will depend on future market movements.
• FuelEU Maritime Initiative: The proposed FuelEU regulation would set a maximum limit on the greenhouse
gas intensity of onboard energy usage for ships arriving at, sailing in or departing from E.U. ports, which will
become progressively stricter over time. Other key components of the regulation include requirements for
connecting to onshore power grids in E.U. ports as well as targets for the use of renewable fuels of non-
biological origin.
In 2021, the IMO adopted two new requirements, which have entered into effect in 2023, the Carbon Intensity Indicator
(the “CII”) and Energy Efficiency Ship Index (the “EEXI”), which each regulate carbon emissions for ships. The CII is
an operational metric designed to measure how efficiently a ship transports goods or passengers by looking at carbon
dioxide emissions per nautical mile. Ships are given an annual rating from A to E with a C or better required for
compliance. For ships that receive a D rating for three consecutive years, or an E rating for one year, a corrective action
plan will need to be developed and approved. In 2023, ships will be required to reduce carbon intensity by 5% from a
2019 baseline with 2% incremental improvements each year thereafter until 2030. The enforcement mechanism for CII
has not yet been defined. The EEXI is a one-time design re-certification requirement that updates energy efficiency
requirements for existing ships and regulates carbon dioxide emissions related to installed engine power, transport
capacity and ship speed. Compliance with the EEXI is not expected to have a material impact on our operations.
Compliance with such laws and regulations is expected to entail significant expenses for a combination of: ship
modifications, purchases of emissions allowances, alternative fuels and higher-cost compliant newbuilds. Compliance is
also expected to result in changes to our operating procedures, including limitations on our ability to operate in certain
locations and slowing the speed of our ships, and may render some ships obsolete, which would adversely impact our
operations. 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.
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. We expect to make material
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investments in our business to comply with these laws and regulations; however, the total impact cannot be determined
as we are evaluating our compliance plans.
We refer you to “—Our Mission, Competitive Strengths & Business Strategies — Our Commitment to Sustainability”
for information related to our Environmental, Social and Governance strategy.
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 and Crew 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 CDC and the FDA. 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.
We continue to work directly with the CDC Maritime Unit as well as other health regulatory authorities, such as E.U.
Healthy Gateways, to adjust our infectious disease (COVID-19, influenza, noro virus) response protocols.
Security and Safety
The IMO has adopted safety standards as part of the SOLAS convention, which apply to all 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 our crew undergo regular security and safety training
exercises pursuant to 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 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.
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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 is 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.
In addition, 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, 2022, we have in place
approximately £68.6 million of security guarantees for our brands as well as a consumer protection policy covering up to
£82.4 million. The Company has provided approximately $29.7 million in cash to secure all the financial security
guarantees required.
Compliance with these regulations has had an impact on our financial condition. 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. We cannot estimate the expenses we may incur to comply with potential
new laws or changes to existing laws, or the other potential effects these laws may have on our business.
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 certain recently introduced laws and regulations and future
changes in laws and regulations could lead to increased costs and/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
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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 New York Stock Exchange
(“NYSE”). The NYSE is considered to be an established securities market 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 2022, 2021 and 2020, 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
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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. For example, the Organization for Economic Co-operation and Development
and numerous jurisdictions (including the U.K.) have had an increased focus on issues concerning the taxation of
multinational businesses and several related reforms have been put forth (including the implementation of a global
27
minimum tax rate of at least 15% for large multinational businesses), which could have a negative effect on our business,
financial condition and results of operations.
Human Capital
At NCLH, our culture is defined by our corporate values of flawless execution, dedication to family and community,
spirit of entrepreneurship, financial excellence and environmental stewardship. These values were internally developed
and are authentic to our Company as they define success in our culture and establish the foundation upon which it is
built. We believe our culture and commitment to our team members attract and retain top talent, while simultaneously
providing robust career development opportunities that ultimately results in significant value to our Company and its
shareholders.
Demographics
As of December 31, 2022, we employed approximately 5,100 full-time employees worldwide in our shoreside
operations and approximately 33,800 shipboard employees. Regent and Oceania Cruises’ ships use a third party to
provide additional hotel and restaurant staffing onboard. We refer you to “Item 1A—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.
Diversity, Equity and Inclusion
Our Company is committed to fostering an inclusive workforce, where diverse backgrounds are represented, engaged
and empowered to generate and execute on innovative ideas. Our commitment to diversity and inclusion is
demonstrated by our Board of Directors, which is 50% diverse with three female directors and one director from an
under-represented minority community. Our commitment to seeking female and under-represented candidates as well as
candidates with diverse backgrounds is formalized in our Corporate Governance Guidelines.
Our Company operates globally, with team members representing over 110 countries. To foster a diverse and inclusive
culture, we seek to leverage the talents of all team members and commit to equal employment opportunity (“EEO”) as
detailed in our Company’s EEO policy. We have long-term partnerships with the National Diversity Council, sponsoring
the Florida Diversity Council and its South Florida local chapter. We have established shoreside employee resource
groups, such as the Veterans Task Force, Elevate (Women in Leadership) and Embrace (Diversity in Leadership), to
promote diversity and inclusion within our teams and to serve as a feedback channel for employees.
As of December 31, 2022, the composition of our workforce was as follows:
Gender diversity (1)
All shoreside team members
Shoreside Managers/above
All shipboard team members
3-stripe/above (equivalent to Manager level)
Male %
39%
53%
79%
85%
Ethnic diversity (2)
All shoreside team members in the U.S. who have self-identified
Shoreside Managers/above in the U.S. who have self-identified
Non-URMs %
33%
46%
Female %
61%
47%
21%
15%
URMs %
67%
54%
(1) While we present male and female, we acknowledge this is not fully encompassing of all gender identities.
(2) Under-represented minority (“URM”) is used to describe diverse populations, including Native American, Asian,
Black, Hispanic/Latino and Native Hawaiian team members in the U.S. We do not generally track ethnicity/race for
our shipboard team members as the majority are URMs from a U.S. perspective.
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Compensation and Benefits
Critical to our success is identifying, recruiting, retaining top talent and incentivizing existing and future team members.
We attract and retain talented team members by offering competitive compensation and benefits. Our pay-for-
performance compensation philosophy for our shoreside team is based on rewarding each team member’s individual
contributions. We use a combination of fixed and variable pay components including base salary, bonus, equity,
commissions and merit increases. We maintain a long-term incentive plan for our manager-level team members and
above that allows us to provide share-based compensation to enhance our pay-for-performance culture and to support
our attraction, retention and motivational goals. In October 2022, we proudly established an $18 per hour minimum
wage for our non-commission U.S. based shoreside employees. We also issued an appreciation bonus of up to 10 days of
pay to non-management employees not eligible under other bonus or incentive programs. The Company also
consistently reviews salary levels in order to remain competitive in recruiting and retaining talent for shoreside and
shipboard employees. We believe our compensation programs for our shipboard team are competitive and for the
majority of this team, negotiated with various unions and documented in collective bargaining agreements.
The success of our Company is connected to the well-being of our team members, such that we offer a competitive
benefits package including physical, financial and emotional well-being benefits. We offer our full-time U.S. shoreside
team members a choice of Company-subsidized medical and dental programs to meet their needs and those of their
families. In addition, we offer health savings and flexible spending accounts, vision cover, paid time off, employee
assistance programs, short term disability and voluntary long-term disability insurance, term life and business travel
insurance. Additionally, we offer a 401(k) retirement savings plan and education assistance benefits. Our benefits vary
by location and are designed to meet or exceed local requirements and to be competitive in the marketplace. As we strive
to be an employer of choice, the Company continues with a 4/1 flexible work model for shoreside team members
globally. The flexible model allows most employees to work in-office Monday through Thursday and remotely on
Friday.
In April 2022, the Company was honored by South Florida Business Journal as a 2022 Healthiest Employer Awards
Honoree to celebrate our dedication to providing health and wellness benefits that allow our employees to thrive both
physically and mentally in the workforce. To further demonstrate our continued dedication to family as one of our
company’s core values, effective July 1, 2022, we enhanced our Family Care Benefits to our eligible shoreside
employees. This included additional time of paid leave at 100% of an employee’s salary, for maternity, paternity, and
adoption leaves. Family planning assistance for fertility/surrogacy services and adoption support were also enhanced.
Minimum basic life insurance was also increased for all team members.
Beyond our Company’s public philanthropic support during the Ukraine Crisis, the Company dedicated resources and
support to our dedicated impacted crew members. Among the many actions taken, the Company provided monetary
crew welfare fund relief, complimentary enhanced communication channels, and ongoing travel and assignment support
as needed.
Training and Development
The opportunity to grow and develop skills and experience, regardless of job role, division or geographic location is
critical to the success of the Company as a global organization. We actively foster a culture of learning and offer a
variety of developmental courses for our team members. We provide a mentorship program where even our most senior
leaders actively participate. Succession planning is part of our culture. We have a year-round focus on providing team
members with opportunities to develop their leadership skills and add to our bench of talent through various training
initiatives. Succession planning and talent review programs allow us to continuously calibrate and evaluate high
potential talent, offering talent rotations and investing in development for long-term success.
Established in 2021, Rising Stars remains a key development program to identify high potential shoreside leaders at the
Director and Senior Director level. The 6-month program is conducted with a human resources strategy firm and is
focused on developing a growth mindset to refine leadership strengths, champion change and encourage innovation
through assessment tools, one-on-one coaching and group learning.
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Shipboard team members have the opportunity to learn the skills and responsibilities of another position in a different
department, either to increase their effectiveness in the Company, or to give them the opportunity to shift their career
path.
Retention and Engagement
We have a history of strong retention rates across our shoreside and shipboard teams which we attribute to our culture
that allows our team members to thrive and achieve their career goals. For the full year of 2022, the company
experienced the highest shoreside voluntary retention rate in recent years.
Exceptional team members continue to be recognized by a robust annual Award of Excellence recognition program
which acknowledges and rewards individual team members and teams for their demonstration of Company values. In
2022, the Award of Excellence winners were celebrated onboard Norwegian Prima, where the ship was dedicated
exclusively to our shoreside employees and their guests for a 2-night sailing to share appreciation for our shoreside
employees. We have also continued the Kloster Visionary Award which honors the Company’s founder, Knut Kloster,
by recognizing a team member whose spirit of innovation follows in the footsteps of this visionary. Through the
shipboard Vacation Hero Awards program, shipboard supervisors and management recognize select shipboard team
members that have proven to be outstanding in selected categories. This award program is designed to provide
recognition and promote total guest satisfaction by encouraging and rewarding team members for demonstrating
excellence in service, teamwork, attitude and leadership.
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 own and operate a cruise destination in Belize, Harvest Caye, which we introduced in November 2016. We have
developed, in conjunction with Port Miami, a new terminal, which is 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 with the Port of New Orleans, Port Miami, Port Canaveral, Manhattan Cruise Terminal, A.J. Juneau
Dock, Ogden Point Cruise Ship Terminal in Victoria, BC, Port of Southampton, 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 that includes preferential berthing rights, for which a second
pier in Icy Strait Point, Alaska has been developed.
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•
a 30-year preferential berthing agreement with Ward Cove Dock Group, LLC, who has constructed a new
double ship pier in Ward Cove, Ketchikan, Alaska. The pier has been built to simultaneously accommodate two
of Norwegian Cruise Line’s 4,000 passenger Breakaway Plus Class Ships.
• An agreement with Glacier Creek Development, LLC for construction and operation of a cruise terminal and
related berthing facilities in Whittier, Alaska, expected to be operational for the 2024 season.
• An agreement with AAK’W Landing LLC for the development of berthing facilities in Juneau Alaska, expected
to be operational in 2025 or 2026.
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.nclhltd.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.
Information about our Executive Officers
The following table sets forth certain information regarding NCLH’s executive officers as of February 16, 2023.
Name
Frank J. Del Rio
Mark A. Kempa
Harry Sommer
Andrea DeMarco
Frank A. Del Rio
T. Robin Lindsay
Daniel S. Farkas
Faye L. Ashby
Age
68
51
55
44
45
65
54
51
Position
Director, President and Chief Executive Officer
Executive Vice President and Chief Financial Officer
President and Chief Executive Officer, Norwegian brand
President, Regent brand
President, Oceania Cruises brand
Executive Vice President, Vessel Operations
Executive Vice President, General Counsel and Assistant Secretary
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. Frank J. Del Rio is the father of Frank A. Del Rio. There are no other 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 and the
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Acquisition of Prestige in 2014. 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.
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.
Andrea DeMarco has served as the President of the Regent brand since January 2023 and has strong knowledge of the
cruise industry with nearly 20 years of diverse experience spanning multiple areas of the business. She served as Chief
Sales and Marketing Officer for Regent Seven Seas Cruises from September 2021 until January 2023 and as Senior Vice
President of Investor Relations, Corporate Communications and Environmental, Social and Governance from January
2020 until August 2021. Prior to that, she served as Vice President, Investor Relations and Corporate Communications
from October 2016 through December 2019, Senior Director, Investor Relations from June 2015 through October 2016
and Director, Investor Relations from November 2012 through June 2015. Prior to joining the Company, she worked in
charter sales and corporate financial planning roles at Royal Caribbean Group. Ms. DeMarco has an M.B.A. in Finance
from Florida International University and a B.S. in Finance from Florida State University.
Frank A. Del Rio has served as the President of the Oceania Cruises brand since January 2023 and is an industry
veteran, having started his career in the cruise industry in 2003. He served as Chief Sales and Marketing Officer for
Oceania Cruises from March 2022 until January 2023 and as Senior Vice President, Port Destinations and Onboard
Revenue from March 2015 through April 2017. From 2018 until March 2022, Mr. Frank A. Del Rio pursued
entrepreneurial opportunities in the private equity, finance, and tech spaces, where he was involved across a wide
spectrum of products and industries, including AI, telecommunications and 5G network solutions, medical, and real
estate development, including serving as Chief Executive Officer of Divinus Life LLC, a specialty provider of skin and
wellness products, from 2018 through 2020. Prior to the Company’s acquisition of Prestige, Mr. Frank A. Del Rio served
as Senior Vice President, Port and Destination Services at Prestige from 2008 until March 2015 and as Vice President,
Destination Services and Product Development at Prestige from 2003 to 2008. Mr. Frank A. Del Rio has a B.S./B.A. in
Finance and Economics from the University of Florida.
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.
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
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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.
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.
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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 our business. If any of the risks discussed or additional risks and uncertainties not currently known
to us or that we currently deem to be immaterial actually occur, our business, financial condition and results of
operations could be materially adversely affected. The impacts of the COVID-19 pandemic and the associated debt we
incurred related to the COVID-19 pandemic have also had the effect of heightening many of the risks described below.
The ordering of the risk factors 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.”
COVID-19 and Debt/Liquidity Related Risk Factors
Public health crises, including the COVID-19 pandemic, have had, and may in the future have, a significant impact
on our financial condition, results, operations, outlook, plans, goals, growth, reputation, cash flows, liquidity,
demand for voyages and share price.
The COVID-19 pandemic has had, and may continue to have, significant negative impacts on all aspects of our business,
and a future pandemic or other public health crisis could have a similar effect. In March 2020, we implemented a
voluntary suspension of all cruise voyages across our three brands. We began resuming cruise voyages in July 2021 in a
phased manner and completed the phased relaunch of our entire fleet in early May 2022. It may take us longer than
expected to return to historical occupancy levels and our occupancy levels may be negatively impacted by concerns that
cruises are susceptible to the spread of infectious diseases, disruptions to travel due to travel restrictions, health
concerns, or other factors, as well as adverse changes in the perceived or actual economic climate due to the impact of
COVID-19 or other future pandemics or other public health crises.
To date, the COVID-19 pandemic has resulted in significant costs and lost revenue as a result of, among other things, the
suspension of cruise voyages, implementation of additional health and safety measures, reduced demand for cruise
vacations, guest compensation, itinerary modifications, redeployments and cancellations, travel restrictions and
advisories, the unavailability of ports and/or destinations and protected commissions. We have also been, and may
continue to be, negatively impacted by adverse impacts to our travel agencies and suppliers due to COVID-19, and we
may experience similar impacts in the event of a future pandemic or other public health crises.
We have been, and may in the future be, subject to heightened governmental regulations, travel advisories, travel bans
and restrictions that have and could significantly impact our global guest sourcing and our access to various ports of call
around the globe. We have had instances of COVID-19 on our ships and there is no guarantee that the health and safety
protocols we implement will be successful in preventing the spread of pandemics onboard our ships and among our
passengers and crew.
We have been and may continue to be the subject of lawsuits and investigations stemming from COVID-19. We cannot
predict the number or outcome of any such proceedings and the impact that they will have on our financial results, but
any such impact may be material.
As a result of the impacts of COVID-19, provisions in our credit card processing and other commercial agreements have
and may continue to adversely affect our liquidity. We have agreements with several credit card companies to process
the sale of tickets and provide other services. Under these agreements, the credit card companies could, under certain
circumstances and upon written notice, require us to maintain a reserve, which reserve would be funded by the credit
card companies withholding or offsetting our credit card receivables, or our posting of cash or other collateral. As a
result of the impacts of COVID-19, certain of our credit card processors currently hold cash collateral reserves. We may
be required to pledge additional collateral and/or post additional cash reserves or take other actions that may further
reduce our liquidity.
COVID-19 has also had the effect of heightening many of the other risks described herein, such as those relating to our
need to generate sufficient cash flows to service our indebtedness, our ability to comply with the covenants contained in
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the agreements that govern our indebtedness and our access to raise additional capital in the future. Accordingly, as a
result of these unprecedented circumstances, we cannot predict the full impact of COVID-19 on our business, financial
condition and results of operations. Epidemics, pandemics and viral outbreaks or other wide-ranging public health crises
in the future would likely also adversely affect our business, financial condition and results of operations.
If our results of operations and financial performance do not recover as planned, we may not be in compliance with
maintenance covenants in certain of our debt facilities.
Certain of our debt facilities include maintenance and financial covenants. For example, under the Senior Secured Credit
Facility, we are required to maintain a loan to value ratio of no less than 0.70 to 1.00. Financial covenants include free
liquidity of no less than $250,000,000 at all times, a total net funded debt to total capitalization ratio of less than 0.93 to
1.00 for the quarter ending March 31, 2023, 0.92 to 1.00 for the quarter ending June 30, 2023, 0.91 to 1.00 for the
quarters ending September 30, 2023, December 31, 2023 and March 31, 2024, 0.90 to 1.00 for the quarter ending June
30, 2024, 0.88 to 1.00 for the quarter ending September 30, 2024 and 0.87 to 1.00 for the quarter ending December 31,
2024 and an EBITDA to consolidated debt service ratio of at least 1.25 to 1.00 at the end of each fiscal quarter unless
free liquidity is greater than or equal to $300,000,000 at that time. The testing of the covenants under the Senior Secured
Credit Facility was suspended to and including December 31, 2022, with the exception of the free liquidity test. As a
result of the COVID-19 pandemic, we paused our global fleet cruise operations from March 2020 until July 2021.
Although we resumed our cruise voyages on a limited basis in July 2021 and completed the re-launch of our full fleet in
May 2022, if we must again pause our voyages or if our results of operations and financial performance do not recover
as planned, we may be out of compliance with some or all of the maintenance and financial covenants in certain of our
debt facilities. If we expect to not be in compliance, we would expect to seek waivers from the lenders under these
facilities or renegotiate these facilities prior to any covenant violation.
Any covenant waiver or renegotiation of any of our debt facilities has led, and may in the future lead, to increased costs,
increased interest rates, additional restrictive covenants and other available lender protections that would be applicable to
us under these debt facilities, and such increased costs, restrictions and modifications may vary among debt facilities.
Our ability to provide additional lender protections under these facilities will be limited by the restrictions in our
indebtedness. There can be no assurance that we would be able to obtain waivers or renegotiate these facilities in a
timely manner, on acceptable terms or at all. If we were not able to obtain a covenant waiver under any one or more of
these debt facilities or renegotiate such facilities, we would be in default of such agreements, which could result in cross
defaults to our other debt agreements. As a consequence, we would need to refinance or repay the applicable debt facility
or facilities, and would be required to raise additional debt or equity capital, or divest assets, to refinance or repay such
facility or facilities. If we were to be unable to obtain a covenant waiver under any one or more of these debt facilities or
renegotiate these facilities, there can be no assurance that we would be able to raise sufficient debt or equity capital, or
divest assets, to refinance or repay such facility or facilities.
With respect to each of these debt facilities, if we were unable to or did not obtain a waiver, renegotiate or refinance or
repay such debt facilities, it would lead to an event of default under such facilities, which could lead to an acceleration of
the indebtedness under such debt facilities. In turn, this would lead to an event of default and potential acceleration of
amounts due under all of our outstanding debt and derivative contract payables. 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 our ships. Any such action would have an
adverse impact on our business, financial condition and results of operations. As a result, the failure to obtain the
covenant waivers or renegotiate our facilities as described above would have a material adverse effect on us and our
ability to service our debt obligations.
We anticipate that we will need additional financing in the future, which may not be available on favorable terms, or
at all, and our outstanding exchangeable notes and any future financing may be dilutive to existing shareholders.
We anticipate that we will need additional equity and/or debt financing in the future to refinance our existing debt and to
fund our newbuild program. We may be unable to obtain any desired additional financing on terms favorable to us, or at
all, depending on market and other conditions. The ability to raise additional financing depends on numerous factors that
are outside of our control, including general economic and market conditions, the health of financial institutions, our
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credit ratings and investors’ and lenders’ assessments of our prospects and the prospects of the cruise industry in general.
If we raise additional funds by issuing debt, we may be subject to limitations on our operations due to restrictive
covenants, which may be more restrictive than the covenants in our existing debt agreements, and we may be required to
further encumber our assets. We may not have sufficient available collateral to pledge to support additional financing. If
adequate funds are not available on acceptable terms, or at all, we may be unable to fund our operations or respond to
competitive pressures, which could negatively affect our business. Our credit ratings, which have been downgraded as a
result of the impact on our business of the COVID-19 pandemic, could be further downgraded, which could have an
impact on the availability and/or cost of financing. In addition, we may conclude that there is a substantial doubt about
our ability to operate as a going concern, which could have additional effects on our credit ratings and the availability
and/or cost of financing. There can be no assurance that our ability to access the credit and/or capital markets will not be
adversely affected by changes in the financial markets and the global economy. If we are not able to fulfill our liquidity
needs through operating cash flows and/or borrowings under credit facilities or otherwise in the capital markets, our
business and financial condition could be adversely affected and it may be necessary for us to reorganize our company in
its entirety, including through bankruptcy proceedings, and our shareholders may lose their investment in our ordinary
shares.
If we raise additional funds through equity and/or debt issuances, NCLH’s shareholders could experience dilution of
their ownership interest, and these securities could have rights, preferences, and privileges that are superior to that of
holders of NCLH’s ordinary shares. Further, the exchange of some or all of our outstanding exchangeable notes may
dilute the ownership interests of NCLH’s shareholders. Upon exchange of any of the exchangeable notes, any sales in
the public market of NCLH’s ordinary shares issuable upon such exchange could adversely affect prevailing market
prices of NCLH’s ordinary shares. In addition, the existence of the exchangeable notes may encourage short selling by
market participants that engage in hedging or arbitrage activity, and anticipated exchange of any of the exchangeable
notes into NCLH ordinary shares could depress the price of NCLH’s ordinary shares.
Our indebtedness, and the agreements governing our indebtedness, may limit our flexibility in operating our business
and a substantial majority of our assets 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.
The impact of volatility and disruptions in the global credit and financial markets could increase our counterparty
credit risks, including those under our credit facilities, derivatives, contingent obligations, insurance contracts and
new ship progress payment guarantees.
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
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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.
In 2017, the U.K.’s Financial Conduct Authority (“FCA”), which regulated the London Interbank Offered Rate
(“LIBOR”), announced its intention to phase out LIBOR by the end of 2021 and the Alternative Reference Rates
Committee selected the Secured Overnight Financing Rate (“SOFR”) as the rate recommended to replace U.S. dollar
LIBOR (“USD LIBOR”). In December 2020, ICE Benchmark Administration (“IBA”), the administrator of LIBOR,
released a consultation disclosing that it would cease publication of one-week and two-month USD LIBOR after
December 31, 2021, but continue to publish the remaining tenors of USD LIBOR for an additional 18 months, through
June 30, 2023. These remaining tenors of USD LIBOR—overnight, one-month, three-month, six-month and 12-
months—encompass the tenors referenced in certain of our borrowings and interest rate swaps. However, uncertainty
remains as many market participants await the development of term SOFR products, including forward-looking rates and
indices that might co-exist with SOFR. In addition, recent New York state legislation effectively codified the use of
SOFR as the alternative to LIBOR in the absence of another chosen replacement rate, which may affect contracts
governed by New York state law.
We have begun to transition away from LIBOR as a reference rate and will continue to do so in the coming months. We
will need to amend our remaining credit facilities that reference LIBOR to determine replacement rates, which may
result in interest payments that differ from our original expectations and which may materially impact the amount of our
interest payments under our variable rate debt. We will also need to consider any new contracts and whether they should
reference an alternative benchmark rate or include suggested fallback language, as published by the Alternative
Reference Rates Committee. Additionally, SOFR is calculated based on short-term repurchase agreements, backed by
Treasury securities. SOFR is observed and backward looking, which stands in contrast with LIBOR, which is an
estimated forward-looking rate and relies, to some degree, on the expert judgment of submitting panel members. Given
the inherent differences between LIBOR and SOFR or any other alternative benchmark rate that may be established,
there are many uncertainties regarding a transition from LIBOR. The consequences of these developments with respect
to LIBOR cannot be entirely predicted and span multiple future periods but could result in an increase in the cost of our
variable rate debt which may be detrimental to our financial position or operating results. In addition, uncertainty as to
the nature of a potential discontinuance, modification, alternative reference rates or other reforms may materially
adversely affect the trading market for securities linked to such benchmarks. However, we cannot predict the timing of
these developments or their impact on our indebtedness or financial condition.
Any further impairment of our trade names or goodwill could adversely affect our financial condition and operating
results.
We evaluate trade names and goodwill for impairment on an annual basis, or more frequently when circumstances
indicate that the carrying value of a reporting unit may not be recoverable. Several factors including a challenging
operating environment impacts affecting consumer demand or spending, the deterioration of general macroeconomic
conditions, or other factors could result in a change to the future cash flows we expect to derive from our operations.
Reductions of the cash flows used in the impairment analyses may result in the recording of an impairment charge to a
reporting unit’s trade name or goodwill. For example, we recognized significant impairment losses during 2020 related
to the COVID-19 pandemic. We believe that we have made reasonable estimates and judgments. However, a change in
our estimated future operating cash flows may result in a decline in fair value in future periods, which may result in a
need to recognize additional impairment charges.
Operational Related Risk Factors
Unavailability of ports of call may materially adversely affect our business, financial condition and results of
operations.
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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, health, safety, and environmental concerns,
existing capacity constraints, security, adverse weather conditions and natural disasters such as hurricanes, floods,
typhoons and earthquakes, financial limitations on port development, political instability, armed conflicts such as
Russia’s invasion of Ukraine, 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, currently and in the past, regulatory changes, the
COVID-19 pandemic, armed conflicts and damages to ports from hurricanes have prohibited our cruise voyages from
visiting certain regions, including Cuba, Russia, Japan and some ports in the Caribbean. There can be no assurance that
our ports of call will not be similarly affected in the future. 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.
We rely on scheduled commercial airline services for passenger and crew connections. Increases in the price of, or
major changes, significant delays and disruptions, or reduction in, commercial airline services has, and could in the
future, 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 health and safety events, strikes or other staffing shortages, weather or other
events, or the lack of availability due to schedule changes or a high level of airline bookings has and could adversely
affect our ability to deliver guests and crew to or from our ships and thereby increase our cruise operating expenses
which, in turn, has an adverse effect on our financial condition and results of operations. For example, many commercial
airlines reduced services, experienced staffing shortages and suffered other disruptions due to the COVID-19 pandemic
and other macroeconomic conditions. COVID-19 related regulations have also sometimes prevented us from using
commercial airline services to transport our crew members to and from our ships, which has resulted in increased costs
to our Company.
Global events and conditions, including terrorist acts, armed conflicts, acts of piracy, and other international events
impacting the security of travel or the global economy, or threats thereof, could adversely affect our business.
Global events and conditions, including the threat or possibility of future terrorist acts, outbreaks of hostilities or armed
conflict, political unrest and instability, the issuance of government travel advisories or elevated threat warnings,
increases in the activity of pirates, and other geo-political uncertainties, or the possibility or fear of such events, have had
in the past and may again in the future have an adverse impact on our business. Any of these events or conditions may
adversely affect demand for, and by extension pricing of, our cruises. Such events or conditions may also have
downstream effects on the global economic environment, including increased fuel and commodity pricing, supply chain
shortages, labor shortages, volatility in the global capital markets, contraction of the global economy leading to
decreased consumer discretionary spending, and other effects impossible to predict at this time.
Armed conflicts, including Russia’s ongoing invasion of Ukraine, have also impacted, and could in the future impact,
our profitability and product offering by limiting the destinations to which we can travel and our operations by making it
more difficult to source crew members and third-party vendors from affected regions and making it more difficult or
costly to source goods we need to run our operations or to build or maintain our ships. Further, the Russia-Ukraine
conflict has contributed to extreme volatility in the global financial markets and has had, and is expected to continue to
have, further global economic consequences, including disruptions of the global supply chain and energy markets and
heightened volatility of commodity fuel prices. Such volatility or disruptions have had, and may continue to have,
adverse consequences to our business, our suppliers and our customers. If the equity and credit markets deteriorate,
including as a result of political unrest or war, it may make any necessary debt or equity financing more difficult to
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obtain in a timely manner or on favorable terms, more costly or more dilutive. Our business, financial condition and
results of operations may be materially and adversely affected by any negative impact on the global economy, capital
markets or commodity fuel prices resulting from the conflict in Ukraine or any other geopolitical tensions.
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. We have experienced
accidents and other incidents involving our cruise ships in the past 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), could have an adverse impact on demand, which 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 interest rates,
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, inflation, 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 or lower Occupancy Percentages, 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.
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.
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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. We experience cyber-attacks of varying degrees
on our systems and networks and, as a result, unauthorized parties have obtained in the past, and may in the future
obtain, access to our computer systems and networks, including cloud-based platforms. The technology infrastructure
and systems of our suppliers, vendors, service providers and partners have in the past experienced and may in the future
experience such attacks. Cyber-attacks can include computer viruses, malware, worms, hackers and other malicious
software programs or other attacks, 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. There can be no assurance that a 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.
Noncompliance with these 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, including more costly alternate fuel sources, 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, the significant drop in demand for high-sulfur fuel due to the previous pandemic-related pause in
operations has made it more difficult to source high-sulfur fuel going forward, which may increase our fuel costs. Ships
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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. We also expect to be required to use alternate fuel sources in the
future as additional regulations aimed at reducing carbon intensity are introduced or in order to achieve any emissions
reduction targets we have and may in the future adopt. For example, the IMO adopted two requirements that went into
effect in 2023, the Carbon Intensity Indicator and Energy Efficiency Ship Index, which each regulate carbon emissions
for ships, and the E.U. will regulate carbon dioxide emissions from passenger and cargo ships over 5,000 Gross Tons
under its Emissions Trading System beginning in 2024. 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. 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, other “force majeure” events that are beyond our control and the control of shipyards or
subcontractors, or changes to technical specifications due to regulatory changes, sustainability initiatives or other
strategic initiatives 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 impacts of COVID-19, Russia’s invasion of Ukraine, modifications the Company plans to make to
its newbuilds, including initiatives to improve environmental sustainability, and other macroeconomic events have
resulted in some delays in expected ship deliveries, and may result in additional delays in ship deliveries in the future,
which may be prolonged. 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. Additionally, we are reliant on a third party to oversee certain newbuild and Dry-
dock projects. Any occurrence that prevented such third party from continuing to oversee such projects or substantially
increased the costs related to such oversight could have an adverse effect on our operations. 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
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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.
Our failure or 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.
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 failure or inability to hire a sufficient number of qualified crew members would adversely
affect our business. 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.
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 loss of services of one or more of these
individuals could materially adversely affect us.
Negative perceptions about the cruise industry due to the COVID-19 pandemic, carbon intensity or otherwise may make
it increasingly difficult to retain and hire additional crew members to staff our fleet and to recruit new employees
generally.
Impacts related to climate change may adversely affect our business, financial condition and results of operations.
There has been an increased focus on greenhouse gas and other emissions from global regulators, consumers and other
stakeholders. Regulations addressing climate change that have already been adopted or are being considered, as
described under “Risks Related to the Regulatory Environment in Which We Operate,” may have significant adverse
impacts to our profitability and operations. In addition, concern about climate change may cause consumers to avoid
certain kinds of travel including cruise and air travel, which could impact our ability to source guests. Increasing
concerns about greenhouse gas emissions may attract scrutiny from investors and may make it more difficult and/or
costly for us to raise capital. Our ships, port facilities, corporate offices and island destinations have in the past and may
again be adversely affected by an increase in the frequency and intensity of adverse weather conditions caused by
climate change. For example, certain ports have become temporarily unavailable to us due to hurricane damage and
other destinations have either considered or implemented restrictions on cruise operations due to environmental
concerns. We expect to make significant investments in technology, equipment and alternative fuels in order to achieve
any climate-related targets we may set and to comply with climate-related regulations, and our profitability and
operations may be adversely impacted by such investments. These investments may have costs beyond our expectations
and may not ultimately benefit us as expected. The actions we take to meet our emissions reduction goals and
requirements are expected to result in delays to our shipbuilding program. Our ability to achieve our sustainability
commitments and goals will depend on a number of variable factors, some of which are outside of our control. We may
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fall short of any sustainability goals we set, including those disclosed in this report, which may result in negative impacts
to our reputation, 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.
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 would 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. Two such certified claims against us are
pending and additional claims may be brought against us in the future. If these suits are successful after we have
exhausted our ability to appeal, we may be required to pay substantial monetary damages. Lawsuits and investigations
stemming from COVID-19 have also been brought against us, and we may be subject to additional lawsuits and
investigations related to COVID-19 in the future. We cannot predict the number or outcome of any such proceedings and
the impact that they will have on our financial results, but any such impact may be material.
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, such
as technology and payment processing services, that are vital to our business. If these service providers suffer financial
hardship or suffer disruptions or are 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
43
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.
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. A weaking of the U.S. dollar against the euro would have a negative impact on our
financial performance to the extent that these contracts have not been hedged. Additionally, if a shipyard is unable to
perform under the related ship construction contract, any associated foreign currency hedges that were entered into to
manage the currency risk would need to be terminated.
Our expansion into new markets and investments in new markets and land-based destination projects may not be
successful.
We believe there remains significant opportunity to expand our passenger sourcing into major markets in the future, such
as Europe and Australia, as well as into emerging markets and to expand our itineraries in new markets. 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. We have
also made, and plan to continue to make, investments in land-based projects including port facilities and destination
projects that are susceptible to impacts from, among other things, weather events, regulatory restrictions, labor risks,
shortages of goods and materials and resistance from local populations. Any such impacts to our land-based projects
could adversely impact our business, financial condition and results of operations.
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 additional ships to our fleet. 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.
Risks Related to the Regulatory Environment in Which We Operate
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 certain recently
introduced laws and regulations and future changes in laws and regulations could lead to increased costs and/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
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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 restricting or taxing emissions, including those of greenhouse gases,
requiring the use of low-sulfur fuels, requiring the use of shore power while in port, increasing fuel efficiency
requirements, reducing the threat of invasive species in ballast water, and improving sewage and greywater-handling
capabilities. For example, 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 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. In 2021, the IMO adopted two requirements that went into effect in
2023, the Carbon Intensity Indicator (the “CII”) and Energy Efficiency Ship Index (the “EEXI”), which each regulate
carbon emissions for ships. The CII is an operational metric designed to measure how efficiently a ship transports goods
or passengers by looking at carbon dioxide emissions per nautical mile. Ships are given an annual rating from A to E
with a C or better required for compliance. For ships that receive a D rating for three consecutive years, or an E rating
for one year, a corrective action plan will need to be developed and approved. In 2023, ships are required to reduce
carbon intensity by 5% from a 2019 baseline, with 2% incremental improvements each year thereafter until 2030. The
EEXI is a design re-certification requirement that updates energy efficiency requirements for existing ships and regulates
carbon dioxide emissions related to installed engine power, transport capacity and ship speed. In addition, in December
2022, the European Parliament, the Council of the European Union, and the European Commission reached an
agreement on including the maritime transport sector in the E.U.’s carbon dioxide Emissions Trading System. Under the
proposed directive, which has not been formally approved, ships over 5,000 Gross Tons that transport passengers or
cargo to or from E.U. member state ports would be required to purchase and surrender emissions allowances equivalent
to emissions for all or a half of a covered voyage, depending on whether the voyage was between two E.U. ports or an
E.U. and a non-E.U. port. The requirements are proposed to be phased in from 2024 to 2026. Beginning in 2024, covered
entities would be required to procure and surrender allowances equivalent to 40% of their carbon emissions, with the
amount increasing to 70% of carbon emissions in 2025 and 100% of greenhouse gas emissions in 2026.
Compliance with such laws and regulations are expected to entail significant expenses for a combination of: ship
modifications, purchases of emissions allowances, alternative fuels and higher-cost compliant newbuilds. Compliance is
also expected to result in changes to our operating procedures, including limitations on our ability to operate in certain
locations and slowing the speed of our ships and may render some ships obsolete, which would adversely impact our
operations. 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.
Additionally, 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.
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.
45
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, changes in tax laws could
adversely affect our tax position, including our effective tax rate, tax payments and 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. For example, the Organization for Economic Co-operation and Development and numerous jurisdictions
(including the United Kingdom) have had an increased focus on issues concerning the taxation of multinational
businesses and several related reforms have been put forth (including the implementation of a global minimum tax rate
of at least 15% for large multinational businesses), which could have a negative effect on our business, financial
condition and results of operations.
Our ability to comply with economic substance requirements in certain jurisdictions and increased costs associated
with our efforts to comply may have a negative impact on our operations.
Our Company and certain of its subsidiaries may be subject to economic substance requirements in their jurisdictions of
formation, including, but not limited to, Bermuda, Guernsey, Isle of Man, British Virgin Islands, Cayman Islands, the
Bahamas, Saint Lucia and Marshall Islands. Pursuant to the legislation passed in each jurisdiction, entities subject to
each jurisdiction’s laws that carry out relevant activities as specified in such laws, are required to demonstrate substantial
economic substance in that jurisdiction. In general terms, substantial economic substance means: (i) the entity is actually
directed and managed in the jurisdiction; (ii) core income-generating activities relating to the applicable relevant activity
are performed in the jurisdiction; (iii) there are adequate employees in the jurisdiction; (iv) the entity maintains adequate
physical presence in the jurisdiction; and (v) there is adequate operating expenditure in the jurisdiction. We have
evaluated the activities of NCLH, NCLC and their subsidiaries and have concluded that in some cases, those activities
are 'relevant activities' for the purposes of the applicable economic substance laws and that, consequently, certain entities
within our organization will be required to demonstrate compliance with these economic substance requirements. We
may be subject to increased costs and our management team may be required to devote significant time to satisfying
economic substance requirements in certain of these jurisdictions. If such entities cannot establish compliance with these
46
requirements, we may be liable to penalties and fines in the applicable jurisdictions and/or required to re-domicile such
entities to different jurisdictions that may have tax regimes and other regulatory regimes which may be less favorable.
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 expect to pay any cash dividends for the foreseeable future.
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. For instance, 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 (i) the
ability of NCLH’s Board of Directors to designate one or more series of preference shares and issue preference shares
without shareholder approval; (ii) a classified board of directors; (iii) the sole power of a majority of NCLH’s Board of
Directors to fix the number of directors; (iv) 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 (v) 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.
47
Item 1B. Unresolved Staff Comments
None.
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 386,224 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 private 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
Our threshold for disclosing material environmental legal proceedings involving a governmental authority where
potential monetary sanctions are involved is $1 million.
See “Item 8—Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note 13
Commitments and Contingencies” in Part II of this annual report for information about material legal proceedings.
Item 4. Mine Safety Disclosures
None.
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Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
PART II
Market Information
NCLH’s ordinary shares are listed on the NYSE under the symbol “NCLH.”
Holders
As of February 16, 2023, there were 274 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.
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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 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 NYSE and in each index on the last
trading day of fiscal 2017. 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.
$250.00
$200.00
$150.00
$100.00
$50.00
$-
12/31/17
12/31/18
12/31/19
12/31/20
12/31/21
12/31/22
NCLH
S&P 500
Dow Jones US Travel & Leisure
Item 6. [Reserved]
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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;
however, our cruise voyages were completely suspended from March 2020 until July 2021 due to the COVID-19
pandemic and our resumption of cruise voyages was phased in gradually, with full operation of our fleet resumed in May
2022 as described under “—Update Regarding COVID-19 Pandemic” below. 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 Wi-Fi 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.
The cost of crew repatriation, including charters, housing, testing and other costs related to COVID-19 are also
included.
• 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
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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 liquidity, ship accounting and asset impairment.
Liquidity
We make several critical accounting estimates with respect to our liquidity.
Significant events affecting travel typically have an impact on demand for cruise vacations, with the full extent of the
impact determined by the length of time the event influences travel decisions. The level of occupancy on our ships will
depend on a number of factors including, but not limited to, the conditions discussed below under “Macroeconomic
Trends and Uncertainties”, further resurgences of COVID-19 or the emergence of other public health crises and any
related governmental regulations and new health and safety protocols, port availability, travel restrictions, bans and
advisories, and our ability to staff our ships. In addition, as a result of conditions associated with the COVID-19
pandemic and other global events, such as Russia’s ongoing invasion of Ukraine and actions taken by the United States
and other governments in response to the invasion, the global economy, including the financial and credit markets, has
experienced significant volatility and disruptions, including increases in inflation rates, fuel prices, and interest rates.
These conditions have resulted, and may continue to result, in increased expenses and also have impacted travel and
consumer discretionary spending. We believe the ongoing effects of the foregoing factors and events on our operations
and global bookings have had, and will continue to have, a significant impact on our financial results and liquidity.
The estimation of our future cash flow projections includes numerous assumptions that are subject to various risks and
uncertainties. Our principal assumptions for future cash flow projections include:
• Expected gradual return to historical occupancy levels;
• Expected increase in revenue per passenger cruise day through a combination of both passenger ticket and
onboard revenue as compared to 2019;
• Forecasted cash collections in accordance with the terms of our credit card processing agreements (see Note 13
- “Commitments and Contingencies”); and
• Expected sustained higher fuel prices and the impact of inflation.
Our projected liquidity requirements also reflect our principal assumptions surrounding ongoing operating costs, as well
as liquidity requirements for financing costs and necessary capital expenditures. We cannot make assurances that our
assumptions used to estimate our liquidity requirements will not change materially due to the dynamic nature of the
current economic landscape. Accordingly, the full effect of the COVID-19 pandemic and other global events impacting
macroeconomic conditions and travel and consumer discretionary spending, including Russia’s ongoing invasion of
Ukraine, on our financial performance and financial condition cannot be quantified at this time. We have made
reasonable estimates and judgments of the impact of these events within our financial statements; however, there may be
material changes to those estimates in future periods. We have taken actions to improve our liquidity, including
completing various capital market and financing transactions and making capital expenditure and operating expense
reductions, and we expect to continue to pursue further opportunities to improve our liquidity.
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. Our residual value is established based on our long-term estimates
of the expected remaining future benefit at the end of the ships’ weighted average useful lives. In the third quarter of
2022, the Company took delivery of Norwegian’s first Prima Class Ship. Based on the design, structure and
technological advancements made to this new class of ship and the analysis of its major components, which is generally
performed upon the introduction of a new class of ship, we have assigned the Prima Class Ships a weighted-average
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useful life of 35 years with a residual value of 10%. 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 costs and useful
lives of the ships’ major component systems on the date of acquisition, such as cabins, main diesels, main electric,
superstructure and hull, and their related proportional weighting to the ship as a whole. The useful lives of components
of new ships and ship improvements are estimated based on the economic lives of the new components. In addition, to
determine the useful lives of the major components of new ships and ship improvements, we consider the impact of the
historical useful lives of similar assets, manufacturer recommended lives, planned maintenance programs 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. In 2020, one ship had significant improvements that extended the
remaining weighted average useful life of the vessel. Accordingly, we updated our estimate of both its useful life and
residual value based on the new weighted average useful life of its current components. The impact of the change in
estimate was accounted on a prospective basis and was not material.
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 ship service life by one year,
depreciation expense for the year ended December 31, 2022 would have increased by $18.8 million. In addition, if our
ships were estimated to have no residual value, depreciation expense for the same period would have increased by $82.8
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. For ship
impairment analyses, the lowest level for which identifiable cash flows are largely independent of other assets and
liabilities is each individual ship. 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 estimated 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 trade names for impairment on December 31 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 a qualitative assessment which allows us to first assess qualitative factors to determine whether it is
more likely than not (i.e., more than 50%) that the estimated fair value of a reporting unit is less than its carrying value.
For trade names we also provide a qualitative assessment to determine if there is any indication of impairment.
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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 believe our estimates and judgments with respect to our long-lived assets, principally ships, goodwill, tradenames
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. If a material change occurred or the result of
the qualitative assessment indicated it is more likely than not that the estimated fair value of the asset is less than its
carrying value, we would conduct a quantitative assessment comparing the fair value to its carrying value.
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.
For our annual impairment evaluation, we performed a qualitative assessment for the Regent Seven Seas reporting unit
and of each brand’s trade names. As part of our analysis, we performed an assessment of current factors compared to key
assumptions impacting the quantitative tests performed in 2020. As of December 31, 2022, there was $98.1 million of
goodwill remaining for the Regent Seven Seas reporting unit. Trade names were $500.5 million as of
December 31, 2022. As of December 31, 2022, our annual impairment reviews support the carrying values of these
assets.
Non-GAAP Financial Measures
We use certain non-GAAP financial measures, such as Adjusted Gross Margin, Net Cruise Cost, Adjusted Net Cruise
Cost Excluding Fuel, Adjusted EBITDA, Adjusted Net Loss 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
Adjusted Gross Margin to manage our business on a day-to-day basis because it reflects revenue earned net of certain
direct variable costs. We also utilize Net Cruise Cost and Adjusted Net Cruise Cost Excluding Fuel to manage our
business on a day-to-day basis. In measuring our ability to control costs in a manner that positively impacts our results of
operations, we believe changes in Adjusted Gross Margin, 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
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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 Loss and Adjusted EPS are non-GAAP financial measures that exclude certain amounts and
are used to supplement GAAP net loss and EPS. We use Adjusted Net Loss 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
during normal operations. The amounts excluded in the presentation of these non-GAAP financial measures may vary
from period to period; accordingly, our presentation of Adjusted Net Loss and Adjusted EPS may not be indicative of
future adjustments or results. For example, for the year ended December 31, 2022, we incurred $12.1 million related to
restructuring costs or charges. We included this as an adjustment in the reconciliation of Adjusted Net Loss since the
expenses are not representative of our day-to-day operations; however, this adjustment did not occur and is not included
in the comparative period presented within this Form 10-K.
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.
Update Regarding COVID-19 Pandemic
Safe Resumption of Operations
Due to the impact of COVID-19, travel restrictions and limited access to ports around the world, in March 2020, we
implemented a voluntary suspension of all cruise voyages across our three brands. In the third quarter of 2021, we began
a phased relaunch of certain cruise voyages with ships initially operating at reduced occupancy levels. In early May
2022, we completed the phased relaunch of our entire fleet with all ships now in operation with guests on board.
Occupancy levels have sequentially increased in recent quarters, most recently averaging 87% in the fourth quarter 2022,
with the Company expecting to return to historical Occupancy levels for the second quarter of 2023.
During 2022, we benefitted from significant improvements in the public health environment which allowed for the
removal of most COVID-19 related health and safety protocols by year-end, unless required by local jurisdictions. For
example, in July 2022, the CDC announced that its voluntary COVID-19 Program for Cruise Ships Operating in U.S.
Waters was no longer in effect. We will continue to modify and evolve our health and safety protocols as needed along
with the broader public health and regulatory environments. We continue to prioritize the health and safety of our guests,
crew and communities we visit and follow applicable travel guidelines and local protocols as required by the ports and
destinations we visit.
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The relaxation of protocols, continued easing of travel restrictions and reopening of most ports around the globe to cruise
ships has improved travel experiences, expanded the addressable cruise market, allowed us to expand the variety of our
itineraries and provided additional catalysts on the road to recovery.
Modified Policies
We have launched cancellation policies for certain sailings booked during certain time periods to permit certain guests to
cancel cruises which were not part of a temporary suspension of voyages up to 15 days prior to embarkation for cruises
embarking prior to December 31, 2022 or in the event of a positive COVID-19 test and receive a refund in the form of a
credit to be applied toward a future cruise. Standard payment schedules and cancellation penalties apply for all sailings
after December 31, 2022. The future cruise credits that have been issued as face value reimbursement for cancelled
bookings due to COVID-19 are generally valid for any sailing through June 30, 2023, and we may further extend the
length of time these future cruise credits may be redeemed. The use of such credits may prevent us from garnering
certain future cash collections as staterooms booked by guests with such credits will not be available for sale, resulting in
less cash collected from bookings to new guests. We may incur incremental commission expense for the use of these
future cruise credits.
Financing Transactions
In 2022 and 2023, we continued to take actions to bolster our financial condition as part of our long-term post-pandemic
financial recovery strategy. In February 2022, we received additional financing through various debt financings,
collectively totaling $2.1 billion in gross proceeds, which was used to redeem all of the outstanding 2024 Senior Secured
Notes and 2026 Senior Secured Notes and to make scheduled principal payments on debt maturing in 2022, including, in
each case, to pay any accrued and unpaid interest thereon, as well as related premiums, fees and expenses.
In December 2022, we amended the Senior Secured Credit Facility to extend approximately $1.4 billion of maturities by
one year to January 2025. The amendment also updated certain financial covenants and increased our ability to incur
additional debt. Each of our export-credit backed facilities were also amended to conform the financial covenants with
the Senior Secured Credit Facility. In February 2023, a commitment of $82.5 million in aggregate principal amount of
the Revolving Loan Facility that was not previously extended was obtained to assign the commitment to a new lender
under the same terms as the extending lenders.
In February 2023, NCLC issued $600 million aggregate principal amount of 8.375% senior secured notes due 2028. The
proceeds from the notes were used to repay the loans outstanding under our Term Loan A Facility that otherwise would
have become due in January 2024, including to pay any accrued and unpaid interest thereon, as well as related
premiums, fees and expenses.
In July 2022, we amended our $1 billion commitment, which provided additional liquidity to the Company through
March 31, 2023. In February 2023, the commitment was further extended through February 2024, with an option for
NCLC to further extend the commitments through February 2025 at its election. Simultaneously, the amount of the
commitment was reduced to $650 million, which may be drawn in up to two draws, and in connection with the execution
of the amended commitment letter, NCLC issued $250 million aggregate principal amount of senior secured notes due
2028. NCLC will use the net proceeds for general corporate purposes.
In February 2023, NCLC entered into a Backstop Agreement with MS, pursuant to which MS has agreed to provide
backstop committed financing to refinance and/or repay in whole or in part up to $300 million of amounts outstanding
under the Senior Secured Credit Facility.
Refer to Note 8 – “Long-Term Debt” for further details about the above transactions.
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Update on Bookings
The Company entered the year with a record cumulative booked position of approximately 62% for full year 2023, in
line with previously outlined expectations and within the Company’s optimal 60% to 65% range, and at higher prices
than 2019 at a similar point in time. Booking volumes have accelerated in recent months buoyed by strong WAVE
season demand. The Company’s brands achieved several booking records in recent months including at Norwegian
Cruise Line which reached an all-time record booking month in November, boosted by Black Friday and Cyber Monday,
which was subsequently exceeded in January 2023. As a result, full year 2023 cumulative booked position is ahead of
2019 levels inclusive of the Company’s approximately 19% increase in capacity, at continued higher pricing. Net
booking volumes continue to be at the pace needed to reach historical Occupancy levels for the second quarter of 2023
and beyond; however, our full fleet may not achieve historical Occupancy levels on our expected schedule and as a
result, current booking data may not be informative. In addition, because of our cancellation policies, bookings may not
be representative of actual cruise revenues.
There are uncertainties about when our full fleet will be back at historical occupancy levels and, accordingly, we cannot
estimate the impact on our business, financial condition or near- or longer-term financial or operational results with
certainty; however, we will report a net loss for the first quarter of 2023.
Macroeconomic Trends and Uncertainties
As a result of conditions associated with global events, including the downstream effects of the COVID-19 pandemic
and Russia’s ongoing invasion of Ukraine and actions taken by the United States and other governments in response to
the invasion, the global economy, including the financial and credit markets, has experienced significant volatility and
disruptions, including increases in inflation rates, fuel prices, and interest rates. Our costs have been, and are expected to
continue to be, adversely impacted by these increases. We have used, and may continue to use, derivative instruments to
attempt to mitigate the risk of adverse changes in fuel prices and interest expense. In an attempt to mitigate risks related
to inflation, our supply chain department has negotiated contracts with varying terms, with a goal of providing us with
the ability to take advantage of cost declines when they occur, and diversified our sourcing options. These strategies may
not fully offset the impact of current macroeconomic conditions. Furthermore, we are exposed to fluctuations in the euro
exchange rate for certain portions of ship construction contracts that have not been hedged. See “Item 1A—Risk
Factors” for additional information.
Climate Change
We believe the increasing focus on climate change and evolving regulatory requirements will materially impact our
future capital expenditures and results of operations. We expect to incur significant expenses related to these regulatory
requirements, which may include expenses related to greenhouse gas emissions reduction initiatives and the purchase of
emissions allowances, among other things. If requirements become more stringent, we may be required to change certain
operating procedures, for example slowing the speed of our ships, which could adversely impact our operations. We are
evaluating the effects of global climate change related requirements, which are still evolving, including our ability to
mitigate certain future expenses through initiatives to reduce greenhouse gas emissions; consequently, the full impact to
the Company is not yet known. Additionally, our ships, port facilities, corporate offices and island destinations have in
the past and may again be adversely affected by an increase in the frequency and intensity of adverse weather conditions
caused by climate change. For example, certain ports have become temporarily unavailable to us due to hurricane
damage and other destinations have either considered or implemented restrictions on cruise operations due to
environmental concerns. See Item 1A, “Risk Factors” for additional information.
Executive Overview
Total revenue increased 647.5% to $4.8 billion for the year ended December 31, 2022 compared to $0.6 billion for the
year ended December 31, 2021. Capacity Days increased by 420.2%.
For the year ended December 31, 2022, we had net loss and diluted EPS of $(2.3) billion and $(5.41), respectively. For
the year ended December 31, 2021, we had net loss and diluted EPS of $(4.5) billion and $(12.33), respectively.
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Operating loss decreased 39.2% to $(1.6) billion for the year ended December 31, 2022 from $(2.6) billion for the year
ended December 31, 2021.
We had Adjusted Net Loss and Adjusted EPS of $(1.9) billion and $(4.64), respectively, for the year ended
December 31, 2022, including $0.3 billion of adjustments primarily consisting of losses on the extinguishment and
modification of debt and share-based compensation, compared to Adjusted Net Loss and Adjusted EPS of $(2.9) billion
and $(8.07), respectively, for the year ended December 31, 2021. A 60.9% improvement in Adjusted EBITDA was
incurred for the same period. We refer you to our “Results of Operations” below for a calculation of Adjusted Net Loss,
Adjusted EPS and Adjusted EBITDA.
Results of Operations
The discussion below compares the results of operations for the year ended December 31, 2022 to the year ended
December 31, 2021. You should read this discussion in conjunction with the consolidated financial statements and the
notes thereto included elsewhere in this annual report. For a comparison of the Company’s results of operations for the
fiscal years ended December 31, 2021 to the year ended December 31, 2020, 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, 2021, which was filed with the U.S. Securities and Exchange Commission on March 1, 2022.
We reported total revenue, total cruise operating expense, operating loss and net loss as follows (in thousands, except per
share data):
Total revenue
Total cruise operating expense
Operating loss
Net loss
EPS:
Basic
Diluted
Year Ended December 31,
2022
2021
647,986
$ 4,843,760 $
$ 4,267,086 $
1,608,037
$ (1,551,757) $ (2,552,348)
$ (2,269,909) $ (4,506,587)
$
$
(5.41) $
(5.41) $
(12.33)
(12.33)
58
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 loss
Non-operating income (expense)
Interest expense, net
Other income (expense), net
Total non-operating income (expense)
Net loss before income taxes
Income tax benefit (expense)
Net loss
The following table sets forth selected statistical information:
Passengers carried
Passenger Cruise Days
Capacity Days (1)
Occupancy Percentage
(1) Excludes certain capacity on Pride of America which was temporarily unavailable.
Year Ended December 31,
2022
2021
67.2 %
32.8 %
100.0 %
21.4 %
7.4 %
22.5 %
14.2 %
5.4 %
17.2 %
88.1 %
28.5 %
15.5 %
44.0 %
(32.1)%
(16.5)%
1.6 %
(14.9)%
(47.0)%
0.1 %
(46.9)%
60.6 %
39.4 %
100.0 %
22.2 %
8.3 %
82.9 %
46.6 %
9.7 %
78.4 %
248.1 %
137.6 %
108.2 %
245.8 %
(393.9)%
(319.9)%
19.1 %
(300.8)%
(694.7)%
(0.8)%
(695.5)%
Year Ended December 31,
2022
1,663,275
12,791,773
17,566,069
2021
232,448
1,778,899
3,376,703
72.8 %
52.7 %
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Adjusted Gross Margin was calculated as follows (in thousands):
Total revenue
Less:
Total cruise operating expense
Ship depreciation
Gross Margin
Ship depreciation
Payroll and related
Fuel
Food
Other
Adjusted Gross Margin
Year Ended December 31,
2022
Constant
Currency
$ 4,891,222 $
2022
$ 4,843,760
2021
647,986
4,267,086
700,988
(124,314)
700,988
1,088,639
686,825
263,807
835,254
$ 3,451,199
4,306,953
700,988
(116,719)
700,988
1,089,184
687,022
267,500
857,657
$ 3,485,632 $
1,608,037
650,138
(1,610,189)
650,138
537,439
301,852
62,999
508,186
450,425
Gross Cruise Cost, Net Cruise Cost, Net Cruise Cost Excluding Fuel and Adjusted Net Cruise Cost Excluding Fuel were
calculated as follows (in thousands):
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)
Restructuring costs (3)
Adjusted Net Cruise Cost Excluding Fuel
Year Ended December 31,
2022
2022
$ 4,267,086
1,379,105
5,646,191
Constant
Currency
2021
$ 4,306,953 $ 1,608,037
891,452
2,499,489
1,389,087
5,696,040
1,034,629
357,932
4,253,630
686,825
3,566,805
1,047,658
357,932
4,290,450
687,022
3,603,428
143,524
54,037
2,301,928
301,852
2,000,076
2,797
113,563
12,140
$ 3,438,305
2,797
113,563
12,140
3,619
124,077
—
$ 3,474,928 $ 1,872,380
(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 expenses related to equity awards, which are included in marketing, general
and administrative expense and payroll and related expense.
(3) Restructuring costs related to the workforce reduction are included in marketing, general and administrative
expense.
60
Adjusted Net Loss and Adjusted EPS were calculated as follows (in thousands, except share and per share data):
Net loss
Non-GAAP Adjustments:
Non-cash deferred compensation (1)
Non-cash share-based compensation (2)
Restructuring costs (3)
Extinguishment and modification of debt (4)
Adjusted Net Loss
Diluted weighted-average shares outstanding - Net loss and Adjusted Net Loss
Diluted loss per share
Adjusted EPS
Year Ended December 31,
2022
2021
$ (2,269,909) $ (4,506,587)
4,048
113,563
12,140
193,374
4,012
124,077
—
1,428,813
$ (1,946,784) $ (2,949,685)
365,449,967
(12.33)
(8.07)
(5.41) $
(4.64) $
419,773,195
$
$
(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) Restructuring costs related to the workforce reduction are included in marketing, general and administrative
expense.
(4) Losses on extinguishments and modifications of debt are primarily included in interest expense, net.
EBITDA and Adjusted EBITDA were calculated as follows (in thousands):
Net loss
Interest expense, net
Income tax (benefit) expense
Depreciation and amortization expense
EBITDA
Other (income) expense, net (1)
Other Non-GAAP Adjustments:
Non-cash deferred compensation (2)
Non-cash share-based compensation (3)
Restructuring costs (4)
Adjusted EBITDA
Year Ended December 31,
2022
2021
$ (2,269,909) $ (4,506,587)
2,072,925
5,267
700,845
(1,727,550)
(123,953)
801,512
(6,794)
749,326
(725,865)
(76,566)
2,797
113,563
12,140
3,619
124,077
—
(673,931) $ (1,723,807)
$
(1) Primarily consists of gains and losses, net of foreign currency remeasurements and derivatives not designated as
hedges.
(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) Restructuring costs related to the workforce reduction are included in marketing, general and administrative
expense.
Year Ended December 31, 2022 (“2022”) Compared to Year Ended December 31, 2021 (“2021”)
Revenue
Total revenue increased 647.5% to $4.8 billion in 2022 compared to $0.6 billion in 2021. In 2022, revenue primarily
increased as we returned to service with 12.8 million Passenger Cruise Days compared to 1.8 million in 2021.
61
Expense
Total cruise operating expense increased 165.4% in 2022 compared to 2021. In 2022, the year started with 16 ships
operating with guests onboard and ended with the entire 29-ship fleet in service compared to 2021, during which only 16
ships were returned to service in the second half of the year. In 2022, our cruise operating expenses increased as more
ships resumed voyages, resulting in higher payroll, fuel, and direct variable costs of fully operating ships. Costs for
certain items such as food, fuel and logistics also increased related to inflation. Gross Cruise Cost increased 125.9% in
2022 compared to 2021, primarily related to the change in costs described above plus an increase in marketing, general
and administrative expenses primarily related to increased marketing costs as we returned to service. Total other
operating expense increased 33.7% in 2022 compared to 2021 primarily due to the increase in marketing, general and
administrative expenses.
Interest expense, net was $0.8 billion in 2022 compared to $2.1 billion in 2021. The decrease in 2022 primarily reflects
lower losses from extinguishment of debt and debt modification costs, which were $1.4 billion in 2021. Excluding these
losses, interest expense increased primarily as a result of higher debt balances and higher rates partially offset by lower
interest expense in connection with refinancings.
Other income (expense), net was income of $76.6 million in 2022 compared to $124.0 million in 2021. Other income in
2022 and 2021 was primarily due to gains on fuel swaps not designated as hedges and foreign currency remeasurements.
Liquidity and Capital Resources
General
As of December 31, 2022, our liquidity consisted of cash and cash equivalents of $0.9 billion and a $1 billion undrawn
commitment, less related fees, available through March 31, 2023. Our primary ongoing liquidity requirements are to
finance working capital, capital expenditures and debt service. As of December 31, 2022, we had a working capital
deficit of $3.2 billion. This deficit included $2.5 billion of advance ticket sales, which represents the total revenue we
collected 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 liquidity and undrawn export-credit backed facilities,
allows us to operate with a working capital deficit and still meet our operating, investing and financing needs.
In February 2022, we received additional financing through various debt financings, collectively totaling $2.1 billion in
gross proceeds, which was used to redeem all of the outstanding 2024 Senior Secured Notes and 2026 Senior Secured
Notes and to make scheduled principal payments on debt maturing in 2022, including, in each case, to pay any accrued
and unpaid interest thereon, as well as related premiums, fees and expenses.
In December 2022, we amended our Senior Secured Credit Facility to extend approximately $1.4 billion of maturities by
one year to January 2025, subject to, if a one-time minimum liquidity threshold is not satisfied on September 16, 2024, a
springing maturity date of September 16, 2024. The amendment also updated certain financial covenants and increased
our ability to incur additional debt. Each of our export-credit backed facilities were also amended to conform the
financial covenants with the Senior Secured Credit Facility. In February 2023, a commitment of $82.5 million in
aggregate principal amount of the Revolving Loan Facility that was not previously extended was obtained to assign the
commitment to a new lender under the same terms as the extending lenders.
In February 2023, NCLC issued $600 million aggregate principal amount of 8.375% senior secured notes due 2028. The
proceeds from the notes were used to repay the loans outstanding under our Term Loan A Facility that otherwise would
have become due in January 2024, including to pay any accrued and unpaid interest thereon, as well as related
premiums, fees and expenses.
In July 2022, we amended our $1 billion commitment, which provided additional liquidity to the Company through
March 31, 2023. In February 2023, the commitment was further extended through February 2024, with an option for
NCLC to further extend the commitments through February 2025 at its election. Simultaneously, the amount of the
commitment was reduced to $650 million, which may be drawn in up to two draws, and in connection with the execution
62
of the amended commitment letter, NCLC issued $250 million aggregate principal amount of senior secured notes due
2028. NCLC will use the net proceeds for general corporate purposes.
In February 2023, NCLC entered into a Backstop Agreement with MS, pursuant to which MS has agreed to provide
backstop committed financing to refinance and/or repay in whole or in part up to $300 million of amounts outstanding
under the Senior Secured Credit Facility at any time between October 4, 2023 and January 2, 2024.
Refer to Note 8 – “Long-Term Debt” for further details about the above financing transactions.
The estimation of our future cash flow projections includes numerous assumptions that are subject to various risks and
uncertainties. Refer to Note 2 – “Summary of Significant Accounting Policies” for further information on liquidity and
management’s plan. Refer to Item 1A, “Risk Factors” for further details regarding uncertainty related to Russia’s
ongoing invasion of Ukraine and other risks and uncertainties that may cause our results to differ from our expectations.
There can be no assurance that the accuracy of the assumptions used to estimate our liquidity requirements will be
correct, and our ability to be predictive is uncertain due to the dynamic nature of the current operating environment,
including the impacts of the COVID-19 global pandemic, Russia’s ongoing invasion of Ukraine and current
macroeconomic conditions such as inflation, rising fuel prices and rising interest rates. Based on the liquidity estimates
and our current resources, we have concluded we have sufficient liquidity to satisfy our obligations for at least the next
12 months. Nonetheless, we anticipate that we will need additional equity and/or debt financing to fund our operations in
the future if a substantial portion of our fleet suspends cruise voyages or operates at reduced occupancy levels for a
prolonged period. There is no assurance that cash flows from operations and additional financings will be available in
the future to fund our future obligations. Beyond 12 months, we will pursue refinancings and other balance sheet
optimization transactions from time to time in order to reduce interest expense or extend debt maturities. We expect to
collaborate with financing institutions regarding these refinancing and optimization transactions as opportunities arise in
the short-term to amend long-term arrangements.
We have received amendments to certain financial and other debt covenants, including the modification of our free
liquidity requirements. At December 31, 2022, taking into account such amendments, we were in compliance with all of
our debt covenants. If we do not continue to remain in compliance with our covenants, we would have to seek additional
amendments to or waivers of the covenants. However, no assurances can be made that such amendments or waivers
would be approved by our lenders. Generally, if an event of default under any debt agreement occurs, then pursuant to
cross default and/or cross acceleration clauses, substantially all of our outstanding debt and derivative contract payables
could become due, and all debt and derivative contracts could be terminated, which would have a material adverse
impact to our operations and liquidity.
Since March 2020, Moody’s has downgraded our long-term issuer rating to B2, our senior secured rating to B1 and our
senior unsecured rating to Caa1. In September 2022, Moody’s reaffirmed our current ratings. Since April 2020, S&P
Global has downgraded our issuer credit rating to B, lowered our issue-level rating on our $875 million Revolving Loan
Facility and $1.5 billion Term Loan A Facility to BB-, our issue-level rating on our other senior secured notes to B+ and
our senior unsecured rating to B-. If our credit ratings were to be further downgraded, or general market conditions were
to ascribe higher risk to our rating levels, our industry, or us, our access to capital and the cost of any debt or equity
financing will be further negatively impacted. We also have capacity to incur additional indebtedness under our debt
agreements and may issue additional ordinary shares from time to time, subject to our authorized number of ordinary
shares. However, there is no guarantee that debt or equity financings will be available in the future to fund our
obligations, or that they will be available on terms consistent with our expectations.
As of December 31, 2022, we had advance ticket sales of $2.7 billion, including the long-term portion, which included
approximately $144.0 million of future cruise credits. We also have agreements with our credit card processors that, as
of December 31, 2022, governed approximately $2.4 billion in advance ticket sales that had been received by the
Company relating to future voyages. These agreements allow the credit card processors to require under certain
circumstances, including the existence of a material adverse change, excessive chargebacks and other triggering events,
that the Company maintain a reserve which would be satisfied by posting collateral. Although the agreements vary, these
requirements may generally be satisfied either through a percentage of customer payments withheld or providing cash
63
funds directly to the card processor. Any cash reserve or collateral requested could be increased or decreased. As of
December 31, 2022, we had cash collateral reserves of approximately $622.0 million with credit card processors, of
which approximately $118.4 million is recognized in accounts receivable, net and approximately $503.6 million in other
long-term assets. We may be required to pledge additional collateral and/or post additional cash reserves or take other
actions that may reduce our liquidity.
Sources and Uses of Cash
In this section, references to 2022 refer to the year ended December 31, 2022, references to 2021 refer to the year
ended December 31, 2021.
Net cash provided by operating activities was $210.0 million in 2022 compared to net cash used in operating activities of
$2.5 billion in 2021. The net cash used in operating activities included net losses due to the suspension of global cruise
voyages from March 2020 through July 2021, the subsequent resumption of cruise voyages through May 2022 and the
timing differences in cash receipts and payments relating to operating assets and liabilities. The net cash provided by
operating activities in 2022 included net losses of $(2.3) billion, an increase in advance ticket sales of $928.9 million and
loss on extinguishment of $188.8 million. The net cash used in operating activities in 2021 included net losses of $(4.5)
billion and a decrease of $1.2 billion in cash from accounts receivable, which includes our collateral reserves with credit
card processors, offset by an increase in advance ticket sales of $521.9 million and loss on extinguishment of $1.4
billion.
Net cash used in investing activities was $1.8 billion in 2022, primarily related to the delivery of Norwegian Prima. Net
cash used in investing activities was $1.0 billion in 2021, primarily related to newbuild payments and ship improvement
projects and net purchases and maturities of short-term investments.
Net cash provided by financing activities was $1.0 billion in 2022, primarily due to newbuild loans and the proceeds of
$2.1 billion from our various note offerings partially offset by debt repayments and related redemption premiums
associated with extinguishment of certain senior secured notes. Net cash provided by financing activities was $1.7
billion in 2021, primarily due to $2.6 billion in proceeds from the issuance of debt and $2.7 billion in proceeds from
issuance of NCLH’s ordinary shares offset by $2.1 billion of debt principal repayments and $1.4 billion of early
redemption premiums.
For the Company’s cash flow activities for the fiscal year ended December 31, 2020, 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, 2021, which was filed with the U.S. Securities and Exchange Commission on
March 1, 2022.
Future Capital Commitments
Future capital commitments consist of contracted commitments, including ship construction contracts. Anticipated
expenditures related to ship construction contracts are $2.4 billion, $0.5 billion and $1.8 billion for the years ending
December 31, 2023, 2024 and 2025, respectively. We have export-credit backed financing in place for the anticipated
expenditures related to ship construction contracts of $1.9 billion, $0.1 billion and $1.1 billion for the years ending
December 31, 2023, 2024 and 2025, respectively. Anticipated non-newbuild capital expenditures are $0.4 billion for the
year ended December 31, 2023. Future expected capital expenditures will significantly increase our depreciation and
amortization expense.
For the Norwegian brand, we have five Prima Class Ships on order, each ranging from approximately 143,500 to
169,000 Gross Tons with 3,100 or more Berths, with currently scheduled delivery dates from 2023 through 2028. For the
Regent brand, we have one Explorer Class Ship on order to be delivered in 2023, which 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
2023 and 2025. Each of the Allura Class Ships will be approximately 67,000 Gross Tons and 1,200 Berths.
64
As of December 31, 2022, the combined contract prices of the eight ships on order for delivery was approximately €6.7
billion, or $7.2 billion based on the euro/U.S. dollar exchange rate as of December 31, 2022. Contract amendments for
certain of our ships that are or will become effective subsequent to December 31, 2022 will increase the contract cost by
€1.2 billion, of which $0.5 billion is included in the anticipated expenditures related to ship construction contracts
discussed above. We have obtained or expect to obtain fixed rate export-credit backed 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 year ended December 31, 2022 and 2021 was $58.4 million and $43.6 million, respectively,
primarily associated with the construction of our newbuild ships.
Material Cash Requirements
As of December 31, 2022, our material cash requirements for debt and ship construction were as follows (in thousands):
2023
2024
2025
2026
2027
Thereafter
Total
Long-term debt
(1)
Ship construction
contracts (2)
Total
$ 1,649,354 $ 3,060,269
$ 2,818,257
$ 2,338,101
$ 3,284,454
$ 2,990,190 $ 16,140,625
2,198,897
275,232
$ 3,848,251 $ 3,335,501
1,617,782
$ 4,436,039
1,827,114
$ 4,165,215
842,581
$ 4,127,035
—
6,761,606
$ 2,990,190 $ 22,902,231
(1) Includes principal as well as estimated interest payments with LIBOR/SOFR held constant as of
December 31, 2022. Includes exchangeable notes which can be settled in shares. Excludes the impact of any future
possible refinancings and undrawn export-credit backed facilities. Subsequent to December 31, 2022, we completed
various capital market and financing transactions, including issuing two series of notes totaling an aggregate
principal amount of $850 million of senior secured notes due in 2028, of which approximately $600 million was
used to repay the loans outstanding under our Term Loan A Facility that otherwise would have become due in
January 2024. Additionally, a commitment of $82.5 million in aggregate principal amount of the Revolving Loan
Facility was obtained, which will extend the maturity date of the assigned commitments by one year to January
2025. See Note 8 – “Long-Term Debt” for further information.
(2) Ship construction contracts are for our newbuild ships based on the euro/U.S. dollar exchange rate as of
December 31, 2022. As of December 31, 2022, we have committed undrawn export-credit backed facilities of $5.6
billion which funds approximately 80% of our ship construction contracts. After giving effect to an amendment to
our newbuild agreements for the last two Prima Class Ships subsequent to December 31, 2022, our material cash
requirements for ship construction contracts are as follows (in thousands):
2023
2024
2025
2026
2027
Thereafter
Total
Ship construction
contracts
$ 2,204,378 $ 213,353
$ 1,573,183
$ 1,071,080
$ 1,021,461 $ 952,200 $ 7,035,655
Excludes the impact of expected future ship construction contract amendments noted above.
For other operational commitments for lease and port obligations we refer you to Note 5 – “Leases” and Note 13 –
“Commitments and Contingencies,” respectively, for further information.
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. Approximately $13.7
billion of our assets are pledged as collateral for certain of our debt. We have received amendments to certain financial
65
and other debt covenants, including the modification of our free liquidity requirements. After taking into account such
amendments, we believe we were in compliance with these covenants as of December 31, 2022.
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.
We believe our cash on hand, the impact of the undrawn commitment less related fees, the backstop financing available
from October 4, 2023 through January 2, 2024, the expected return of a portion of the cash collateral from our credit
card processors, expected future operating cash inflows 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. Refer to “—Liquidity and Capital
Resources—General” for further information regarding the debt covenant waivers and liquidity requirements.
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.
We refer you to “—Liquidity and Capital Resources—General” for information regarding collateral provided to our
credit card processors.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
General
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. The financial impacts of these derivative instruments are primarily offset by corresponding
changes in the underlying exposures being hedged. We achieve this by closely matching the notional, term and
conditions of the derivatives with the underlying risk being hedged. We do not hold or issue derivatives for trading or
other speculative purposes. Derivative positions are monitored using techniques including market valuations and
sensitivity analyses.
Interest Rate Risk
As of December 31, 2022, 75% of our debt was fixed and 25% was variable. As of December 31, 2021, 72% of our debt
was fixed and 28% was variable, which includes the effects of an interest rate swap that matured during the year ended
December 31, 2022. The notional amount of our outstanding debt associated with the interest rate swap was $0.2 billion
as of December 31, 2021. The change in our fixed rate percentage from December 31, 2021 to December 31, 2022 was
primarily due to the addition of fixed rate debt. Based on our December 31, 2022 outstanding variable rate debt balance,
a one percentage point increase in annual LIBOR interest rates would increase our annual interest expense by
approximately $34.1 million excluding the effects of capitalization of interest.
66
Foreign Currency Exchange Rate Risk
As of December 31, 2022, 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 €4.5 billion, or $4.8 billion based on the euro/U.S. dollar exchange rate as of December 31, 2022. As of
December 31, 2021, the payments not hedged aggregated €5.0 billion, or $5.7 billion, based on the euro/U.S. dollar
exchange rate as of December 31, 2021. The change from December 31, 2021 to December 31, 2022 was due to the
addition of foreign currency forwards and the delivery of Norwegian Prima. We estimate that a 10% change in the euro
as of December 31, 2022 would result in a $0.5 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 16.1% for the year ended December 31, 2022 and
18.8% for the year ended December 31, 2021. We use fuel derivative agreements to mitigate the financial impact of
fluctuations in fuel prices and as of December 31, 2022, we had hedged approximately 50% of our 2023 projected metric
tons of fuel purchases. As of December 31, 2021, we had hedged approximately 24% of our 2023 projected metric tons
of fuel purchases. Additional fuel swaps were executed between December 31, 2021 to December 31, 2022 to lower our
fuel price risk.
We estimate that a 10% increase in our weighted-average fuel price would increase our anticipated 2023 fuel expense by
$67.7 million. This increase would be partially offset by an increase in the fair value of our fuel swap agreements of
$38.2 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 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, 2022. 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, 2022, 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.
67
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, 2022.
The effectiveness of the Company’s internal control over financial reporting as of December 31, 2022 has been audited
by PricewaterhouseCoopers LLP, the independent registered public accounting firm that audited the financial statements
included in this Annual Report on Form 10-K, 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, 2022
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 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
68
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, 2022 in connection with our 2023 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, 2022 in connection with our 2023
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, 2022 in connection with our 2023
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, 2022 in connection with our 2023
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, 2022 in connection with our 2023
Annual General Meeting of Shareholders.
69
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, 2022 are included on page 84.
(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
3.3
4.1
4.2
4.3
4.4
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))
Memorandum of Increase of Share Capital of Norwegian Cruise Line Holdings Ltd. (incorporated herein
by reference to Exhibit 3.1 to Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on May 21, 2021
(File No. 001-35784))
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))
Indenture, dated May 8, 2020, by and among NCL Corporation Ltd., as issuer, Norwegian Cruise Line
Holdings Ltd., as guarantor, and U.S. Bank National Association, as trustee, with respect to the 6.00%
exchangeable senior notes due 2024 (incorporated herein by reference to Exhibit 4.1 to Norwegian
Cruise Line Holdings Ltd.’s Form 8-K filed on May 11, 2020 (File No. 001-35784))
Indenture, dated July 21, 2020, by and among NCL Corporation Ltd., as issuer, Norwegian Cruise Line
Holdings Ltd., as guarantor, and U.S. Bank National Association, as trustee, with respect to the 5.375%
exchangeable senior notes due 2025 (incorporated herein by reference to Exhibit 4.1 to Norwegian
Cruise Line Holdings Ltd.’s Form 8-K filed on July 21, 2020 (File No. 001-35784))
Indenture, dated December 18, 2020, by and among NCL Corporation Ltd., as issuer, the guarantors
named therein and U.S. Bank National Association, as trustee, principal paying agent, transfer agent and
registrar, with respect to the 5.875% senior notes due 2026 (incorporated herein by reference to Exhibit
4.1 to Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on December 18, 2020 (File No. 001-
35784))
70
4.5
4.6
4.7
4.8
4.9
4.10
4.11
Indenture, dated March 3, 2021, by and among NCL Finance, Ltd., as issuer, NCL Corporation Ltd., as
guarantor, the other guarantors named therein and U.S. Bank National Association, as trustee, principal
paying agent, transfer agent and registrar, with respect to the 6.125% senior notes due 2028 (incorporated
herein by reference to Exhibit 4.1 to Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on March 3,
2021 (File No. 001-35784))
Indenture, dated November 19, 2021, by and among NCL Corporation Ltd., as issuer, Norwegian Cruise
Line Holdings Ltd., as guarantor, and U.S. Bank National Association, as trustee, with respect to 1.125%
exchangeable senior notes due 2027 (incorporated herein by reference to Exhibit 4.1 to Norwegian
Cruise Line Holdings Ltd.’s Form 8-K filed on November 19, 2021 (File No. 001-35784))
Indenture, dated February 18, 2022, by and among NCL Corporation Ltd., as issuer, the guarantors party
thereto and U.S. Bank Trust Company, National Association, as trustee, principal paying agent, transfer
agent, registrar and security agent, with respect to 5.875% senior secured notes due 2027 (incorporated
herein by reference to Exhibit 4.2 to Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on February
22, 2022 (File No. 001-35784))
Indenture, dated February 18, 2022, by and between NCL Corporation Ltd., as issuer, and U.S. Bank
Trust Company, National Association, as trustee, principal paying agent, transfer agent and registrar,
with respect to 7.750% senior unsecured notes due 2029 (incorporated herein by reference to Exhibit 4.3
to Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on February 22, 2022 (File No. 001-35784))
Indenture, dated February 15, 2022, by and among NCL Corporation Ltd., as issuer, Norwegian Cruise
Line Holdings Ltd., as guarantor, and U.S. Bank Trust Company, National Association, as trustee, with
respect to 2.50% exchangeable senior notes due 2027 (incorporated herein by reference to Exhibit 4.1 to
Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on February 22, 2022 (File No. 001-35784))
Indenture, dated February 2, 2023, by and among NCL Corporation Ltd., as issuer, the guarantors party
thereto, U.S. Bank Trust Company, National Association, as trustee, principal paying agent, transfer
agent and registrar, and JPMorgan Chase Bank, N.A., as security agent, with respect to 8.375% Senior
Secured Notes Due 2028 (incorporated herein by reference to Exhibit 4.1 to Norwegian Cruise Line
Holdings Ltd.’s Form 8-K filed on February 2, 2023 (File No. 001-35784))
Indenture, dated February 22, 2023, by and among, inter alia, NCL Corporation Ltd., as issuer, the
guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee, principal
paying agent, transfer agent, registrar and security agent, with respect to the First Lien Senior Secured
Notes (incorporated herein by reference to Exhibit 4.1 to Norwegian Cruise Line Holdings Ltd.’s Form
8-K filed on February 27, 2023 (File No. 001-35784))
4.12
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))
4.13**
Description of Securities of Norwegian Cruise Line Holdings Ltd.
9.1
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))
10.1
Fourth Amendment Agreement, dated December 23, 2021, to Breakaway One Credit Agreement, dated
November 18, 2010, by and among Breakaway One, Ltd., as borrower, NCL Corporation Ltd., as
guarantor, NCL International, Ltd., as shareholder, the lenders party thereto, KfW IPEX-Bank GmbH, as
facility agent, collateral agent and CIRR agent, Nordea Bank Abp, filial i Norge, as documentation agent,
Commerzbank Aktiengesellschaft, as Hermes agent, and the other parties thereto (incorporated herein by
71
reference to Exhibit 10.1 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on March 1, 2022
(File No. 001-35784))#†
10.2
Fifth Amendment Agreement, dated December 23, 2021, to Breakaway Two Credit Agreement, dated
November 18, 2010, by and among Breakaway Two, Ltd., as borrower, NCL Corporation Ltd., as
guarantor, NCL International, Ltd., as shareholder, the lenders party thereto, KfW IPEX-Bank GmbH, as
facility agent, collateral agent and CIRR agent, Nordea Bank Abp, filial i Norge, as documentation agent,
Commerzbank Aktiengesellschaft, as Hermes agent, and the other parties thereto (incorporated herein by
reference to Exhibit 10.2 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on March 1, 2022
(File No. 001-35784))#†
10.3
Third Supplemental Agreement, dated December 23, 2021, to Breakaway Three Credit Agreement, dated
October 12, 2012, by and among Breakaway Three, Ltd., as borrower, NCL Corporation Ltd., as
guarantor, NCL International, Ltd., as shareholder, the lenders thereto and KfW IPEX-Bank GmbH, as
facility agent, Hermes agent, bookrunner, initial mandated lead arranger, collateral agent and CIRR agent
(incorporated herein by reference to Exhibit 10.3 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K
filed on March 1, 2022 (File No. 001-35784))#†
10.4
Side Letter, dated December 13, 2022, by and among Breakaway Three, Ltd. and Breakaway Four, Ltd.,
as borrowers, NCL Corporation Ltd., as guarantor, NCL International, Ltd., as shareholder, and KfW
IPEX-Bank GmbH as CIRR agent, Hermes agent and facility agent (incorporated herein by reference to
Exhibit 10.2 to Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on December 19, 2022 (File No.
001-35784))
10.5
Fourth Supplemental Agreement, dated December 23, 2021, to 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, the lenders therein defined and KfW IPEX-Bank
GmbH, as facility agent, Hermes agent, bookrunner, initial mandated lead arranger, collateral agent and
CIRR agent (incorporated herein by reference to Exhibit 10.4 to Norwegian Cruise Line Holdings Ltd.’s
Form 10-K filed on March 1, 2022 (File No. 001-35784))#†
10.6
Amendment Agreement, dated December 6, 2022, by and among NCL Corporation Ltd., as borrower,
Voyager Vessel Company, LLC, as co-borrower, the subsidiary guarantors party thereto, the lenders
party thereto and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, which
amends the Fifth Amended and Restated Credit Agreement, dated May 8, 2020 (incorporated herein by
reference to Exhibit 10.1 to Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on December 9,
2022 (File No. 001-35784))#†
10.7
Fourth Supplemental Agreement, dated December 23, 2021, to Seahawk One Credit Agreement, dated
July 14, 2014, by and among Seahawk One, Ltd., as borrower, NCL Corporation Ltd., as guarantor, NCL
International, Ltd., as shareholder, the lenders party thereto and KfW IPEX-Bank GmbH, as facility
agent, Hermes agent, bookrunner, initial mandated lead arranger, collateral agent and CIRR Agent
(incorporated herein by reference to Exhibit 10.6 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K
filed on March 1, 2022 (File No. 001-35784))#†
10.8
Side Letter, dated December 13, 2022, by and among Seahawk One, Ltd., Seahawk Two, Ltd.,
Breakaway One, Ltd. and Breakaway Two, Ltd., as borrowers, NCL Corporation Ltd., as guarantor,
NCL International, Ltd., as shareholder, KfW IPEX-Bank GmbH, as CIRR agent and facility agent under
the Credit Agreements and as Hermes agent under the Seahawk One Credit Agreement and the Seahawk
Two Credit Agreement, and Commerzbank Aktiengesellschaft, as Hermes agent under the Breakaway
One Credit Agreement and the Breakaway Two Credit Agreement (incorporated herein by reference to
Exhibit 10.1 to Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on December 19, 2022 (File No.
001-35784))
72
10.9
10.10
Fifth Supplemental Agreement, dated December 23, 2021, to Seahawk Two Credit Agreement, dated
July 14, 2014, by and among Seahawk Two, Ltd., as borrower, NCL Corporation Ltd., as guarantor,
NCL International, Ltd., as shareholder, the lenders party thereto and KfW IPEX-Bank GmbH, as facility
agent, Hermes agent, bookrunner, initial mandated lead arranger, collateral agent and CIRR Agent
(incorporated herein by reference to Exhibit 10.7 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K
filed on March 1, 2022 (File No. 001-35784))#†
Amendment and Restatement Agreement, dated as of February 17, 2021, among Riviera New Build,
LLC, as borrower, NCL Corporation Ltd., as guarantor, Oceania Cruises S. de R.L., as charterer and
shareholder, Norwegian Cruise Line Holdings Ltd., the lenders party thereto, Crédit Agricole Corporate
and Investment Bank and Société Générale, as mandated lead arrangers, and the other parties thereto,
which amends and restates the Loan Agreement, originally dated as of July 18, 2008 (incorporated herein
by reference to Exhibit 10.3 to Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on February 23,
2021 (File No. 001-35784))#†
10.11
Supplemental Agreement, dated as of December 23, 2021, among Riviera New Build, LLC, as borrower,
NCL Corporation Ltd., as guarantor, Oceania Cruises S. de R.L., as charterer and shareholder,
Norwegian Cruise Line Holdings Ltd., the lenders party thereto, Crédit Agricole Corporate and
Investment Bank and Société Générale, as mandated lead arrangers, and the other parties thereto, which
amends the Amendment and Restatement Agreement, dated as of February 17, 2021 (incorporated herein
by reference to Exhibit 10.9 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on March 1,
2022 (File No. 001-35784))#
10.12
Supplemental Agreement, dated December 16, 2022, by and among Riviera New Build, LLC, as
borrower, NCL Corporation Ltd., as guarantor, Norwegian Cruise Line Holdings Ltd. and Oceania
Cruises S. de R.L., as charterer and shareholder, the lenders party thereto, 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 10.5 to
Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on December 19, 2022 (File No. 001-35784))
10.13
Amendment and Restatement Agreement, dated as of February 17, 2021, among Marina New Build,
LLC, as borrower, NCL Corporation Ltd., as guarantor, Oceania Cruises S. de R.L., as charterer and
shareholder, Norwegian Cruise Line Holdings Ltd., the lenders party thereto, Crédit Agricole Corporate
and Investment Bank and Société Générale, as mandated lead arrangers, and the other parties thereto,
which amends and restates the Loan Agreement, originally dated as of July 18, 2008 (incorporated herein
by reference to Exhibit 10.4 to Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on February 23,
2021 (File No. 001-35784))#†
10.14
Supplemental Agreement, dated as of December 23, 2021, among Marina New Build, LLC, as borrower,
NCL Corporation Ltd., as guarantor, Oceania Cruises S. de R.L., as charterer and shareholder,
Norwegian Cruise Line Holdings Ltd., the lenders party thereto, Crédit Agricole Corporate and
Investment Bank and Société Générale, as mandated lead arrangers, and the other parties thereto, which
amends the Amendment and Restatement Agreement, dated as of February 17, 2021 (incorporated herein
by reference to Exhibit 10.11 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on March 1,
2022 (File No. 001-35784))#
10.15
Supplemental Agreement, dated December 16, 2022, by and among Marina New Build, LLC, as
borrower, NCL Corporation Ltd., as guarantor, Norwegian Cruise Line Holdings Ltd. and Oceania
Cruises S. de R.L., as charterer and shareholder, the lenders party thereto, 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 10.6 to
Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on December 19, 2022 (File No. 001-35784))
10.16
Amendment and Restatement Agreement, dated as of February 17, 2021, among Explorer New Build,
LLC, as borrower, NCL Corporation Ltd., as guarantor, Seven Seas Cruises S. de R.L., as charterer and
73
shareholder, Norwegian Cruise Line Holdings Ltd., the lenders party thereto, Crédit Agricole Corporate
and Investment Bank, Société Générale, HSBC Bank PLC, and KfW IPEX-Bank GmbH, as joint
mandated lead arrangers, and the other parties thereto, which amends and restates the Loan Agreement,
originally dated as of July 31, 2013 (incorporated herein by reference to Exhibit 10.1 to Norwegian
Cruise Line Holdings Ltd.’s Form 8-K filed on February 23, 2021 (File No. 001-35784))#†
10.17
Supplemental Agreement, dated as of December 23, 2021, among Explorer New Build, LLC, as
borrower, NCL Corporation Ltd., as guarantor, Seven Seas Cruises S. de R.L., as charterer and
shareholder, Norwegian Cruise Line Holdings Ltd., the lenders party thereto, Crédit Agricole Corporate
and Investment Bank, Société Générale, HSBC Bank PLC, and KfW IPEX-Bank GmbH, as joint
mandated lead arrangers, and the other parties thereto, which amends the Amendment and Restatement
Agreement, dated as of February 17, 2021 (incorporated herein by reference to Exhibit 10.13 to
Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on March 1, 2022 (File No. 001-35784))#
10.18
Supplemental Agreement, dated December 16, 2022, by and among Explorer New Build, LLC, as
borrower, NCL Corporation Ltd., as guarantor, Norwegian Cruise Line Holdings Ltd. and Seven Seas
Cruises S. de R.L., as charterer and shareholder, the lenders party thereto, Crédit Agricole Corporate and
Investment Bank, Société Générale and KfW IPEX-Bank GmbH, as joint mandated lead arrangers,
Crédit Agricole Corporate and Investment Bank, as agent and SACE agent, and Crédit Agricole
Corporate and Investment Bank, as security trustee (incorporated herein by reference to Exhibit 10.3 to
Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on December 19, 2022 (File No. 001-35784))
10.19
10.20
Amendment and Restatement Agreement, dated as of February 17, 2021, among Explorer II New Build,
LLC, as borrower, NCL Corporation Ltd., as guarantor, Seven Seas Cruises S. de R.L., as charterer and
shareholder, Norwegian Cruise Line Holdings Ltd., the lenders party thereto, Crédit Agricole Corporate
and Investment Bank, Société Générale, HSBC Bank PLC, and KfW Ipex-Bank GmbH, as joint
mandated lead arrangers, and the other parties thereto, which amends and restates the Loan Agreement,
originally dated as of March 30, 2016 (incorporated herein by reference to Exhibit 10.2 to Norwegian
Cruise Line Holdings Ltd.’s Form 8-K filed on February 23, 2021 (File No. 001-35784))#†
Supplemental Agreement, dated as of December 23, 2021, among Explorer II New Build, LLC, as
borrower, NCL Corporation Ltd., as guarantor, Seven Seas Cruises S. de R.L., as charterer and
shareholder, Norwegian Cruise Line Holdings Ltd., the lenders party thereto, Crédit Agricole Corporate
and Investment Bank, Société Générale, HSBC Bank PLC, and KfW Ipex-Bank GmbH, as joint
mandated lead arrangers, and the other parties thereto, which amends the Amendment and Restatement
Agreement, dated as of February 17, 2021 (incorporated herein by reference to Exhibit 10.15 to
Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on March 1, 2022 (File No. 001-35784))#
10.21
Supplemental Agreement, dated December 16, 2022, by and among Explorer II New Build, LLC, as
borrower, NCL Corporation Ltd., as guarantor, Norwegian Cruise Line Holdings Ltd. and Seven Seas
Cruises S. de R.L., as charterer and shareholder, the lenders party thereto, Crédit Agricole Corporate and
Investment Bank, Société Générale, HSBC Bank PLC, and KfW IPEX-Bank GmbH, as joint mandated
lead arrangers, Crédit Agricole Corporate and Investment Bank, as agent and SACE agent, 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 8-K filed on December 19, 2022 (File No. 001-
35784))
10.22
Amendment and Restatement Agreement, dated as of June 17, 2021, but effective as of July 5, 2021,
among Leonardo One, Ltd., as borrower, NCL Corporation Ltd., as guarantor, NCL International, Ltd.,
as shareholder, Norwegian Cruise Line Holdings Ltd., the lenders party thereto, Crédit Agricole
Corporate and Investment Bank, BNP Paribas Fortis S.A./N.V., KfW IPEX-Bank GmbH, HSBC Bank
PLC and Cassa Depositi e Prestiti S.P.A., as joint mandated lead arrangers, and the other parties thereto,
which amends and restates the Loan Agreement, originally dated as of April 12, 2017 (incorporated
herein by reference to Exhibit 10.1 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on
August 9, 2021 (File No. 001-35784))#
74
10.23
Supplemental Agreement, dated as of December 23, 2021, among Leonardo One, Ltd., as borrower,
NCL Corporation Ltd., as guarantor, NCL International, Ltd., as shareholder, Norwegian Cruise Line
Holdings Ltd., the lenders party thereto, Crédit Agricole Corporate and Investment Bank, BNP Paribas
Fortis S.A./N.V., KfW IPEX-Bank GmbH, HSBC Bank PLC and Cassa Depositi e Prestiti S.P.A., as
joint mandated lead arrangers, and the other parties thereto, which amends the Amendment and
Restatement Agreement, dated as of June 17, 2021 (incorporated herein by reference to Exhibit 10.17 to
Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on March 1, 2022 (File No. 001-35784))#
10.24
Supplemental Agreement, dated December 16, 2022, by and among Leonardo One, Ltd., as borrower,
NCL Corporation Ltd., as guarantor, NCL International, Ltd., as shareholder, Norwegian Cruise Line
Holdings Ltd., the lenders party thereto, 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
mandated lead arrangers, Crédit Agricole Corporate and Investment Bank, as agent and SACE agent, 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 8-K filed on December 19, 2022 (File No.
001-35784))
10.25
Amendment and Restatement Agreement, dated as of June 17, 2021, but effective as of July 5, 2021,
among Leonardo Two, Ltd., as borrower, NCL Corporation Ltd., as guarantor, NCL International, Ltd.,
as shareholder, Norwegian Cruise Line Holdings Ltd., the lenders party thereto, Crédit Agricole
Corporate and Investment Bank, BNP Paribas Fortis S.A./N.V., HSBC Bank PLC and Cassa Depositi e
Prestiti S.P.A., as joint mandated lead arrangers, and the other parties thereto, which amends and restates
the Loan Agreement, originally dated as of April 12, 2017 (incorporated herein by reference to Exhibit
10.2 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on August 9, 2021 (File No. 001-
35784))#
10.26
10.27
Supplemental Agreement, dated as of December 23, 2021, among Leonardo Two, Ltd., as borrower,
NCL Corporation Ltd., as guarantor, NCL International, Ltd., as shareholder, Norwegian Cruise Line
Holdings Ltd., the lenders party thereto, Crédit Agricole Corporate and Investment Bank, BNP Paribas
Fortis S.A./N.V., HSBC Bank PLC and Cassa Depositi e Prestiti S.P.A., as joint mandated lead
arrangers, and the other parties thereto, which amends the Amendment and Restatement Agreement,
dated as of June 17, 2021 (incorporated herein by reference to Exhibit 10.19 to Norwegian Cruise Line
Holdings Ltd.’s Form 10-K filed on March 1, 2022 (File No. 001-35784))#
Supplemental Agreement, dated December 16, 2022, by and among Leonardo Two, Ltd., as borrower,
NCL Corporation Ltd., as guarantor, NCL International, Ltd., as shareholder, Norwegian Cruise Line
Holdings Ltd., the lenders party thereto, Crédit Agricole Corporate and Investment Bank, BNP Paribas
Fortis S.A./N.V., HSBC Bank PLC and Cassa Depositi e Prestiti S.P.A., as mandated lead arrangers,
Crédit Agricole Corporate and Investment Bank, as agent and SACE agent, and Crédit Agricole
Corporate and Investment Bank, as security trustee (incorporated herein by reference to Exhibit 10.8 to
Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on December 19, 2022 (File No. 001-35784))
10.28
Amendment and Restatement Agreement, dated as of June 17, 2021, but effective as of July 6, 2021,
among Leonardo Three, Ltd., as borrower, NCL Corporation Ltd., as guarantor, NCL International, Ltd.,
as shareholder, Norwegian Cruise Line Holdings Ltd., the lenders party thereto, HSBC Bank PLC, BNP
Paribas Fortis S.A./N.V., KfW IPEX-Bank GmbH and Cassa Depositi e Prestiti S.P.A., as joint
mandated lead arrangers, and the other parties thereto, which amends and restates the Loan Agreement,
originally dated as of April 12, 2017 (incorporated herein by reference to Exhibit 10.3 to Norwegian
Cruise Line Holdings Ltd.’s Form 10-Q filed on August 9, 2021 (File No. 001-35784))#
10.29
Supplemental Agreement, dated as of December 23, 2021, among Leonardo Three, Ltd., as borrower,
NCL Corporation Ltd., as guarantor, NCL International, Ltd., as shareholder, Norwegian Cruise Line
Holdings Ltd., the lenders party thereto, HSBC Bank PLC, BNP Paribas Fortis S.A./N.V., KfW IPEX-
Bank GmbH and Cassa Depositi e Prestiti S.P.A., as joint mandated lead arrangers, and the other parties
75
thereto, which amends the Amendment and Restatement Agreement, dated as of June 17, 2021
(incorporated herein by reference to Exhibit 10.21 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K
filed on March 1, 2022 (File No. 001-35784))#
10.30
Supplemental Agreement, dated December 16, 2022, by and among Leonardo Three, Ltd., as borrower,
NCL Corporation Ltd., as guarantor, NCL International, Ltd., as shareholder, Norwegian Cruise Line
Holdings Ltd., the lenders party thereto, HSBC Bank PLC, BNP Paribas Fortis S.A./N.V., KfW IPEX-
Bank GmbH and Cassa Depositi e Prestiti S.P.A., as joint mandated lead arrangers, BNP Paribas S.A., as
agent and SACE agent, and BNP Paribas S.A., as security trustee (incorporated herein by reference to
Exhibit 10.9 to Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on December 19, 2022 (File No.
001-35784))
10.31
Amendment and Restatement Agreement, dated as of June 17, 2021, but effective as of July 6, 2021,
among Leonardo Four, Ltd., as borrower, NCL Corporation Ltd., as guarantor, NCL International, Ltd.,
as shareholder, Norwegian Cruise Line Holdings Ltd., the lenders party thereto, KfW IPEX-Bank
GmbH, BNP Paribas Fortis S.A./N.V., HSBC Bank PLC and Cassa Depositi e Prestiti S.P.A., as joint
mandated lead arrangers, and the other parties thereto, which amends and restates the Loan Agreement,
originally dated as of April 12, 2017 (incorporated herein by reference to Exhibit 10.4 to Norwegian
Cruise Line Holdings Ltd.’s Form 10-Q filed on August 9, 2021 (File No. 001-35784))#
10.32
10.33
Supplemental Agreement, dated as of December 23, 2021, among Leonardo Four, Ltd., as borrower,
NCL Corporation Ltd., as guarantor, NCL International, Ltd., as shareholder, Norwegian Cruise Line
Holdings Ltd., the lenders party thereto, KfW IPEX-Bank GmbH, BNP Paribas Fortis S.A./N.V., HSBC
Bank PLC and Cassa Depositi e Prestiti S.P.A., as joint mandated lead arrangers, and the other parties
thereto, which amends the Amendment and Restatement Agreement, dated as of June 17, 2021
(incorporated herein by reference to Exhibit 10.23 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K
filed on March 1, 2022 (File No. 001-35784))#
Supplemental Agreement, dated December 16, 2022, by and among Leonardo Four, Ltd., as borrower,
NCL Corporation Ltd., as guarantor, NCL International, Ltd., as shareholder, Norwegian Cruise Line
Holdings Ltd., the lenders party thereto, HSBC Bank PLC, BNP Paribas Fortis S.A./N.V., KfW IPEX-
Bank GmbH and Cassa Depositi e Prestiti S.P.A., as joint mandated lead arrangers, BNP Paribas S.A., as
agent and SACE agent, and BNP Paribas S.A., as security trustee (incorporated herein by reference to
Exhibit 10.10 to Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on December 19, 2022 (File No.
001-35784))
10.34
Amendment and Restatement Agreement, dated as of June 17, 2021, but effective as of July 5, 2021,
among Leonardo Five, Ltd., as borrower, NCL Corporation Ltd., as guarantor, NCL International, Ltd.,
as shareholder, Norwegian Cruise Line Holdings Ltd., the lenders party thereto, 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, and the other parties thereto, which amends and restates the Loan Agreement, originally
dated as of December 19, 2018 (incorporated herein by reference to Exhibit 10.5 to Norwegian Cruise
Line Holdings Ltd.’s Form 10-Q filed on August 9, 2021 (File No. 001-35784))#
10.35
Supplemental Agreement, dated as of December 23, 2021, among Leonardo Five, Ltd., as borrower,
NCL Corporation Ltd., as guarantor, NCL International, Ltd., as shareholder, Norwegian Cruise Line
Holdings Ltd., the lenders party thereto, 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, and the other parties thereto,
which amends the Amendment and Restatement Agreement, dated as of June 17, 2021 (incorporated
herein by reference to Exhibit 10.25 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on
March 1, 2022 (File No. 001-35784))#
76
10.36
Supplemental Agreement, dated December 16, 2022, by and among Leonardo Five, Ltd., as borrower,
NCL Corporation Ltd., as guarantor, NCL International, Ltd., as shareholder, Norwegian Cruise Line
Holdings Ltd., the lenders party thereto, 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 S.A., as facility
agent, Crédit Agricole Corporate and Investment Bank, as SACE agent, and HSBC Corporate Trustee
Company (UK) Limited, as security trustee (incorporated herein by reference to Exhibit 10.11 to
Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on December 19, 2022 (File No. 001-35784))
10.37
Amendment and Restatement Agreement, dated as of June 17, 2021, but effective as of July 5, 2021,
10.38
10.39
10.40
10.41
among Leonardo Six, Ltd., as borrower, NCL Corporation Ltd., as guarantor, NCL International, Ltd., as
shareholder, Norwegian Cruise Line Holdings Ltd., the lenders party thereto, 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,
and the other parties thereto, which amends and restates the Loan Agreement, originally dated as of
December 19, 2018 (incorporated herein by reference to Exhibit 10.6 to Norwegian Cruise Line
Holdings Ltd.’s Form 10-Q filed on August 9, 2021 (File No. 001-35784))#
Supplemental Agreement, dated as of December 23, 2021, among Leonardo Six, Ltd., as borrower, NCL
Corporation Ltd., as guarantor, NCL International, Ltd., as shareholder, Norwegian Cruise Line Holdings
Ltd., the lenders party thereto, 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, and the other parties thereto,
which amends the Amendment and Restatement Agreement, dated as of June 17, 2021 (incorporated
herein by reference to Exhibit 10.27 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on
March 1, 2022 (File No. 001-35784))#
Supplemental Agreement, dated December 16, 2022, by and among Leonardo Six, Ltd., as borrower,
NCL Corporation Ltd., as guarantor, NCL International, Ltd., as shareholder, Norwegian Cruise Line
Holdings Ltd., the lenders party thereto, 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 S.A., as facility
agent, Crédit Agricole Corporate and Investment Bank, as SACE agent, and HSBC Corporate Trustee
Company (UK) Limited, as security trustee (incorporated herein by reference to Exhibit 10.12 to
Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on December 19, 2022 (File No. 001-35784))
Amendment and Restatement Agreement, dated as of June 17, 2021, but effective as of July 5, 2021,
among Explorer III New Build, LLC, as borrower, NCL Corporation Ltd., as guarantor, Seven Seas
Cruises S. de R.L., as shareholder, Norwegian Cruise Line Holdings Ltd., the lenders party thereto,
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, and the other parties thereto, which amends and restates the Loan
Agreement, originally dated as of December 19, 2018 (incorporated herein by reference to Exhibit 10.7
to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on August 9, 2021 (File No. 001-35784))#
Supplemental Agreement, dated as of December 23, 2021, among Explorer III New Build, LLC, as
borrower, NCL Corporation Ltd., as guarantor, Seven Seas Cruises S. de R.L., as shareholder,
Norwegian Cruise Line Holdings Ltd., the lenders party thereto, 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, and the other parties thereto, which amends the Amendment and Restatement Agreement,
dated as of June 17, 2021(incorporated herein by reference to Exhibit 10.29 to Norwegian Cruise Line
Holdings Ltd.’s Form 10-K filed on March 1, 2022 (File No. 001-35784))#
77
10.42
Supplemental Agreement, dated December 16, 2022, by and among Explorer III New Build, LLC, as
borrower, NCL Corporation Ltd., as guarantor, Seven Seas Cruises S. de R.L., as shareholder,
Norwegian Cruise Line Holdings Ltd., the lenders party thereto, 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 S.A., as facility agent, Crédit Agricole Corporate and Investment Bank, as SACE agent,
and HSBC Corporate Trustee Company (UK) Limited, as security trustee (incorporated herein by
reference to Exhibit 10.13 to Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on December 19,
2022 (File No. 001-35784))
10.43
Amendment and Restatement Agreement, dated as of June 17, 2021, but effective as of July 5, 2021,
among O Class Plus One, LLC, as borrower, NCL Corporation Ltd., as guarantor, Oceania Cruises S. de
R.L., as shareholder, Norwegian Cruise Line Holdings Ltd., the lenders party thereto, 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, and the other parties thereto, which amends and restates the Loan Agreement, originally
dated as of December 19, 2018 (incorporated herein by reference to Exhibit 10.8 to Norwegian Cruise
Line Holdings Ltd.’s Form 10-Q filed on August 9, 2021 (File No. 001-35784))#
10.44
Supplemental Agreement, dated as of December 23, 2021, among O Class Plus One, LLC, as borrower,
NCL Corporation Ltd., as guarantor, Oceania Cruises S. de R.L., as shareholder, Norwegian Cruise Line
Holdings Ltd., the lenders party thereto, 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, and the other parties thereto,
which amends the Amendment and Restatement Agreement, dated as of June 17, 2021 (incorporated
herein by reference to Exhibit 10.31 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on
March 1, 2022 (File No. 001-35784))#
10.45
Supplemental Agreement, dated December 16, 2022, by and among O Class Plus One, LLC, as
borrower, NCL Corporation Ltd., as guarantor, Oceania Cruises S. de R.L., as shareholder, Norwegian
Cruise Line Holdings Ltd., the lenders party thereto, 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
S.A., as facility agent, Crédit Agricole Corporate and Investment Bank, as SACE agent, and HSBC
Corporate Trustee Company (UK) Limited, as security trustee (incorporated herein by reference to
Exhibit 10.14 to Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on December 19, 2022 (File No.
001-35784))
10.46
Amendment and Restatement Agreement, dated as of June 17, 2021, but effective as of July 5, 2021,
among O Class Plus Two, LLC, as borrower, NCL Corporation Ltd., as guarantor, Oceania Cruises S. de
R.L., as shareholder, Norwegian Cruise Line Holdings Ltd., the lenders party thereto, 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, and the other parties thereto, which amends and restates the Loan Agreement, originally
dated as of December 19, 2018 (incorporated herein by reference to Exhibit 10.9 to Norwegian Cruise
Line Holdings Ltd.’s Form 10-Q filed on August 9, 2021 (File No. 001-35784))#
10.47
Supplemental Agreement, dated as of December 23, 2021, among O Class Plus Two, LLC, as borrower,
NCL Corporation Ltd., as guarantor, Oceania Cruises S. de R.L., as shareholder, Norwegian Cruise Line
Holdings Ltd., the lenders party thereto, 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, and the other parties thereto,
which amends the Amendment and Restatement Agreement, dated as of June 17, 2021 (incorporated
herein by reference to Exhibit 10.33 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on
March 1, 2022 (File No. 001-35784))#
78
10.48
Supplemental Agreement, dated December 16, 2022, by and among O Class Plus Two, LLC, as
borrower, NCL Corporation Ltd., as guarantor, Oceania Cruises S. de R.L., as shareholder, Norwegian
Cruise Line Holdings Ltd., the lenders party thereto, 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
S.A., as facility agent, Crédit Agricole Corporate and Investment Bank, as SACE agent, and HSBC
Corporate Trustee Company (UK) Limited, as security trustee (incorporated herein by reference to
Exhibit 10.15 to Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on December 19, 2022 (File No.
001-35784))
10.49
10.50
Second Amended and Restated Commitment Letter, dated February 22, 2023, among NCL Corporation
Ltd. and the purchasers named therein (incorporated herein by reference to Exhibit 10.1 to Norwegian
Cruise Line Holdings Ltd.’s Form 8-K filed on February 27, 2023 (File No. 001-35784))
Backstop Agreement, dated February 23, 2023, between NCL Corporation Ltd. and Morgan Stanley &
Co. LLC (incorporated herein by reference to Exhibit 10.2 to Norwegian Cruise Line Holdings Ltd.’s
Form 8-K filed on February 27, 2023 (File No. 001-35784))
10.51
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))
10.52
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))*
10.53
Amendment to Employment Agreement by and between NCL (Bahamas) Ltd. and T. Robin Lindsay,
dated as of February 14, 2022 (incorporated herein by reference to Exhibit 10.1 to Norwegian Cruise
Line Holdings Ltd.’s Form 8-K filed on February 18, 2022 (File No. 001-35784))*
10.54
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))*
10.55
Amendment to Employment Agreement by and between Prestige Cruise Services, LLC and Jason
Montague, dated as of February 14, 2022 (incorporated herein by reference to Exhibit 10.2 to Norwegian
Cruise Line Holdings Ltd.’s Form 8-K filed on February 18, 2022 (File No. 001-35784))*
10.56
Transition and Release Agreement by and between Prestige Cruise Services LLC and Jason Montague,
entered into on December 13, 2022 (incorporated herein by reference to Exhibit 10.3 to Norwegian
Cruise Line Holdings Ltd.’s Form 8-K filed on December 15, 2022 (File No. 001-35784))*
10.57
Employment Agreement by and between NCL (Bahamas) Ltd. and Frank J. Del Rio, entered into on
October 1, 2020 (incorporated herein by reference to Exhibit 10.1 to Norwegian Cruise Line Holdings
Ltd.’s Form 8-K filed on October 5, 2020 (File No. 001-35784))*
10.58
10.59
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))*
Employment Agreement by and between Prestige Cruise Services, LLC and Howard Sherman, entered
into on November 8, 2021 and effective as of January 1, 2022 (incorporated herein by reference to
Exhibit 10.1 to Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on November 8, 2021 (File No.
001-35784))*
79
10.60
10.61
10.62
Transition and Release Agreement by and between Prestige Cruise Services LLC and Howard Sherman,
entered into on December 13, 2022 (incorporated herein by reference to Exhibit 10.4 to Norwegian
Cruise Line Holdings Ltd.’s Form 8-K filed on December 15, 2022 (File No. 001-35784))*
Employment Agreement by and between Prestige Cruise Services LLC and Andrea DeMarco, entered
into on December 14, 2022 and effective as of January 1, 2023 (incorporated herein by reference to
Exhibit 10.1 to Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on December 15, 2022 (File No.
001-35784))*
Employment Agreement by and between Prestige Cruise Services LLC and Frank A. Del Rio, entered
into on December 14, 2022 and effective as of January 1, 2023 (incorporated herein by reference to
Exhibit 10.2 to Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on December 15, 2022 (File No.
001-35784))*
10.63
Employment Agreement by and between NCL Corporation Ltd. and Harry Sommer, entered into on
January 10, 2019 (incorporated herein by reference to Exhibit 10.2 to Norwegian Cruise Line Holdings
Ltd.’s Form 10-Q filed on May 10, 2021 (File No. 001-35784))*
10.64
Form of Indemnification Agreement by and between Norwegian Cruise Line Holdings Ltd. and each of
its directors, executive officers and certain other officers (effective July 14, 2020) (incorporated herein
by reference to Exhibit 10.2 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on August 10,
2020 (File No. 001-35784))*
10.65
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 June 17, 2022 (File No. 001-35784))*
10.66
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))*
10.67
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))*
10.68
Directors’ Compensation Policy (effective January 1, 2022) (incorporated herein by reference to Exhibit
10.48 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on March 1, 2022 (File No. 001-
35784))*
10.69
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))*
10.70
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))*
10.71
10.72
10.73
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))*
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))*
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))*
80
10.74
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))*
10.75
10.76
10.77
10.78
10.79
Form of Norwegian Cruise Line Holdings Ltd. Time-based Restricted Share Unit Award Agreement
(2020) (incorporated by reference to Exhibit 10.77 to Norwegian Cruise Line Holdings Ltd.’s annual
report on Form 10-K filed on February 27, 2020 (File No. 001-35784))*
Form of Norwegian Cruise Line Holdings Ltd. Performance-based Restricted Share Unit Award
Agreement (2020) (incorporated by reference to Exhibit 10.78 to Norwegian Cruise Line Holdings Ltd.’s
annual report on Form 10-K filed on February 27, 2020 (File No. 001-35784))*
Form of Norwegian Cruise Line Holdings Ltd. Time-based Restricted Share Unit Award Agreement
(President and Chief Executive Officer 2022) (incorporated herein by reference to Exhibit 10.57 to
Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on March 1, 2022 (File No. 001-35784))*
Form of Norwegian Cruise Line Holdings Ltd. Performance-based Restricted Share Unit Award
Agreement (President and Chief Executive Officer 2022) (incorporated herein by reference to Exhibit
10.58 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on March 1, 2022 (File No. 001-
35784))*
Form of Norwegian Cruise Line Holdings Ltd. Performance-based Restricted Share Unit Award
Agreement (2022) (incorporated herein by reference to Exhibit 10.59 to Norwegian Cruise Line
Holdings Ltd.’s Form 10-K filed on March 1, 2022 (File No. 001-35784))*
10.80
Form of Restricted Cash Retention Agreement (2022) (incorporated herein by reference to Exhibit 10.60
to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on March 1, 2022 (File No. 001-35784))*
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, 2022, 2021
and 2020;
(ii) the Consolidated Statements of Comprehensive Loss of NCLH for the years ended
December 31, 2022, 2021 and 2020;
(iii) the Consolidated Balance Sheets of NCLH as of December 31, 2022 and 2021;
(iv) the Consolidated Statements of Cash Flows of NCLH for the years ended December 31, 2022, 2021
and 2020;
(v) the Consolidated Statements of Changes in Shareholders’ Equity of NCLH for the years ended
December 31, 2022, 2021 and 2020;
81
(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, 2022, formatted in Inline XBRL and included in the interactive data files submitted
as Exhibit 101.
# Certain portions of this document that constitute confidential information have been redacted in accordance with
Regulation S-K Item 601(b)(10).
† Agreement restates previous versions of agreement.
* Management contract or compensatory plan.
** Filed herewith.
*** Furnished herewith.
Item 16. Form 10-K Summary
None.
82
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 28, 2023.
SIGNATURES
NORWEGIAN CRUISE LINE HOLDINGS LTD.
/s/ Frank J. Del Rio
By:
Name:Frank J. Del Rio
Title: 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 28, 2023
/s/ Mark A. Kempa
Mark A. Kempa
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
February 28, 2023
/s/ Faye L. Ashby
Faye L. Ashby
Senior Vice President and Chief Accounting Officer
(Principal Accounting Officer)
February 28, 2023
/s/ Adam M. Aron
Director
Adam M. Aron
/s/ Harry C. Curtis
Director
Harry C. Curtis
/s/ David M. Abrams
Director
David M. Abrams
/s/ Stella David
Director
Stella David
/s/ Russell W. Galbut
Director
Russell W. Galbut
/s/ Mary E. Landry
Director
Mary E. Landry
/s/ Zillah Byng-Thorne
Director
Zillah Byng-Thorne
83
February 28, 2023
February 28, 2023
February 28, 2023
February 28, 2023
February 28, 2023
February 28, 2023
February 28, 2023
Norwegian Cruise Line Holdings Ltd.
Schedule II Valuation and Qualifying Accounts (in thousands)
Additions
Charged to Charged to
Description
Balance
12/31/19
costs and
expenses
other
accounts (a) Deductions (b)
Balance
12/31/20
Valuation allowance on deferred tax assets
$
5,847
$
— $ 38,150 $
(1,121) $ 42,876
Charged to Charged to
Description
Balance
12/31/20
costs and
expenses
other
accounts (a) Deductions (b)
Balance
12/31/21
Valuation allowance on deferred tax assets
$ 42,876
$
— $ 45,163 $
(190) $ 87,849
Description
Charged to Charged to
Balance
12/31/21
costs and
expenses accounts (a) Deductions (b)
other
Balance
12/31/22
Valuation allowance on deferred tax assets
$ 87,849
$
— $ 52,219 $
(335) $ 139,733
(a) Amount relates to a valuation allowance on net U.S. deferred tax assets.
(b) 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.
84
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID 238)
Consolidated Statements of Operations for the years ended December 31, 2022, 2021 and 2020
Consolidated Statements of Comprehensive Loss for the years ended December 31, 2022, 2021 and 2020
Consolidated Balance Sheets as of December 31, 2022 and 2021
Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021 and 2020
Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2022, 2021
and 2020
Notes to the Consolidated Financial Statements
Page
F-1
F-5
F-6
F-7
F-8
F-9
F-10
85
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, 2022 and 2021, and the related consolidated statements of operations,
of comprehensive loss, of changes in shareholders’ equity and of cash flows for each of the three years in the period
ended December 31, 2022, 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, 2022, 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, 2022 and 2021, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2022 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, 2022, based on criteria established in Internal
Control - Integrated Framework (2013) issued by the COSO.
Change in Accounting Principle
As discussed in Note 8 to the consolidated financial statements, the Company changed the manner in which it accounts
for convertible instruments in 2021.
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
Emphasis of Matter
As discussed in Note 2 to the consolidated financial statements, the ongoing effects of COVID-19 and other global
events on the Company's operations and global bookings have had, and will continue to have, a significant impact on the
Company’s financial results and liquidity. Management’s evaluation of the events and conditions and management’s
plans to mitigate these matters are also described in Note 2.
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.
Liquidity
As described in Note 2 to the consolidated financial statements, significant events affecting travel typically have an
impact on demand for cruise vacations, with the full extent of the impact determined by the length of time the event
influences travel decisions. Management believes the ongoing effects of the COVID-19 pandemic and other global
events on the Company’s operations and global bookings have had, and will continue to have, a significant impact on the
Company’s financial results and liquidity. Management has taken actions to improve the Company’s liquidity, including
completing various capital market transactions and making capital expenditure and operating expense reductions, and
management expects to continue to pursue other opportunities to improve the Company’s liquidity. The estimation of
management’s future cash flow projections includes numerous assumptions that are subject to various risks and
uncertainties. Management’s principal assumptions for future cash flow projections include: (i) the expected gradual
return to historical occupancy levels; (ii) the expected increase in revenue per passenger cruise day through a
combination of both passenger ticket and onboard revenue; (iii) the forecasted cash collections in accordance with the
terms of the Company’s credit card processing agreements; and (iv) the expected sustained higher fuel prices and the
impact of inflation. Based on these actions and assumptions, and considering the Company’s cash and cash equivalents
of $0.9 billion and the impact of the Company’s $1 billion undrawn commitment and related fees as of December 31,
2022 and the impact of the Company’s various capital market and financing transactions, management has concluded
that the Company has sufficient liquidity to satisfy its obligations for at least the next twelve months from the issuance
of the financial statements.
F-2
The principal considerations for our determination that performing procedures relating to the Company’s liquidity is a
critical audit matter are the significant judgment by management when developing the estimate of future liquidity
requirements; this in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and
evaluating management’s estimate of future liquidity requirements and assumptions related to (i) the expected gradual
return to historical occupancy levels; (ii) the expected increase in revenue per passenger cruise day through a
combination of both passenger ticket and onboard revenue; (iii) the forecasted cash collections in accordance with the
terms of the Company’s credit card processing agreements; and (iv) the expected sustained higher fuel prices and the
impact of inflation.
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 estimate of future liquidity requirements. These procedures also included, among others,
testing management’s process for estimating future liquidity requirements for the twelve months after the date the
financial statements are issued. Testing management’s process involved (i) testing the completeness and accuracy of
underlying data used in the estimate; (ii) evaluating the reasonableness of the significant assumptions used by
management related to the expected gradual return to historical occupancy levels, the expected increase in revenue per
passenger cruise day through a combination of both passenger ticket and onboard revenue, the forecasted cash
collections in accordance with the terms of the Company’s credit card processing agreements, and the expected sustained
higher fuel prices and the impact of inflation; and (iii) evaluating management’s estimate of future liquidity requirements
and their disclosure in the consolidated financial statements regarding having sufficient liquidity to satisfy the
Company’s obligations for the twelve months after the financial statements are issued. Evaluating management’s
assumptions related to the gradual return to historical occupancy levels, the expected increase in revenue per passenger
cruise day through a combination of both passenger ticket and onboard revenue, the forecasted cash collections in
accordance with the terms of the Company’s credit card processing agreements, and the expected sustained higher fuel
prices and the impact of inflation involved evaluating whether the assumptions used by management were reasonable
considering (i) the current and past performance of the Company; (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.
Ship Accounting – New Ships and Ship Improvements
As described in Notes 2 and 7 to the consolidated financial statements, the Company’s consolidated ships and ship
improvements balances were $15.8 billion and $2.7 billion as of December 31, 2022, respectively. Management
determines the weighted average useful lives of ships based on estimates of the costs and useful lives of the ships’ major
component systems on the date of acquisition, such as cabins, main diesels, main electric, superstructure and hull, and
their related proportional weighting to the ship as a whole. In the third quarter of 2022, the Company took delivery of
Norwegian’s first Prima Class Ship. Based on the design, structure and technological advancements made to this new
class of ship and the analysis of its major components, which is generally performed upon the introduction of a new class
of ship, management assigned the Prima Class Ships a weighted-average useful life of 35 years. A residual value of 10%
was established based on management’s long-term estimates of the expected remaining future benefit at the end of the
ships’ weighted average useful lives. Additionally, the Company capitalized approximately $300.7 million of costs
associated with ship improvements during the year ended December 31, 2022. Ship improvement costs that management
believes add value to the ships, are capitalized to the ship. The useful lives of components of new ships and ship
improvements are estimated based on the economic lives of the new components. To determine the useful lives of the
major components of new ships and ship improvements, management considers the historical useful lives of similar
assets, manufacturer recommended lives, planned maintenance programs, and anticipated changes in technological
conditions.
The principal considerations for our determination that performing procedures relating to ship accounting for new ships
and ship improvements is a critical audit matter are the significant judgments by management when determining (i) the
useful lives of the major components of new ships and ship improvements; (ii) whether ship improvement costs add
value to the Company’s ships and are capitalizable; and (iii) the residual value of the new class of ship based on
management’s expectation of remaining future benefit. This in turn led to a high degree of auditor judgment,
subjectivity, and effort in performing procedures and evaluating audit evidence relating to (i) the appropriateness of the
useful lives of the major components of new ships and ship improvements; (ii) whether ship improvement costs add
F-3
value to the Company’s ships and are capitalized appropriately; and (iii) whether the residual value assigned to the new
class of ship is appropriate. In addition, the audit effort involved the use of professionals with specialized skill and
knowledge.
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 assessment of the useful lives of the major components of new ships and ship improvements,
whether ship improvements add value and are capitalized appropriately, and whether the residual value assigned to the
new class of ship is appropriate. These procedures also included, among others, (i) evaluating the reasonableness of the
useful lives assigned to the major components of new ships and ship improvements, considering the historical useful
lives of similar assets, manufacturer recommended lives, planned maintenance programs, and anticipated changes in
technological conditions; (ii) evaluating whether costs capitalized extend the useful life or increase the functionality of
the ship, including testing the accuracy, existence and valuation of capitalized ship improvement costs; and (iii)
evaluating the residual value assigned to the new class of ship. Professionals with specialized skill and knowledge were
used to assist in evaluating the appropriateness of the assigned useful lives of the major components of new ships and
ship improvements, and residual value of the new class of ship.
/s/ PricewaterhouseCoopers LLP
Hallandale Beach, Florida
February 28, 2023
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-4
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
Impairment loss
Total other operating expense
Operating loss
Non-operating income (expense)
Interest expense, net
Other income (expense), net
Total non-operating income (expense)
Net loss before income taxes
Income tax benefit (expense)
Net loss
Weighted-average shares outstanding
Basic
Diluted
Loss per share
Basic
Diluted
Year Ended December 31,
2021
2020
2022
$
$
3,253,799
1,589,961
4,843,760
392,752 $
255,234
647,986
867,110
412,798
1,279,908
1,034,629
357,932
1,088,639
686,825
263,807
835,254
4,267,086
1,379,105
749,326
—
2,128,431
(1,551,757)
143,524
54,037
537,439
301,852
62,999
508,186
1,608,037
891,452
700,845
—
1,592,297
(2,552,348)
380,710
85,678
521,301
264,712
65,369
375,291
1,693,061
745,345
717,840
1,607,797
3,070,982
(3,484,135)
(801,512)
76,566
(724,946)
(2,276,703)
6,794
(482,313)
(33,599)
(515,912)
(4,000,047)
(12,467)
$ (2,269,909) $ (4,506,587) $ (4,012,514)
(2,072,925)
123,953
(1,948,972)
(4,501,320)
(5,267)
419,773,195
419,773,195
365,449,967
365,449,967
254,728,932
254,728,932
$
$
(5.41) $
(5.41) $
(12.33) $
(12.33) $
(15.75)
(15.75)
The accompanying notes are an integral part of these consolidated financial statements.
F-5
Norwegian Cruise Line Holdings Ltd.
Consolidated Statements of Comprehensive Loss
(in thousands)
Net loss
Other comprehensive income (loss):
Shipboard Retirement Plan
Cash flow hedges:
Net unrealized loss
Amount realized and reclassified into earnings
Total other comprehensive income (loss)
Total comprehensive loss
Year Ended December 31,
2021
$ (2,269,909) $ (4,506,587) $ (4,012,514)
2020
2022
8,889
393
345
(104,017)
(96,865)
(191,993)
(51,642)
106,670
55,373
$ (2,461,902) $ (4,551,556) $ (3,957,141)
(110,379)
65,017
(44,969)
The accompanying notes are an integral part of these consolidated financial statements.
F-6
Norwegian Cruise Line Holdings Ltd.
Consolidated Balance Sheets
(in thousands, except share data)
Assets
Current assets:
Cash and cash equivalents
Short-term investments
Accounts receivable, net
Inventories
Prepaid expenses and other assets
Total current assets
Property and equipment, net
Goodwill
Trade names
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,
2022
2021
$
946,987 $ 1,506,647
240,000
—
1,167,473
326,272
118,205
148,717
269,243
450,893
3,301,568
1,872,869
13,528,806
14,516,366
98,134
98,134
500,525
500,525
1,300,804
1,569,800
$ 18,557,694 $ 18,729,837
$
991,128 $
228,742
1,318,460
2,516,521
5,054,851
12,630,402
803,850
18,489,103
876,890
233,172
1,059,034
1,561,336
3,730,432
11,569,700
997,055
16,297,187
Ordinary shares, $0.001 par value; 980,000,000 shares authorized; and 421,413,565
shares issued and outstanding at December 31, 2022 and 416,891,915 shares issued
and outstanding at December 31, 2021
Additional paid-in capital
Accumulated other comprehensive income (loss)
Accumulated deficit
Total shareholders’ equity
Total liabilities and shareholders’ equity
421
7,611,564
(477,079)
(7,066,315)
68,591
417
7,513,725
(285,086)
(4,796,406)
2,432,650
$ 18,557,694 $ 18,729,837
The accompanying notes are an integral part of these consolidated financial statements.
F-7
Norwegian Cruise Line Holdings Ltd.
Consolidated Statements of Cash Flows
(in thousands)
Cash flows from operating activities
Net loss
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
$ (2,269,909) $ (4,506,587) $ (4,012,514)
Year Ended December 31,
2021
2020
2022
Depreciation and amortization expense
Impairment loss
Deferred income taxes, net
(Gain) loss on derivatives
Loss on extinguishment of debt
Provision for bad debts and inventory obsolescence
Gain on involuntary conversion of assets
Share-based compensation expense
Payment-in-kind interest premium
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 (used in) operating activities
Cash flows from investing activities
Additions to property and equipment, net
Purchases of short-term investments
Proceeds from maturities of short-term investments
Cash paid on settlement of derivatives
Other, net
Net cash used in investing activities
Cash flows from financing activities
Repayments of long-term debt
Proceeds from long-term debt
Common share issuance proceeds, net
Proceeds from employee related plans
Net share settlement of restricted share units
Early redemption premium
Deferred financing fees
Net cash provided by 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
810,053
—
—
(1,237)
8,618
188,799
13,609
(2,300)
113,563
(10,795)
828,661
(33,609)
(601,080)
(16,196)
252,896
928,947
210,020
758,604
—
78
(39,842)
1,399,816
19,284
(9,486)
124,077
—
(9,865)
(1,159,998)
(37,481)
24,004
152,026
295,451
521,910
(2,468,009)
(1,783,857)
(752,843)
— (1,010,000)
770,000
(23,496)
12,295
(1,004,044)
240,000
(224,137)
12,090
(1,755,904)
739,619
1,607,797
12,765
(8,501)
10,480
31,756
(1,496)
111,297
19,349
8,584
30,797
10,555
(89,528)
(21,419)
(193,938)
(811,846)
(2,556,243)
(946,545)
—
—
(31,520)
2,703
(975,362)
(1,770,172)
3,003,003
—
5,267
(20,987)
(172,012)
(58,875)
986,224
(559,660)
1,506,647
946,987
$
(892,481)
(2,113,063)
6,075,090
2,601,317
1,541,708
2,665,843
5,557
3,141
(15,407)
(16,687)
(1,376)
(1,354,882)
(133,880)
(107,451)
6,579,211
1,678,218
3,047,606
(1,793,835)
3,300,482
252,876
$ 1,506,647 $ 3,300,482
The accompanying notes are an integral part of these consolidated financial statements.
F-8
Norwegian Cruise Line Holdings Ltd.
Consolidated Statements of Changes in Shareholders’ Equity
(in thousands)
Balance, December 31, 2019
Share-based compensation
Issuance of shares under employee
related plans
Common share issuance proceeds,
net
Net share settlement of restricted
share units
Cumulative change in accounting
policy
Beneficial conversion feature
Payment-in-kind premium
Other comprehensive income, net
Net loss
Balance, December 31, 2020
Share-based compensation
Issuance of shares under employee
related plans
Common share issuance proceeds,
net
Net share settlement of restricted
share units
Cumulative change in accounting
policy
Other
Other comprehensive loss, net
Net loss
Balance, December 31, 2021
Share-based compensation
Issuance of shares under employee
related plans
Net share settlement of restricted
share units
Other comprehensive loss, net
Net loss
Balance, December 31, 2022
Additional
Ordinary Paid-in
Shares Capital
$
237
—
4,235,690
111,297
Accumulated Retained
Earnings
Other
Comprehensive (Accumulated Treasury
Income (Loss) Deficit)
(295,490) $
—
3,829,068
Shares
—
$
—
$ (1,253,926) $
Total
Shareholders’
Equity
6,515,579
111,297
—
—
5,557
(113,926)
1,253,926
1,541,708
2
5,555
77
401,631
—
(15,407)
—
—
—
—
—
316
—
—
131,240
19,349
—
—
4,889,355
124,077
—
3,141
101
2,665,434
—
(16,687)
—
—
—
—
417
—
(131,240)
(20,355)
—
—
7,513,725
113,563
—
—
—
—
—
—
55,373
—
(240,117)
—
—
—
—
—
—
(44,969)
—
(285,086)
—
4
5,263
—
—
1,923
—
—
—
(4,012,514)
(295,449)
—
—
—
—
5,630
—
—
(4,506,587)
(4,796,406)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(15,407)
1,923
131,240
19,349
55,373
(4,012,514)
4,354,105
124,077
3,141
2,665,535
(16,687)
(125,610)
(20,355)
(44,969)
(4,506,587)
2,432,650
113,563
5,267
—
—
—
— $
(20,987)
(191,993)
(2,269,909)
68,591
—
—
—
(20,987)
—
—
421 $ 7,611,564
$
$
—
(191,993)
—
(2,269,909)
(477,079) $ (7,066,315)
$
The accompanying notes are an integral part of these consolidated financial statements.
F-9
Norwegian Cruise Line Holdings Ltd.
Notes to the Consolidated Financial Statements
1. Description of Business
We are a leading global cruise company which operates the Norwegian Cruise Line, Oceania Cruises and Regent Seven
Seas Cruises brands. Due to COVID-19, we temporarily suspended all global cruise voyages from March 2020 until July
2021, when we resumed cruise voyages on a limited basis. In early May 2022, we completed the phased relaunch of our
entire fleet with all ships now in operation with guests on board. We refer you to Note 2 – “Summary of Significant
Accounting Policies” for further information.
As of December 31, 2022, we had 29 ships with approximately 62,000 Berths and had orders for eight additional ships
currently scheduled to be delivered. We have converted some double occupancy cabins to studio cabins and we expect to
convert approximately 900 additional cabins in early 2023. Additionally, in February 2023, we amended the delivery
dates of the last two Prima Class Ships to 2027 and 2028. These ships will be lengthened and re-configured to
accommodate the use of methanol as an alternative fuel source in the future. While additional modifications will be
needed in the future to fully enable the use of methanol in addition to traditional marine fuel, this reinforces our
commitment to reduce greenhouse gas emissions.
We have five Prima Class Ships on order with currently scheduled delivery dates from 2023 through 2028. We have one
Explorer Class Ship on order for delivery in 2023. We have two Allura Class Ships on order for delivery in 2023 and
2025. The addition of these eight ships to our fleet will increase our total Berths to approximately 82,000.
2. Summary of Significant Accounting Policies
Liquidity and Management’s Plan
Due to the impact of COVID-19, travel restrictions and limited access to ports around the world, in March 2020, the
Company implemented a voluntary suspension of all cruise voyages across our three brands. In the third quarter of 2021,
we began a phased relaunch of certain cruise voyages with our ships initially operating at reduced occupancy levels. In
early May 2022, the Company completed the phased relaunch of its entire fleet with all ships now in operation with
guests on board.
Significant events affecting travel typically have an impact on demand for cruise vacations, with the full extent of the
impact determined by the length of time the event influences travel decisions. The level of occupancy on our ships will
depend on a number of factors including, but not limited to, further resurgences of COVID-19 or the emergence of other
public health crises and any related governmental regulations and new health and safety protocols, port availability,
travel restrictions, bans and advisories, and our ability to staff our ships. In addition, as a result of conditions associated
with the COVID-19 pandemic and other global events, such as Russia’s ongoing invasion of Ukraine and actions taken
by the United States and other governments in response to the invasion, the global economy, including the financial and
credit markets, has experienced significant volatility and disruptions, including increases in inflation rates, fuel prices,
and interest rates. These conditions have resulted, and may continue to result, in increased expenses and may also impact
travel or consumer discretionary spending. We believe the ongoing effects of the foregoing factors and events on our
operations and global bookings have had, and will continue to have, a significant impact on our financial results and
liquidity.
The estimation of our future cash flow projections includes numerous assumptions that are subject to various risks and
uncertainties. Our principal assumptions for future cash flow projections include:
• Expected gradual return to historical occupancy levels;
• Expected increase in revenue per passenger cruise day through a combination of both passenger ticket and
onboard revenue as compared to 2019;
F-10
• Forecasted cash collections in accordance with the terms of our credit card processing agreements (see Note 13
- “Commitments and Contingencies”); and
• Expected sustained higher fuel prices and the impact of inflation.
Our projected liquidity requirements also reflect our principal assumptions surrounding ongoing operating costs, as well
as liquidity requirements for financing costs and necessary capital expenditures. We cannot make assurances that our
assumptions used to estimate our liquidity requirements will not change materially due to the dynamic nature of the
current economic landscape. Accordingly, the full effect of the COVID-19 pandemic and other global events impacting
macroeconomic conditions and travel and consumer discretionary spending, including Russia’s ongoing invasion of
Ukraine, on our financial performance and financial condition cannot be quantified at this time. We have made
reasonable estimates and judgments of the impact of these events within our financial statements; however, there may be
material changes to those estimates in future periods. We have taken actions to improve our liquidity, including
completing various capital market and financing transactions and making capital expenditure and operating expense
reductions, and we expect to continue to pursue further opportunities to improve our liquidity.
Based on these actions and assumptions as discussed above, and considering our cash and cash equivalents of $0.9
billion and the impact of our $1 billion undrawn commitment less related fees as of December 31, 2022 and the impact
of our various capital market and financing transactions in 2023 (see Note 8 – “Long-Term Debt”), we have concluded
that we have sufficient liquidity to satisfy our obligations for at least the next twelve months.
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.
Short-term Investments
Short-term investments include time deposits with original maturities of greater than three months and up to 12 months,
which are stated at cost and present insignificant risk of changes in value.
Accounts Receivable, Net
Accounts receivable are shown net of an allowance for credit losses of $14.0 million and $28.7 million as of
December 31, 2022 and 2021, respectively. Accounts receivable, net includes $118.4 million and $1.1 billion due from
credit card processors within 12 months as of December 31, 2022 and 2021, 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.
Advertising Costs
Advertising costs are expensed as incurred. Expenses related to advertising costs totaled $577.8 million, $300.3 million
and $216.5 million for the years ended December 31, 2022, 2021 and 2020, respectively.
F-11
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 loss
Basic weighted-average shares outstanding
Dilutive effect of share awards
Diluted weighted-average shares outstanding
Basic loss per share
Diluted loss per share
2022
2020
Year Ended December 31,
2021
$ (2,269,909) $ (4,506,587) $ (4,012,514)
254,728,932
365,449,967
—
—
254,728,932
365,449,967
(15.75)
(15.75)
419,773,195
—
419,773,195
(12.33) $
(12.33) $
(5.41) $
(5.41) $
$
$
For the years ended December 31, 2022, 2021 and 2020, a total of 92.6 million, 102.1 million and 80.0 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. We determine the weighted average useful lives of our ships based
primarily on our estimates of the costs and useful lives of the ships’ major component systems on the date of acquisition,
such as cabins, main diesels, main electric, superstructure and hull, and their related proportional weighting to the ship as
a whole. In the third quarter of 2022, the Company took delivery of Norwegian’s first Prima Class Ship. Based on the
design, structure and technological advancements made to this new class of ship and the analysis of its major
components, which is generally performed upon the introduction of a new class of ship, we have assigned the Prima
Class Ships a weighted-average useful life of 35 years. A residual value of 10% was established based on our long-term
estimates of the expected remaining future benefit at the end of the ships’ weighted average useful lives. 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 components of new ships and ship
improvements are estimated based on the economic lives of the new components. In addition, to determine the useful
lives of the major components of new ships and ship improvements, we consider the historical useful lives of similar
assets, manufacturer recommended lives, planned maintenance programs and anticipated changes in technological
conditions.
Depreciation is computed on a straight-line basis over the estimated useful lives of the assets, after a 10-15% 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
30‑35 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-12
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. For ship impairment analyses, the lowest level for which identifiable cash flows are largely
independent of other assets and liabilities is each individual ship. 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 estimated 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 Trade Names
Goodwill represents the excess of cost over the estimated fair value of net assets acquired. Goodwill and other indefinite-
lived assets, principally trade names, are reviewed for impairment on December 31 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 qualitative assessment which allows us to first assess qualitative factors to determine whether it is more likely than
not (i.e., more than 50%) that the estimated fair value of a reporting unit is less than its carrying value. For trade names
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).
If the result of the qualitative assessment indicated it is more likely than not that the estimated fair value of the asset is
less than its carrying value, we would conduct a quantitative assessment comparing the fair value to its carrying value.
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.
For our annual impairment evaluation, we performed a qualitative assessment for the Regent Seven Seas reporting unit
and of each brand’s trade names. As part of our analysis, we performed an assessment of current factors compared to key
assumptions impacting the quantitative tests performed in 2020. As of December 31, 2022, our annual review supports
the carrying value of these assets.
F-13
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):
North America
Europe
Asia-Pacific
Other
Total revenue
Segment Reporting
Year Ended December 31,
2021
2022
$ 3,076,788
1,557,308
115,438
94,226
$ 4,843,760
$ 424,377 $
211,767
6,186
5,656
2020
960,258
27,602
152,976
139,072
$ 647,986 $ 1,279,908
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 through the U.S. Revenue attributable to U.S.-sourced guests was 85%, 87% and 83% for
the years ended December 31, 2022, 2021 and 2020, 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 20
ships with Bahamas registry with a carrying value of $10.6 billion as of December 31, 2022 and 19 ships with Bahamas
registry with a carrying value of $9.7 billion as of December 31, 2021. We had eight ships with Marshall Islands registry
with a carrying value of $2.3 billion as of December 31, 2022 and 2021. We also had one ship with U.S. registry with a
carrying value of $0.3 billion as of December 31, 2022 and 2021.
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.
F-14
Foreign Currency
The majority of our transactions are settled in U.S. dollars. We remeasure assets and liabilities denominated in foreign
currencies at exchange rates in effect at the balance sheet date. The resulting gains or losses are recognized in our
consolidated statements of operations within other income (expense), net. We recognized a gain of $55.8 million, a gain
of $20.9 million and a loss of $15.9 million for the years ended December 31, 2022, 2021 and 2020, respectively, related
to remeasurement of assets and liabilities denominated in foreign currencies. Remeasurements of foreign currency
related to operating activities are recognized within changes in operating assets and liabilities in the consolidated
statement of cash flows.
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 qualitative assessments or regression analysis and high effectiveness is achieved when a statistically valid
relationship reflects a high degree of offset and correlation between the derivative and the hedged forecasted transaction.
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 or is no
longer probable of occurring, gains and losses are recognized in other income (expense), net in our consolidated
statements of operations. Realized gains and losses related to our effective hedges are recognized in the same line item
as the underlying hedged transactions. 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 undrawn commitment 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.
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
F-15
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 March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.
2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial
Reporting (“ASU 2020-04”), which provided guidance to alleviate the burden in accounting for reference rate reform by
allowing certain expedients and exceptions in applying GAAP to contracts, hedging relationships and other transactions
impacted by reference rate reform. The provisions apply only to those transactions that reference LIBOR or another
reference rate expected to be discontinued due to reference rate reform. Adoption of the provisions of ASU 2020-04 are
optional and are effective from March 12, 2020 through December 31, 2024, as deferred by ASU No. 2022-06,
Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848. As of December 31, 2022, we have not
completed any contract amendments within the scope of ASU 2020-04 or adopted any expedients or exceptions. We will
continue to evaluate the impact of ASU 2020-04 on our 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, Wi-Fi
services and other similar items. Food and beverage, casino operations 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, 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. Historically, the inception of
substantive cancellation penalties generally coincided with the dates that final payment is due, and penalties generally
increased as the voyage sail date approaches. We have launched cancellation policies for certain sailings booked during
F-16
certain time periods to permit certain guests to cancel cruises which were not part of a temporary suspension of voyages
up to 15 days prior to embarkation for cruises embarking prior to December 31, 2022 or in the event of a positive
COVID-19 test and receive a refund in the form of a credit to be applied toward a future cruise. 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 receivable, net. As of December 31, 2022, our receivables
from customers were $94.2 million, primarily related to in-transit credit card receivables.
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. Future cruise credits that
have been issued as face value reimbursement for cancelled bookings due to COVID-19 are generally valid for any
sailing through June 30, 2023, and we may further extend this offer. The future cruise credits are not contracts, and
therefore, guests who elected this option are excluded from our contract liability balance; however, the credit for the
original amount paid is included in advance ticket sales.
As of December 31, 2022, our contract liabilities were $1.7 billion. Of the amounts included within contract liabilities as
of December 31, 2022, approximately 40% were refundable in accordance with our cancellation policies. Of the deposits
included within advance ticket sales, the majority are refundable in accordance with our cancellation policies and it is
uncertain to what extent guests may request refunds. Refunds payable to guests are included in accounts payable. As of
December 31, 2021, our contract liabilities were $161.8 million. Approximately $124.4 million of the
December 31, 2021 contract liability balance has been recognized in revenue for the year ended December 31, 2022. The
revenue recognized in the years ended December 31, 2021 and 2020 that was included in contract liabilities as of the
beginning of each respective period was $2.2 million and $0.9 billion, respectively.
Our cruise voyages were completely suspended from March 2020 until July 2021 due to the COVID-19 pandemic and
our resumption of cruise voyages was phased in gradually as described under “—Liquidity and Management’s Plan”
above. As a result of our return to service as well as our cancellation policies returning to our standard terms, there has
been an increase in the contract liability balance as of December 31, 2022. 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. In 2023, three new ships are expected to be delivered.
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 non-cancelable charter agreements and a service concession arrangement with a certain port, both of
F-17
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 generally 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 $184.0 million and $97.8 million as of December 31, 2022
and 2021, respectively. Costs to fulfill contracts with customers were $125.9 million and $17.4 million as of
December 31, 2022 and 2021, 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.
For cruise vacations that had been cancelled by us due to COVID-19, approximately $0.3 million, $36.3 million and
$171.5 million in costs to obtain these contracts, consisting of protected commissions, including those paid to
employees, and credit card fees, were recognized in earnings during the year ended December 31, 2022, 2021 and 2020,
respectively.
4. Goodwill and Trade Names
Goodwill and trade names are not subject to amortization. As of December 31, 2022 and 2021, the carrying values were
$98.1 million for goodwill and $500.5 million for trade names. We evaluate goodwill and trade names 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. The changes in the carrying amount of goodwill are as follows (in thousands):
Accumulated impairment loss
Balance, December 31, 2021
Impairment loss
Balance, December 31, 2022
Total
Goodwill
(1,290,797)
98,134
—
98,134
$
$
For the year ended December 31, 2020, we impaired our trade names for Oceania Cruises and Regent Seven Seas
Cruises by $170.0 million and $147.0 million, respectively. Following these impairments, the carrying value of our trade
names was $500.5 million, which consists of $207.5 million for Norwegian Cruise Line, $140.0 million for Oceania
Cruises and $153.0 million for Regent Seven Seas Cruises.
5. Leases
Nature of Leases
We have operating leases primarily for port facilities and also 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.
F-18
The components of lease expense were as follows (in thousands):
Operating lease expense
Variable lease expense
Short-term lease expense
Lease balances were as follows (in thousands):
Year Ended
Year Ended
December 31, 2022 December 31, 2021 December 31, 2020
19,406
$
9,705
11,076
17,534 $
12,414
6,421
47,558
29,886
38,476
Year Ended
$
Operating leases
Right-of-use assets
Balance Sheet location
December 31, 2022 December 31, 2021
Other long-term assets
$
707,086 $
794,187
Current operating lease liabilities
Non-current operating lease liabilities Other long-term liabilities
Accrued expenses and other
liabilities
39,689
588,064
34,407
670,688
Supplemental cash flow and non-cash 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
$
47,828
$
31,385 $
70,555
Year Ended
Year Ended
Year Ended
December 31, 2022 December 31, 2021 December 31, 2020
Right-of-use assets obtained in exchange for lease
obligations:
Operating leases
(76,173)
506,761
823
The right-of-use assets obtained in exchange for lease obligations for the year ended December 31, 2022 decreased
primarily related to a modification of a port facility agreement.
Other supplemental information related to leases was as follows:
Year Ended
Year Ended
December 31, 2022 December 31, 2021 December 31, 2020
Year Ended
Weighted average remaining lease term (years)
- operating leases
Weighted average discount rate - operating
leases
22.90
24.28
7.36
7.33 %
5.41 %
3.96 %
As of December 31, 2022, maturities of lease liabilities were as follows (in thousands):
2023
2024
2025
2026
2027
Thereafter
Total
Less: Present value discount
Present value of lease liabilities
F-19
Operating
leases
80,239
69,638
66,855
67,059
66,359
1,013,732
1,363,882
(736,129)
627,753
$
$
Sales-Type Lease
We have one sales-type lease for constructed land-based transportation equipment and infrastructure. The term of the
lease is 20 years. At the end of the lease term, the assets shall be conveyed to the lessee. As of December 31, 2022, the
lease receivable is $43.5 million and is recognized within accounts receivable, net and other long-term assets. The
maturities of the lease receivable as of December 31, 2022 were as follows (in thousands):
2023
2024
2025
2026
2027
Thereafter
Total
Sales-type
lease
$
$
3,720
2,481
2,481
2,481
2,481
29,856
43,500
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 estimated our incremental borrowing rate to determine
the net present value of the lease payments at the commencement date. Our incremental borrowing rate was estimated
based on the rate we would have obtained if we had borrowed collateralized debt over the lease term to purchase the
asset.
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.”
Leases That Have Not Yet Commenced
We have one agreement related to our rights to use a port facility which is under construction. The lease term for this
agreement has not commenced as of December 31, 2022. Although we may have provided design input or advances
related to these assets, we have determined that we do not control the assets during the period of construction. The lease
F-20
is expected to commence in 2024. This port facility has undiscounted minimum annual guarantees of approximately
$141.1 million of passenger fees.
6. Accumulated Other Comprehensive Income (Loss)
Accumulated other comprehensive income (loss) was as follows (in thousands):
Year Ended December 31, 2022
Change
Change Related to
Related to Shipboard
Comprehensive Cash Flow Retirement
Accumulated
Other
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
$
$
(285,086) $ (279,696) $
(5,390)
(104,017)
(95,506)
(96,865)(1)
(96,487)
(477,079) $ (480,578)(3) $
8,511
378 (2)
3,499
Year Ended December 31, 2021
Change
Change Related to
Related to Shipboard
Comprehensive Cash Flow Retirement
Accumulated
Other
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
$
$
(240,117) $ (234,334) $
(110,379)
65,410
65,017 (1)
(285,086) $ (279,696) $
(110,379)
(5,783)
—
393 (2)
(5,390)
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
Year Ended December 31, 2020
Change
Change Related to
Related to Shipboard
Comprehensive Cash Flow Retirement
Accumulated
Other
Income (Loss) Hedges
Plan
$
$
(295,490) $ (289,362)
(51,642)
(51,704)
106,670 (1)
107,077
$
(240,117) $ (234,334)
$
(6,128)
(62)
407 (2)
(5,783)
(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 $28.7 million of gain expected to be reclassified into earnings in the next 12 months.
F-21
7. Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
Ships
Ship improvements
Ships under construction
Land and land improvements
Other
Less: accumulated depreciation
Property and equipment, net
December 31,
2022
2021
$ 15,751,860 $ 14,488,539
2,444,910
833,973
58,370
767,819
18,593,611
(5,064,805)
$ 14,516,366 $ 13,528,806
2,718,818
871,813
58,370
880,056
20,280,917
(5,764,551)
The increase in ships was primarily due to the addition of Norwegian Prima. The Company capitalized approximately
$300.7 million of costs associated with ship improvements during the year ended December 31, 2022. Repairs and
maintenance expenses including Dry-dock expenses were $223.5 million, $199.7 million and $129.9 million for
the years ended December 31, 2022, 2021 and 2020, 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
$58.4 million, $43.6 million and $25.2 million for the years ended December 31, 2022, 2021 and 2020, respectively.
F-22
8. Long-Term Debt
Long-term debt consisted of the following:
$875.0 million senior secured Revolving Loan
Facility
Term Loan A Facility
$862.5 million 6.000% exchangeable notes
$450.0 million 5.375% exchangeable notes
$1,150.0 million 1.125% exchangeable notes
$473.2 million 2.50% exchangeable notes
$1,000.0 million 5.875% senior secured notes
$600.0 million 7.75% senior unsecured notes
$675.0 million 12.25% senior secured notes (1)
$750.0 million 10.25% senior secured notes
$525.0 million 6.125% senior unsecured notes
$1,425.0 million 5.875% senior unsecured notes
$565.0 million 3.625% senior unsecured notes
€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
Splendor newbuild loan
Explorer newbuild loan
Marina newbuild loan
Riviera newbuild loan
Term loan - newbuild related
Finance lease and license obligations
Total debt
Less: current portion of long-term debt
Total long-term debt
Interest Rate
December 31,
2022
2021
Maturities
Through
Balance
December 31,
2022
2021
(in thousands)
6.45 %
6.80 %
6.00 %
5.38 %
1.13 %
2.50 %
5.88 %
7.75 %
—
—
6.13 %
5.88 %
3.63 %
5.53 %
4.25 %
3.75 %
3.62 %
4.25 %
4.24 %
2.68 %
2.77 %
1.22 %
1.31 %
3.36 %
4.44 %
4.41 %
5.78 %
—
Various
—
—
—
2.10 % 2025
2.07 % 2025
6.00 % 2024
5.38 % 2025
1.13 % 2027
2027
2027
2029
12.25 % 2024
10.25 % 2026
6.13 % 2028
5.88 % 2026
3.63 % 2024
1.12 % 2026
3.47 % 2027
2.65 % 2027
2.71 % 2029
3.44 % 2030
3.50 % 2031
2.68 % 2034
2.77 % 2035
1.22 % 2036
1.31 % 2037
2.88 % 2032
3.40 % 2028
1.07 % 2027
1.01 % 2026
4.50 % 2022
2028
Various
875,000 $
$
1,447,851
144,608
443,688
1,126,543
462,991
987,522
592,266
—
—
519,314
1,413,053
562,517
224,808
302,280
393,341
537,542
600,504
757,265
1,043,850
259,315
40,765
40,765
383,085
210,634
101,194
135,290
—
15,539
13,621,530
(991,128)
875,000
1,508,025
143,193
441,475
1,121,052
—
—
—
427,164
481,834
518,229
1,409,336
561,248
308,585
344,436
483,109
636,868
699,131
863,891
256,179
193,455
43,298
43,298
405,937
254,548
134,737
202,888
68,220
21,454
12,446,590
(876,890)
$ 12,630,402 $ 11,569,700
(1) Includes an original issue discount of $2.9 million as of December 31, 2021.
(2) Currently U.S. dollar-denominated.
2022 Transactions
In February 2022, NCLC conducted a private offering (the “Notes Offering”) of $1,000 million in aggregate principal
amount of 5.875% senior secured notes due 2027 (the “2027 Secured Notes”) and $600 million in aggregate principal
amount of 7.750% senior notes due 2029 (the “2029 Unsecured Notes”).
The 2027 Secured Notes are jointly and severally guaranteed on a senior secured basis by Pride of Hawaii, LLC,
Norwegian Epic, Ltd. and Sirena Acquisition. The 2027 Secured Notes and the related guarantees are secured by a first-
F-23
priority interest in, among other things and subject to certain agreed security principles, three of our vessels, namely the
Norwegian Jade vessel, the Norwegian Epic vessel and the Sirena vessel.
NCLC may redeem the 2027 Secured Notes at its option, in whole or in part, at any time and from time to time prior to
February 15, 2024, at a “make-whole” redemption price, plus accrued and unpaid interest and additional amounts, if any,
to, but excluding, the redemption date. NCLC may redeem the 2027 Secured Notes at its option, in whole or in part, at
any time and from time to time on or after February 15, 2024, at the redemption prices set forth in the indenture
governing the 2027 Secured Notes, plus accrued and unpaid interest and additional amounts, if any, to, but excluding,
the redemption date. At any time and from time to time prior to February 15, 2024, NCLC may choose to redeem up to
40% of the aggregate principal amount of the 2027 Secured Notes with the net proceeds of certain equity offerings,
subject to certain restrictions, at a redemption price equal to 105.875% of the principal amount of the 2027 Secured
Notes redeemed plus accrued and unpaid interest to, but excluding, the redemption date, so long as at least 60% of the
aggregate principal amount of the 2027 Secured Notes issued remains outstanding following such redemption.
NCLC may redeem the 2029 Unsecured Notes at its option, in whole or in part, at any time and from time to time prior
to November 15, 2028, at a “make-whole” redemption price, plus accrued and unpaid interest and additional amounts, if
any, to, but excluding, the redemption date. NCLC may redeem the 2029 Unsecured Notes at its option, in whole or in
part, at any time and from time to time on or after November 15, 2028, at a redemption price equal to 100% of the
principal amount of 2029 Unsecured Notes redeemed, plus accrued and unpaid interest and additional amounts, if any,
to, but excluding, the redemption date. At any time and from time to time prior to February 15, 2025, NCLC may choose
to redeem up to 40% of the aggregate principal amount of the 2029 Unsecured Notes with the net proceeds of certain
equity offerings, subject to certain restrictions, at a redemption price equal to 107.750% of the principal amount of the
2029 Unsecured Notes redeemed plus accrued and unpaid interest to, but excluding, the redemption date, so long as at
least 60% of the aggregate principal amount of the 2029 Unsecured Notes issued remains outstanding following such
redemption.
The indentures governing the 2027 Secured Notes and the 2029 Unsecured Notes include requirements that, among other
things and subject to a number of qualifications and exceptions, restrict the ability of NCLC and its restricted
subsidiaries, as applicable, to (i) incur or guarantee additional indebtedness; (ii) pay dividends or distributions on, or
redeem or repurchase, equity interests and make other restricted payments; (iii) make investments; (iv) consummate
certain asset sales; (v) engage in certain transactions with affiliates; (vi) grant or assume certain liens; and (vii)
consolidate, merge or transfer all or substantially all of their assets.
In February 2022, NCLC also conducted a private offering (the “Exchangeable Notes Offering”) of $473.2 million in
aggregate principal amount of 2.5% exchangeable senior notes due February 15, 2027 (the “2027 2.5% Exchangeable
Notes”). The 2027 2.5% Exchangeable Notes are guaranteed by NCLH on a senior basis. At their option, holders may
exchange their 2027 2.5% Exchangeable Notes for, at the election of NCLC, cash, ordinary shares of NCLH or a
combination of cash and ordinary shares of NCLH, at any time prior to the close of business on the business day
immediately preceding August 15, 2026, subject to the satisfaction of certain conditions and during certain periods, and
on or after August 15, 2026 until the close of business on the business day immediately preceding the maturity date,
regardless of whether such conditions have been met. If NCLC elects to satisfy its exchange obligation solely in ordinary
shares or in a combination of ordinary shares and cash, upon exchange, the 2027 2.5% Exchangeable Notes will convert
into redeemable preference shares of NCLC, which will be immediately and automatically exchanged, for each $1,000
principal amount of exchanged 2027 2.5% Exchangeable Notes, into a number of NCLH’s ordinary shares based on the
exchange rate. The exchange rate initially will be 28.9765 ordinary shares per $1,000 principal amount of 2027 2.5%
Exchangeable Notes (equivalent to an initial exchange price of approximately $34.51 per ordinary share). The maximum
exchange rate is 44.1891 and reflects potential adjustments to the initial exchange rate, which would only be made in the
event of certain make-whole fundamental changes or tax redemption events. The exchange rate referred to above is also
subject to adjustment for any stock split, stock dividend or similar transaction. The 2027 2.5% Exchangeable Notes pay
interest at 2.5% per annum, semiannually on February 15 and August 15 of each year, to holders of record at the close of
business on the immediately preceding February 1 and August 1, respectively.
NCLC used the net proceeds from the Notes Offering and the Exchangeable Notes Offering to redeem (the
“Redemption”) all of the outstanding 2024 Senior Secured Notes and 2026 Senior Secured Notes and to make scheduled
F-24
principal payments on debt maturing in 2022, including, in each case, to pay any accrued and unpaid interest thereon, as
well as related premiums, fees and expenses. Simultaneously with the Redemption, and pursuant to certain provisions
contained in the indentures governing the 2026 Senior Unsecured Notes and the 2028 Senior Unsecured Notes, each of
the guarantors party to such indentures were released from their obligations thereunder.
We had export credit financing in place for 80% of the contract price for Norwegian Prima, for which we took delivery
in July 2022. The associated $1.1 billion term loan bears interest at a fixed rate of 2.68% with a maturity date of July 31,
2034. Principal and interest payments are payable semiannually.
In December 2022, NCLC entered into Amendment No. 4 to the Senior Secured Credit Facility. Amendment No. 4
extended the maturities for approximately $1.4 billion of NCLC’s operating credit facility by one year to January 2025.
Pursuant to Amendment No. 4, the extending lenders elected to convert (i) $631.8 million of their term A-2 loans into a
like principal amount of term A-3 loans, (ii) $68.0 million of their deferred term A-1 loans into a like principal amount
of deferred term A-2 loans and (iii) $591.0 million of their revolving facility A commitments into a like amount of
revolving facility C commitments. Additionally, certain existing lenders agreed to make new term A-3 loans in an
aggregate amount of $148.7 million, the proceeds of which were used to fully repay the deferred term A loans, deferred
term A-1 loans and term A loans and partially repay the term A-1 loans. The term A-3 loans, deferred term A-2 loans
and revolving facility C commitments each shall constitute a separate tranche of loans and commitments and have a
maturity date of January 2, 2025, subject to, if a one-time minimum liquidity threshold is not satisfied on September 16,
2024, a springing maturity date of September 16, 2024. The term A-3 loans and revolving facility C commitments will
accrue interest depending on a total leverage ratio at a per annum rate based on the adjusted term SOFR rate plus a
margin of between 2.25% and 1.00%. Deferred term A-2 loans will accrue interest at a per annum rate based on the
adjusted term SOFR rate plus a margin of 2.75%. Amendment No. 4 also (i) replaced the LIBOR index rate with the
Term SOFR Rate, (ii) modified certain financial covenants such that, following the covenant relief period ending on
December 31, 2022, (A) the allowable ratio of total net funded debt to total capitalization shall be greater than previously
permitted, (B) free liquidity shall be required to be greater than or equal to $250,000,000 at any time and (C) the ratio of
EBITDA to consolidated debt service shall be required to be greater than or equal to 1.25 to 1.00 unless free liquidity is
greater than $300,000,000 and (iii) increased certain of the baskets applicable to our ability to incur debt.
Also in December 2022, all of NCLC’s export-credit backed facilities were amended to conform the financial covenants
with the Senior Secured Credit Facility.
The refinancings and amendments described above resulted in aggregate losses on extinguishment of $188.8 million and
modification expenses of $4.6 million for the year ended December 31, 2022, which are recognized in interest expense,
net.
2023 Transactions
In February 2023, NCLC issued $600.0 million aggregate principal amount of 8.375% senior secured notes due 2028
(the “2028 Senior Secured Notes”). The 2028 Senior Secured Notes are jointly and severally secured by first-priority
interests in, among other things and subject to certain agreed security principles, thirteen of our vessels that also secure
the Senior Secured Credit Facility. The 2028 Senior Secured Notes are guaranteed by our subsidiaries that own the
vessels that secure the 2028 Senior Secured Notes. NCLC may redeem the 2028 Senior Secured Notes at its option, in
whole or in part, at any time and from time to time prior to February 1, 2025, at a “make-whole” redemption price, plus
accrued and unpaid interest and additional amounts, if any, to, but excluding, the redemption date. NCLC may redeem
the 2028 Senior Secured Notes at its option, in whole or in part, at any time and from time to time on or after February 1,
2025, at the redemption prices set forth in the indenture governing the 2028 Senior Secured Notes plus accrued and
unpaid interest and additional amounts, if any, to, but excluding, the redemption date. At any time and from time to time
prior to February 1, 2025, NCLC may choose to redeem up to 40% of the aggregate principal amount of the 2028 Senior
Secured Notes with the net proceeds of certain equity offerings, subject to certain restrictions, at a redemption price
equal to 108.375% of the principal amount of the 2028 Senior Secured Notes redeemed plus accrued and unpaid interest
to, but excluding, the redemption date, so long as at least 60% of the aggregate principal amount of the 2028 Senior
Secured Notes issued remains outstanding following such redemption. The 2028 Senior Secured Notes pay interest at
8.375% per annum, semiannually on February 1 and August 1 of each year, to holders of record at the close of business
on the immediately preceding January 15 and July 15, respectively.
F-25
The proceeds from the 2028 Senior Secured Notes were used to repay the loans outstanding under our Term Loan A
Facility that otherwise would have become due in January 2024, including to pay any accrued and unpaid interest
thereon, as well as related premiums, fees and expenses. As a result, all of the remaining term loans outstanding under
our Term Loan A Facility will mature in January 2025, subject to the springing maturity described above.
The indenture governing the 2028 Senior Secured Notes includes requirements that, among other things and subject to a
number of qualifications and exceptions, restrict the ability of NCLC and its restricted subsidiaries, as applicable, to (i)
incur or guarantee additional indebtedness; (ii) pay dividends or distributions on, or redeem or repurchase, equity
interests and make other restricted payments; (iii) make investments; (iv) consummate certain asset sales; (v) engage in
certain transactions with affiliates; (vi) grant or assume certain liens; and (vii) consolidate, merge or transfer all or
substantially all of their assets.
In February 2023, a commitment of $82.5 million in aggregate principal amount was obtained from a new lender in
connection with the Revolving Loan Facility. This commitment will be assigned from existing lenders extending certain
revolving facility commitments coming due January 2024 by one year to January 2025. The terms of the commitment
are described above regarding Amendment No. 4 to the Senior Secured Credit Facility.
In July 2022, NCLC entered into a $1 billion amended and restated commitment letter (the “commitment letter”) with
the purchasers named therein (collectively, the “Commitment Parties”), which superseded a $1 billion commitment letter
previously executed in November 2021. The commitment letter, among other things, extended the commitments
thereunder through March 31, 2023. In February 2023, the Commitment Parties further amended the commitment letter
(the “amended commitment letter”) to extend certain commitments thereunder through February 2024, with an option
for NCLC to further extend such commitments through February 2025 at its election. Pursuant to the amended
commitment letter, the Commitment Parties have agreed to purchase from NCLC an aggregate principal amount of up to
$650 million of senior secured notes at NCLC’s option. NCLC has the option to make up to two draws, consisting of (i)
$250 million of senior secured notes due 2028 that, if issued, will accrue interest at a rate of 11.00% per annum subject
to a 1.00% increase or decrease based on certain market conditions at the time drawn (the “Class B Notes”) and (ii) $400
million aggregate principal amount of 8.00% senior secured notes due five years after the issue date (the “Backstop
Notes”). The Class B Notes and the Backstop Notes are subject to a quarterly commitment fee of 0.75% for so long as
the commitments with respect to Class B Notes or the Backstop Notes, as applicable, are outstanding, which fee will be
increased to 1.00% if NCLC extends the commitments through February 2025 at its election. If drawn, the Class B Notes
will be subject to an issue fee of 2.00%, and the Backstop Notes will be subject to a quarterly duration fee of 1.50%, as
well as an issue fee of 3.00%.
In February 2023, in connection with the execution of the amended commitment letter, NCLC issued $250 million
aggregate principal amount of 9.75% senior secured notes due 2028 (the “Class A Notes” and, collectively with the
Class B Notes and the Backstop Notes, the “Notes”), subject to an issue fee of 2.00%. NCLC will use the net proceeds
from the Class A Notes for general corporate purposes. NCLC may redeem the Class A Notes at its option, in whole or
in part, at any time and from time to time prior to February 22, 2025, at a “make-whole” redemption price, plus accrued
and unpaid interest and additional amounts, if any, to, but excluding, the redemption date. NCLC may redeem the Class
A Notes at its option, in whole or in part, at any time and from time to time on or after February 22, 2025, at the
redemption prices set forth in the indenture governing the Class A Notes, plus accrued and unpaid interest and additional
amounts, if any, to, but excluding, the redemption date. The Class A Notes pay interest at 9.75% per annum, quarterly on
February 15, May 15, August 15 and November 15 of each year, to holders of record at the close of business on the
immediately preceding February 1, May 1, August 1 and November 1, respectively.
The Class A Notes are, and the Class B Notes and the Backstop Notes, if issued, will be, secured by first-priority
interests in, among other things and subject to certain agreed security principles, shares of capital stock in certain
guarantors, our material intellectual property and two islands that we use in the operations of our cruise business. The
Class A Notes are, and the Class B Notes and the Backstop Notes, if issued, will be, guaranteed by our subsidiaries that
own the property that secures the Notes as well as certain additional subsidiaries whose assets do not secure the Notes.
The indenture governing the Class A Notes includes requirements that, among other things and subject to a number of
qualifications and exceptions, restrict the ability of NCLC and its restricted subsidiaries, as applicable, to (i) incur or
guarantee additional indebtedness; (ii) pay dividends or distributions on, or redeem or repurchase, equity interests and
F-26
make other restricted payments; (iii) make investments; (iv) consummate certain asset sales; (v) engage in certain
transactions with affiliates; (vi) grant or assume certain liens; and (vii) consolidate, merge or transfer all or substantially
all of their assets.
In February 2023, NCLC entered into a Backstop Agreement with MS, pursuant to which MS has agreed to provide
backstop committed financing to refinance and/or repay in whole or in part amounts outstanding under the Senior
Secured Credit Facility. Pursuant to the Backstop Agreement, we may, at our sole option, issue and sell to MS (subject
to the satisfaction of certain conditions) five-year senior unsecured notes up to an aggregate principal amount sufficient
to generate gross proceeds of $300 million at any time between October 4, 2023 and January 2, 2024.
Exchangeable Notes
In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20)
and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) Accounting for Convertible
Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which reduces the number of accounting
models for convertible debt instruments and enhances transparency in disclosures. One model which was eliminated is
the bifurcation of embedded conversion features that are not accounted for separately as derivatives. Each of the 2024
Exchangeable Notes, 2025 Exchangeable Notes, 2027 1.125% Exchangeable Notes and 2027 2.5% Exchangeable Notes
contain conversion options that may be settled with NCLH’s ordinary shares. As the options are both indexed to and
settled in our ordinary shares, they are not accounted for separately as derivatives. The Private Exchangeable Notes
contained a beneficial conversion feature, which was recognized within additional paid-in capital with an offsetting
discount to the carrying amount of the debt. The discount was amortized to interest expense through December 31, 2020.
On January 1, 2021, we early adopted ASU 2020-06 using a modified retrospective approach. As a result, the $131.2
million beneficial conversion feature previously recognized was reclassified from additional paid-in capital to long-term
debt, and the discount amortization of $5.6 million was adjusted through accumulated deficit.
As of December 31, 2022, NCLC had outstanding $146.6 million aggregate principal amount of 6.00% exchangeable
senior notes due May 15, 2024 (the “2024 Exchangeable Notes”). The 2024 Exchangeable Notes are guaranteed by
NCLH on a senior basis. Holders may exchange their 2024 Exchangeable Notes at their option into redeemable
preference shares of NCLC. Upon exchange, the preference shares will be immediately and automatically exchanged, for
each $1,000 principal amount of exchanged 2024 Exchangeable Notes, into a number of NCLH’s ordinary shares based
on the exchange rate. The exchange rate will initially be 72.7273 ordinary shares per $1,000 principal amount of 2024
Exchangeable Notes (equivalent to an initial exchange price of approximately $13.75 per ordinary share). The maximum
exchange rate is 89.4454 and reflects potential adjustments to the initial exchange rate, which would only be made in the
event of certain make-whole fundamental changes or tax redemption events. The exchange rate referred to above is also
subject to adjustment for any stock split, stock dividend or similar transaction. The 2024 Exchangeable Notes pay
interest at 6.00% per annum, semiannually on May 15 and November 15 of each year, to holders of record at the close of
business on the immediately preceding May 1 and November 1, respectively.
As of December 31, 2022, NCLC had outstanding $450.0 million aggregate principal amount of 5.375% exchangeable
senior notes due August 1, 2025 (the “2025 Exchangeable Notes”). The 2025 Exchangeable Notes are guaranteed by
NCLH on a senior basis. Holders may exchange their 2025 Exchangeable Notes at their option into redeemable
preference shares of NCLC. Upon exchange, the preference shares will be immediately and automatically exchanged, for
each $1,000 principal amount of exchanged 2025 Exchangeable Notes, into a number of NCLH’s ordinary shares based
on the exchange rate. The exchange rate will initially be 53.3333 ordinary shares per $1,000 principal amount of 2025
Exchangeable Notes (equivalent to an initial exchange price of approximately $18.75 per ordinary share). The maximum
exchange rate is 66.6666 and reflects potential adjustments to the initial exchange rate, which would only be made in the
event of certain make-whole fundamental changes or tax redemption events. The exchange rate referred to above is also
subject to adjustment for any stock split, stock dividend or similar transaction. The 2025 Exchangeable Notes pay
interest at 5.375% per annum, semiannually on February 1 and August 1 of each year, to holders of record at the close of
business on the immediately preceding January 15 and July 15, respectively.
As of December 31, 2022, NCLC had outstanding $1,150.0 million aggregate principal amount of 1.125% exchangeable
senior notes due February 15, 2027 (the “2027 1.125% Exchangeable Notes”). The 2027 1.125% Exchangeable Notes
F-27
are guaranteed by NCLH on a senior basis. Holders may exchange their 2027 1.125% Exchangeable Notes at their
option into redeemable preference shares of NCLC or cash, at the election of NCLC, at any time prior to the close of
business on the business day immediately preceding August 15, 2026, subject to the satisfaction of certain conditions
and during certain periods, and on or after August 15, 2026 until the close of business on the business day immediately
preceding the maturity date, regardless of whether such conditions have been met. Upon exchange, the preference shares
will be immediately and automatically exchanged, for each $1,000 principal amount of exchanged 2027 1.125%
Exchangeable Notes, into a number of NCLH’s ordinary shares based on the exchange rate. The initial exchange rate is
29.6850 ordinary shares per $1,000 principal amount of 2027 1.125% Exchangeable Notes (equivalent to an initial
exchange price of approximately $33.69 per ordinary share). The maximum exchange rate is 42.3012 and reflects
potential adjustments to the initial exchange rate, which would only be made in the event of certain make-whole
fundamental changes or tax redemption events. The exchange rate referred to above is also subject to adjustment for any
stock split, stock dividend or similar transaction. The 2027 1.125% Exchangeable Notes pay interest at 1.125% per
annum, semiannually on February 15 and August 15 of each year, to holders of record at the close of business on the
immediately preceding February 1 and August 1, respectively.
The following is a summary of NCLC’s exchangeable notes as of December 31, 2022 (in thousands):
2024 Exchangeable Notes
2025 Exchangeable Notes
2027 1.125% Exchangeable Notes
2027 2.5% Exchangeable Notes
Principal
Amount
146,601
$
450,000
1,150,000
473,175
Unamortized
Deferred
Net Carrying
Fair Value
Financing Fees Amount
$
$
(1,993)
(6,312)
(23,457)
(10,184)
144,608 $ 161,840
433,580
443,688
763,830
1,126,543
331,743
462,991
Amount Leveling
Level 2
Level 2
Level 2
Level 2
The following is a summary of NCLC’s exchangeable notes as of December 31, 2021 (in thousands):
2024 Exchangeable Notes
2025 Exchangeable Notes
2027 1.125% Exchangeable Notes
Principal
Amount
146,601
$
450,000
1,150,000
Unamortized
Deferred
Net Carrying
Fair Value
Financing Fees Amount
$
$
(3,408)
(8,525)
(28,948)
143,193 $
441,475
1,121,052
Amount
249,358
642,591
1,088,510
Leveling
Level 2
Level 2
Level 2
The following provides a summary of the interest expense recognized related to the exchangeable notes (in thousands):
Year Ended
Year Ended
Coupon interest
Amortization of deferred financing fees
Total
December 31, 2022 December 31, 2021
77,591
10,360
87,951
55,759
11,143
66,902 $
$
Prior to the adoption of ASU 2020-06, interest expense, including amortization of debt discounts and coupon interest,
recognized related to the convertible debt instruments was $93.2 million for the year ended December 31, 2020.
The effective interest rate is 7.04%, 5.97%, 1.64% and 3.06% for the 2024 Exchangeable Notes, 2025 Exchangeable
Notes, 2027 1.125% Exchangeable Notes and 2027 2.5% Exchangeable Notes, respectively.
Interest Expense
Interest expense, net for the year ended December 31, 2022 was $0.8 billion which included $59.3 million of
amortization of deferred financing fees and an approximately $193.4 million loss on extinguishment and modification of
debt. Interest expense, net for the year ended December 31, 2021 was $2.1 billion which included $54.4 million of
F-28
amortization of deferred financing fees and a $1.4 billion loss on extinguishment of debt. Interest expense, net for
the year ended December 31, 2020 was $482.3 million which included $42.2 million of amortization of deferred
financing fees and a $27.8 million loss on extinguishment and modification of debt.
Debt Repayments
The following are scheduled principal repayments on our long-term debt including exchangeable notes which can be
settled in shares and finance lease obligations as of December 31, 2022 for each of the next five years (in thousands):
Year
2023
2024
2025
2026
2027
Thereafter
Total
Amount
991,128
2,513,382
2,436,004
2,049,850
3,102,553
2,762,506
13,855,423
$
$
We had an accrued interest liability of $151.8 million and $112.9 million as of December 31, 2022 and 2021,
respectively.
Debt Covenants
During the year ended December 31, 2022, we amended certain financial and other debt covenants, including the
modification of our free liquidity requirements. As of December 31, 2022, taking into account such amendments, we
were in compliance with all of our debt covenants. If we do not continue to remain in compliance with our covenants, we
would have to seek additional amendments to or waivers of our covenants. However, no assurances can be made that
such amendments or waivers would be approved by our lenders. Generally, if an event of default under any debt
agreement occurs, then pursuant to cross default and/or cross acceleration clauses, substantially all of our outstanding
debt and derivative contract payables could become due, and all debt and derivative contracts could be terminated, which
would have a material adverse impact on our operations and liquidity.
9. Related Party Disclosures
NCLC, as issuer, NCLH, as guarantor, and U.S. Bank National Association, as trustee, were all parties to an indenture,
dated May 28, 2020 (the “Indenture”) related to the Private Exchangeable Notes, which were held by an affiliate of L
Catterton (the “Private Investor”). Based on the initial exchange rate for the Private Exchangeable Notes, the Private
Investor beneficially owned approximately 10% of NCLH’s outstanding ordinary shares as of December 31, 2020. The
initial exchange rate for the Private Exchangeable Notes could have been adjusted in the event of certain make-whole
fundamental changes or tax redemption events (each, as described in the Indenture), but the maximum number of NCLH
ordinary shares issuable upon an exchange in the event of such an adjustment would not have exceeded 46,577,947. The
Private Exchangeable Notes also contained certain anti-dilution provisions that could have subjected the exchange rate to
additional adjustment if certain events had occurred.
NCLH, NCLC and the Private Investor also entered into an investor rights agreement, dated May 28, 2020 (the “Investor
Rights Agreement”), which provided that, among other things, the Private Investor was entitled to nominate one person
for appointment to the board of directors of NCLH until the first date on which the Private Investor no longer
beneficially owned in the aggregate at least 50% of the number of NCLH’s ordinary shares issuable upon exchange of
the Private Exchangeable Notes beneficially owned by the Private Investor in the aggregate as of May 28, 2020 (subject
to certain adjustments).
The Investor Rights Agreement also provided for customary registration rights for the Private Investor and its affiliates,
including demand and piggyback registration rights, contained customary transfer restrictions and provided that the
F-29
Private Investor and its affiliates were subject to a voting agreement with respect to certain matters during a specified
period of time.
In a privately negotiated transaction among NCLH, NCLC and the Private Investor, NCLC agreed to repurchase all of
the outstanding Private Exchangeable Notes for an aggregate repurchase price of approximately $1.0 billion (the
“Repurchase”). On March 9, 2021, in connection with the settlement of the Repurchase, the trustee cancelled the
aggregate principal amount outstanding under the Private Exchangeable Notes and confirmed that NCLC had satisfied
and discharged its obligations under the Indenture. In connection with the Repurchase, we and the Private Investor
agreed to terminate the Investor Rights Agreement effective upon the consummation of the Repurchase. Notwithstanding
the termination, we and the Private Investor agreed that certain provisions related to indemnification and expense
reimbursement would survive in accordance with their terms.
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.
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 qualitative assessments or regression analysis for
hedge relationships and high effectiveness is achieved when a statistically valid relationship reflects a high degree of
offset and correlation between 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, except when the hedged item is a contractually specified component, 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, 2022, we had fuel swaps, which are used to mitigate the financial impact of volatility of fuel prices
pertaining to approximately 455 thousand metric tons of our projected fuel purchases, maturing through December 31,
2023.
As of December 31, 2022, we had fuel swaps pertaining to approximately 14 thousand metric tons of our projected fuel
purchases which were not designated as cash flow hedges maturing through December 31, 2023.
F-30
As of December 31, 2022, 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 €1.6 billion, or $1.7 billion based on the euro/U.S. dollar exchange rate as of December 31, 2022.
The derivatives measured at fair value and the respective location in the consolidated balance sheets includes the
following (in thousands):
Assets
Liabilities
Derivative Contracts Designated as Hedging Instruments
Balance Sheet Location
December 31,
2022
December 31, December 31, December 31,
2022
2021
2021
Fuel contracts
Foreign currency contracts
Interest rate contracts
Prepaid expenses and other assets
Other long-term assets
Prepaid expenses and other assets
Accrued expenses and other liabilities
Other long-term liabilities
Accrued expenses and other liabilities
Total derivatives designated as hedging instruments
Derivative Contracts Not Designated as Hedging Instruments
Fuel contracts
Prepaid expenses and other assets
Other long-term assets
Total derivatives not designated as hedging instruments
Total derivatives
$
$
$
$
$
53,224
3,869
$
3,617
4,386
—
—
65,096
84
—
84
65,180
$
$
$
$
$
7,137
655
$
29,349
19,554
4,898
—
—
—
177,746
—
—
$
53,801
—
185,538
10,836
3,476
14,312
68,113
$
$
$
348
191
539
186,077
$
$
$
$
—
—
—
98,592
73,496
469
172,557
—
—
—
172,557
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
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.
F-31
The gross and net amounts recognized within assets and liabilities include the following (in thousands):
December 31, 2022
Assets
Liabilities
December 31, 2021
Assets
Liabilities
Gross
Gross
Amounts
Amounts Offset
$
60,794
177,746
$
(8,331) $
(4,386)
Gross
Amounts
Total Net
Amounts Not Offset Net Amounts
48,846
26,979
$
(146,381)
52,463
173,360
(3,617) $
Gross
Gross
Amounts
Amounts Offset
$
68,113
172,557
$
Gross
Amounts
Total Net
Amounts Not Offset Net Amounts
—
—
$ (68,113) $
(172,557)
68,113
172,557
— $
—
The effects of cash flow hedge accounting on accumulated other comprehensive income (loss) include the following (in
thousands):
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,
2021
74,434
2020
2022
$ 106,994 $
$ (157,669) Fuel
—
—
—
(211,011)
—
(185,067)
254
116,496
(10,469)
Other income
(expense), net
Depreciation and
amortization
Interest expense, net
Amount of Gain (Loss) Reclassified
from Accumulated Other
Comprehensive
Income (Loss) into Income
Year Ended December 31,
2022
2021
$ 104,250 $ (41,080)
2020
$ (45,488)
(293)
(12,002)
(49,653)
(7,052)
(40)
(5,067)
(6,868)
(4,929)
(6,600)
$ (104,017) $ (110,379) $ (51,642)
$ 96,865 $ (65,017)
$ (106,670)
Derivatives
Fuel contracts
Fuel contracts
Foreign currency contracts
Interest rate contracts
Total gain (loss) recognized in other
comprehensive income
The effects of cash flow hedge accounting on the consolidated statements of operations include the following (in
thousands):
Year Ended December 31, 2022
Depreciation
and
Interest
Fuel
Amortization Expense, net
Other Income
(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
$
686,825
$
749,326
$
801,512
$
76,566
Amount of gain (loss) reclassified from accumulated other comprehensive
income (loss) into income
Fuel contracts
Foreign currency contracts
Interest rate contracts
Amount of loss reclassified from accumulated other comprehensive income
(loss) into income as a result that a forecasted transaction is no longer
probable of occurring
Fuel contracts
104,250
—
—
—
(7,052)
—
—
—
(40)
—
—
—
—
—
—
(293)
F-32
The effects of cash flow hedge accounting on the consolidated statements of operations include the following (in
thousands):
Year Ended December 31, 2021
Depreciation
and
Other Income
Amortization Expense, net (Expense), net
Interest
Fuel
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
$
301,852
$
700,845
$
2,072,925
$
123,953
Amount of gain (loss) reclassified from accumulated other comprehensive
income (loss) into income
Fuel contracts
Foreign currency contracts
Interest rate contracts
Amount of loss reclassified from accumulated other comprehensive income
(loss) into income as a result that a forecasted transaction is no longer
probable of occurring
Fuel contracts
(41,080)
—
—
—
(5,067)
—
—
—
(6,868)
—
—
—
—
—
—
(12,002)
The effects of cash flow hedge accounting on the consolidated statements of operations include the following (in
thousands):
Year Ended December 31, 2020
Depreciation
and
Other Income
Interest
Amortization Expense, net (Expense), net
Fuel
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
$
264,712
$
717,840
$
482,313
$
(33,599)
Amount of gain (loss) reclassified from accumulated other comprehensive
income (loss) into income
Fuel contracts
Foreign currency contracts
Interest rate contracts
Amount of loss reclassified from accumulated other comprehensive income
(loss) into income as a result that a forecasted transaction is no longer
probable of occurring
Fuel contracts
Amount of gain recognized in income as a result of failing effectiveness tests
Fuel contracts
(45,488)
—
—
—
(4,929)
—
—
—
(6,600)
—
—
—
—
—
—
—
—
(49,653)
—
5,507
The effects of derivatives not designated as hedging instruments on the consolidated statements of operations include the
following (in thousands):
Derivatives not designated as hedging
instruments
Location of Gain (Loss)
Amount of Gain (Loss) Recognized in Income
Year Ended December 31,
2021
2020
2022
Fuel contracts
Foreign exchange contracts
Other income (expense), net $
Other income (expense), net
33,850
(15,055)
$
65,507 $
(77)
20,932
(76)
F-33
Long-Term Debt
As of December 31, 2022 and 2021, the fair value of our long-term debt, including the current portion, was $11.9 billion
and $12.5 billion, respectively, which was $2.0 billion and $0.1 billion lower, respectively, than the carrying values,
excluding deferred financing costs. 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. The fair value of our long-term revolving and term loan facilities was calculated based on estimated
rates for the same or similar instruments with similar terms and remaining maturities. The fair value of our exchangeable
notes considers observable risk-free rates; credit spreads of the same or similar instruments; and share prices, tenors, and
historical and implied volatilities which are sourced from observable market data. The inputs are considered to be Level
2 in the fair value hierarchy. Market risk associated with our long-term variable rate debt is the potential increase in
interest expense from an increase in interest rates or from an increase in share values.
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
available utilizing estimates, judgments and projections as necessary. As of December 31, 2022, our annual review
supports the carrying value of these assets.
Other
The carrying amounts reported in the consolidated balance sheets of all other financial assets and liabilities approximate
fair value.
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 and May 2021, the plan was amended and restated
(the “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 to a new maximum aggregate limit of 32,375,106 shares. In June 2022,
NCLH’s shareholders approved a further amendment and restatement of the Restated 2013 Plan to increase the number
of NCLH ordinary shares that may be delivered by 7,000,000, resulting in an increase in the maximum aggregate limit to
39,375,106 shares. Additionally, the expiration date of the Restated 2013 Plan was extended to April 25, 2032. 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 or four years with a contractual life of 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.
F-34
Share Option Awards
There were no share option awards granted for the years ended December 31, 2022, 2021 and 2020. The following table
sets forth a summary of option activity under NCLH’s Restated 2013 Plan for the period presented:
Outstanding as of January 1, 2022
Forfeited and cancelled
Outstanding as of December 31, 2022
Vested and expected to vest as of December 31, 2022
Exercisable as of December 31, 2022
Weighted-Average Exercise Price
Weighted-
Average
Performance- Market- Contractual
Number of Share Option Awards
Performance- Market-
Time-
Based
Based
Awards
Awards
4,388,345
(189,750)
4,198,595
114,583
—
114,583
Based
Awards
208,333 $
—
208,333 $
4,198,595
4,198,595
114,583
114,583
— $
— $
Time-
Based
Awards
Based
Awards
Based
Awards
59.43
—
59.43
59.43 $
—
59.43
$
59.43
59.43
$
$
—
—
51.92 $
51.88
51.92
$
51.92
51.92
$
$
Aggregate
Intrinsic
Value
(in thousands)
—
Term
(years)
3.42 $
2.29
2.28
2.28
$
$
$
—
—
—
The total intrinsic value of share options exercised during 2022, 2021 and 2020 was $0, $0 and $0.6 million,
respectively, and total cash received by the Company from exercises was $0, $0 and $2.2 million, respectively. As of
December 31, 2022, there was no unrecognized compensation cost, related to options granted under our share-based
incentive plans.
Restricted Share Unit (“RSU”) Awards
In March 2022, NCLH granted 4.8 million time-based RSU awards to our employees, which primarily vest in
substantially equal installments over three years. Also, in March 2022, NCLH granted 1.9 million performance-based
RSU awards to certain members of our management team, which vest upon the achievement of certain pre-established
performance targets established through 2024 and the satisfaction of an additional time-based vesting requirement that
generally requires continued employment through March 1, 2025.
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 or
other non-financial targets. Although the terms of the performance-based RSU awards provide the compensation
committee with the discretion to make certain adjustments to the performance calculation, a mutual understanding of the
key terms and conditions of these awards has been ascertained. The Company remeasures the probability and the
cumulative share-based compensation expense of the awards each reporting period until vesting or forfeiture occurs.
The following table sets forth a summary of RSU activity for the period presented:
Non-vested as of January 1, 2022
Granted
Vested
Forfeited or expired
Non-vested as of December 31, 2022
Non-vested and expected to vest as of
December 31, 2022
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
7,771,623 $
4,892,594
(5,096,353)
(587,157)
6,980,707 $
1,841,113
1,857,750 (1)
(588,505)
(360,419)
2,749,939
50,000 $
—
—
—
50,000 $
35.68
18.48
27.24
32.34
26.30
27.02
18.56
25.08
23.26
22.83
Number of
Market-
$
$
6,980,707 $
22.83
1,509,864
$
28.73
— $
—
(1) Number of performance-based RSU awards included assumes maximum achievement of performance targets.
As of December 31, 2022, there were total unrecognized compensation costs related to non-vested time-based, non-
vested performance-based and market-based RSUs of $91.1 million, $18.4 million and $0, respectively. The costs are
expected to be recognized over a weighted-average period of 1.7 years, 1.6 years and 0 years, respectively, for the time-
F-35
based, performance-based and market-based RSUs. Taxes paid pursuant to net share settlements in 2022, 2021 and 2020
were $21.0 million, $16.7 million and $15.4 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, 2022 and 2021, we had a
liability for payroll withholdings received of $2.9 million and $2.7 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,
2021
2020
2022
$
$
21,043
92,520
113,563
$
$
22,622
101,455
124,077
$
$
21,190
90,107
111,297
(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 generally require 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
for good reason. Severance generally includes a series of cash payments based on the employee’s base salary 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. In 2022 and 2021, we made 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. Due to the COVID-19 pandemic, in 2020, we paused our matching contributions under the
401(k) Plan for a portion of the year. 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”). We recorded total expenses related to the
above 401(k) Plan of $11.6 million, $8.7 million and $2.8 million for the years ended December 31, 2022, 2021 and
2020, 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 $1.4 million and $0.9 million was included in accrued expenses and other
F-36
liabilities as of December 31, 2022 and 2021, respectively, and $27.3 million and $33.8 million was included in other
long-term liabilities in our consolidated balance sheets as of December 31, 2022 and 2021, respectively.
The amounts related to the Shipboard Retirement Plan were as follows (in thousands):
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
Amounts recognized in accumulated other comprehensive income (loss):
Prior service cost
Accumulated actuarial gain (loss)
Accumulated other comprehensive income (loss)
$
$
$
$
$
$
$
As of or for the Year Ended December 31,
2021
2020
2022
2,797 $
873
378
—
4,048 $
2,902
717
378
15
4,012
34,688 $
2,797
873
(8,511)
(1,082)
28,765 $
31,619
2,902
717
—
(550)
34,688
28,765 $
34,688
$
$
$
$
$
2,665
895
378
29
3,967
28,695
2,665
895
62
(698)
31,619
31,619
For the Year Ended December 31,
2021
2020
2022
(2,647) $
5,080
2,433 $
(3,025) $
(3,431)
(6,456) $
(3,403)
(3,446)
(6,849)
The discount rates used in the net periodic benefit cost calculation for the years ended December 31, 2022, 2021 and
2020 were 2.8%, 2.3% and 3.2%, respectively, and the actuarial loss is amortized over 18 years. The discount rate is
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
2023
2024
2025
2026
2027
Next five years
12. Income Taxes
$
Amount
1,442
1,490
1,541
1,693
2,017
15,040
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.
F-37
The components of net loss before income taxes consist of the following (in thousands):
Year Ended December 31,
2021
2020
2022
Bermuda
Foreign - Other
Net loss before income taxes
$
— $
—
(4,000,047)
(4,501,320)
$ (2,276,703) $ (4,501,320) $ (4,000,047)
(2,276,703)
— $
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,
2021
2022
2020
$
— $
12,706
(7,183)
5,523
—
—
1,271
1,271
6,794
$
$
— $
(85)
(3,264)
(3,349)
—
(1,867)
(51)
(1,918)
(5,267) $
—
5,853
(5,502)
351
—
(12,690)
(128)
(12,818)
(12,467)
Our reconciliation of income tax expense computed by applying our Bermuda statutory rate and reported income tax
benefit (expense) was as follows (in thousands):
Tax at Bermuda statutory rate
Foreign income taxes at different rates
Tax contingencies
Return to provision adjustments
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)
Year Ended December 31,
2021
2022
— $
— $
37,434
(321)
13,039
(43,358)
6,794
38,668
(6)
1,105
(45,034)
(5,267) $
$
2020
—
24,479
(626)
1,684
(38,004)
(12,467)
$
$
As of December 31,
2022
2021
$
155,386 $
27,810
(139,733)
43,463
(42,572)
(42,572)
$
891 $
113,886
15,373
(87,849)
41,410
(41,756)
(41,756)
(346)
We have U.S. net operating loss carryforwards of $721.3 million and $525.3 million for the years ended
December 31, 2022 and 2021, respectively, which begin to expire in 2030, a portion of which relate to Prestige discussed
further below. We have state net operating loss carryforwards of $24.8 million and $12.5 million for the years ended
December 31, 2022 and 2021, respectively, which expire between 2028 through 2042. We evaluate our deferred tax
F-38
assets each period to determine if a valuation allowance is required based on whether it is more likely than not that some
portion of the deferred tax assets would not be realized. The ultimate realization of these deferred tax assets is dependent
upon the generation of sufficient taxable income during future periods. We conduct our evaluation by considering all
available positive and negative evidence. This evaluation considers, among other factors, historical operating results,
forecasts of future profitability, the duration of statutory carryforward periods, and the outlooks for the cruise industry
and broader economy. Based on the weight of available evidence, we have recorded a valuation allowance in the fourth
quarter of 2022, 2021 and 2020 of $43.3 million, $45.0 million and $39.6 million, respectively, with respect to the U.S.
net deferred tax assets in one of our U.S. and several of our foreign subsidiaries.
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 $11.6 million and $13.2 million for the years
ended December 31, 2022 and 2021, 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 $155.0
million for the years ended December 31, 2022 and 2021, which begin to expire in 2030. 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. During the fourth quarter of 2020, a valuation allowance was recognized for $30.0
million on the Prestige U.S. net operating loss carryforwards.
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 2019, except for years in which NOLs generated prior to 2019 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, the first Prima Class Ship, Norwegian Prima, at approximately 143,500 Gross Tons and with
3,100 Berths, was delivered in July 2022. We have five Prima Class Ships on order, each ranging from approximately
143,500 to 169,000 Gross Tons with 3,100 or more Berths, with currently scheduled delivery dates from 2023 through
2028. For the Regent brand, we have one Explorer Class Ship on order to be delivered in 2023, which will be
F-39
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 2023 and 2025. Each of the Allura Class Ships will be approximately 67,000 Gross Tons
and 1,200 Berths. The impacts of COVID-19 on the shipyards where our ships are under construction (or will be
constructed), Russia’s ongoing invasion of Ukraine, initiatives to improve environmental sustainability and
modifications the Company plans to make to its newbuilds and/or other macroeconomic events have resulted in delays in
expected ship deliveries. These and other impacts could result in additional delays in ship deliveries in the future, which
may be prolonged.
As of December 31, 2022, the combined contract prices of the eight ships on order for delivery was approximately €6.7
billion, or $7.2 billion based on the euro/U.S. dollar exchange rate as of December 31, 2022. Subsequent to
December 31, 2022, we have entered into amendments for our ships on order which increase the contract price by €0.3
billion, or $0.3 billion based on the euro/U.S. dollar exchange rate as of December 31, 2022 and revised the delivery date
of two ships. We have obtained or expect to obtain fixed rate export-credit backed 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, 2022, 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
2023
2024
2025
2026
2027
Thereafter
Total minimum annual payments
Amount
2,198,897
275,232
1,617,782
1,827,114
842,581
—
6,761,606
$
$
After giving effect to the amendments for our ships on order subsequent to December 31, 2022, 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
2023
2024
2025
2026
2027
Thereafter
Total minimum annual payments
Amount
2,204,378
213,353
1,573,183
1,071,080
1,021,461
952,200
7,035,655
$
$
F-40
Port Facility Commitments
As of December 31, 2022, future commitments to pay for usage of certain port facilities were as follows (in thousands):
Year
2023
2024
2025
2026
2027
Thereafter
Total port facility future commitments
Other Commitments
Amount
85,805
54,539
34,337
30,258
28,146
546,523
779,608
$
$
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 is 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.
In addition, 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, 2022, we have in place
approximately £68.6 million of security guarantees for our brands as well as a consumer protection policy covering up to
£82.4 million. The Company has provided approximately $29.7 million in cash to secure all the financial security
guarantees required.
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.
Litigation
Investigations
In March 2020, the Florida Attorney General announced an investigation related to the Company’s marketing during the
COVID-19 pandemic. Following the announcement of the investigation by the Florida Attorney General, we received
notifications from other attorneys general and governmental agencies that they are conducting similar investigations. The
Company is cooperating with these ongoing investigations, the outcomes of which cannot be predicted at this time.
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 Javier Garcia-Bengochea (the “Garcia-Bengochea Matter”)
alleges that he holds an interest in the Port of Santiago, Cuba, and the complaint filed by Havana Docks Corporation (the
“Havana Docks Matter”) alleges it holds an interest in the Havana Cruise Port Terminal, 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, as well as profiting from the Cuban Government’s
possession of the property. The plaintiffs seek all available statutory remedies, including the value of the expropriated
property, plus interest, treble damages, attorneys’ fees and costs. On September 1, 2020, the district court in the Garcia-
Bengochea Matter entered an order staying all case deadlines and administratively closed the case pending the outcome
of an appeal in a related case brought by the same plaintiff, in which the district court granted another cruise line
defendant judgment on the pleadings. As to the appeal in the related case, in November 2022, the Eleventh Circuit issued
F-41
an opinion affirming the dismissal and, on February 8, 2023, issued its mandate to the district court. The Company
intends to take further action in the district court to dispose of its case due to the case being identically positioned to the
related case which was dismissed. As a next step in that process, the parties plan to jointly seek further stay of the district
court case pending the earlier of any of the following events: (1) the period within which plaintiff has to petition the
United States Supreme Court for writ of certiorari (including any extensions) expires, (2) the United States Supreme
Court denies any such petition for writ of certiorari, or (3) the case is resolved by action in United States Supreme Court.
In the Havana Docks Matter, after various motions challenging the sufficiency of plaintiff’s complaint were resolved and
voluminous discovery was completed, both sides filed motions for summary judgment. On March 21, 2022, the court
issued an order granting plaintiff’s motion for summary judgment on the issue of liability and denying the Company’s
cross-motion for summary judgment. The court scheduled a trial on determination of damages only for November 2022.
The plaintiff elected to seek what the court ruled to be its baseline statutory damage amount, which was the amount of
the certified claim plus interest, trebled and with attorneys’ fees. Given this, there was no fact issue to be tried, and the
matter was removed from the trial calendar. On December 30, 2022, the court entered a final judgment of approximately
$112.9 million and, on January 23, 2023, the Company filed a notice of appeal from that judgment. For the Havana
Docks Matter, we believe that the likelihood of loss is reasonably possible but not probable at this time; therefore, no
liability has been recorded. For the Garcia Bengochea Matter, we are unable to reasonably estimate any potential loss or
range of losses. The ability to make such estimates and judgments can be affected by various factors including, among
other things: lack of legal precedent, stage of the proceedings, legal uncertainties inherent within the litigation process,
availment of appellate remedies, and involvement of numerous parties. We continue to believe we have meritorious
defenses to these matters. However, if the plaintiffs prevail in the final outcome of these matters, there may be a
material adverse impact on the Company’s financial condition, results of operations and/or cash flows.
Other
We are a party to a claim against a vendor which has resulted in a verdict of approximately $159 million in favor of the
Company in October 2022. At this time, there can be no assurance that the Company will ultimately prevail in the final
outcome of this claim as the vendor filed a notice of appeal in February 2023 and no receivable has been recognized.
In the normal course of our business, various other 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 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.
Other Contingencies
The Company also has agreements with its credit card processors that govern approximately $2.4 billion in advance
ticket sales as of December 31, 2022 that have been received by the Company relating to future voyages. These
agreements allow the credit card processors to require under certain circumstances, including the existence of a material
adverse change, excessive chargebacks and other triggering events, that the Company maintain a reserve which would be
satisfied by posting collateral. Although the agreements vary, these requirements may generally be satisfied either
through a percentage of customer payments withheld or providing cash funds directly to the card processor. Any cash
reserve or collateral requested could be increased or decreased. As of December 31, 2022, we had cash reserves of
approximately $622.0 million with credit card processors of which approximately $118.4 million is recognized in
accounts receivable, net and approximately $503.6 million in other long-term assets. As of December 31, 2022, a portion
of the cash reserves is classified as long-term due to a change in terms to a static reserve, as currently required by a
credit card processor, subject to periodic review. We may be required to pledge additional collateral and/or post
additional cash reserves or take other actions that may reduce our liquidity.
F-42
14. Other Income (Expense), Net
Other income (expense), net was income of $76.6 million, income of $124.0 million, and expense of $33.6 million for
the years ended December 31, 2022, 2021 and 2020, respectively. In 2022 and 2021, the income was primarily due to
gains on derivatives not designated as hedges and gains from foreign currency remeasurements. In 2020, the expense
was primarily due to losses from foreign currency remeasurements and fuel hedges recognized in earnings as a result of
the forecasted transactions no longer being probable or that are no longer designated as hedges.
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 $162.2 million, $48.6 million and $59.0 million for the years ended December 31, 2022,
2021 and 2020, 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, 2022, we had non-cash investing activities related to property and equipment of $51.7
million. For the year ended December 31, 2022, we received a refund of income taxes of $9.5 million and paid interest
and related fees, net of capitalized interest, of $750.6 million including the early redemption premiums.
For the year ended December 31, 2021, we had non-cash investing activities related to property and equipment of $109.3
million. For the year ended December 31, 2021, we paid income taxes of $2.7 million and interest and related fees, net
of capitalized interest, of $2.1 billion including the early redemption premiums.
For the year ended December 31, 2020, we had non-cash investing activities in connection with property and equipment
of $17.7 million. Additionally, we received seller financing related to the acquisition of property and equipment resulting
in both non-cash investing and financing activities of $11.9 million. For the year ended December 31, 2020, we paid
income taxes of $3.5 million and interest and related fees, net of capitalized interest, of $447.9 million.
F-43
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
600 Silks Run
Suite 2210
Hallandale Beach, Florida 33009
TRANSFER AGENT & REGISTRAR
American Stock Transfer &
Trust Company, LLC
6201 15th Avenue
Brooklyn, New York 11219
www.astfi nancial.com
INVESTOR INQUIRIES
To access or obtain fi nancial reports,
please visit our Investor Relations website
at www.nclhltd.com/investors, write to
our Investor Relations Department at our
corporate offi ce 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 15, 2023, at
9:00 a.m. Eastern Time at PULLMAN HOTEL,
5800 Blue Lagoon Drive, Miami, Florida 33126
EXECUTIVE TEAM
BOARD OF DIRECTORS
N O RWE 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 Offi cer,
Norwegian Cruise
Line Holdings Ltd.
DAVID M.
ABRAMS
Founder and
Co-Managing Partner,
Velocity Capital
Management
ADAM M.
ARON
Chief Executive
Offi cer and
President,
AMC
Entertainment
Holdings, Inc.
STELLA DAVID
Former Chief
Executive Offi cer,
William Grant & Sons
Limited
MARY E.
LANDRY
Rear Admiral,
U.S. Coast Guard,
Retired
HARRY C. CURTIS
Former Managing
Director,
Nomura Instinet
ZILLAH
BYNG-THORNE
Former Chief
Executive Offi cer,
Future PLC
N O RWE 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 Offi cer
HARRY J. SOMMER
President and Chief Executive Offi cer - Elect
MARK A. KEMPA
Executive Vice President and
Chief Financial Offi cer
ROBIN LINDSAY
Executive Vice President,
Vessel Operations
DANIEL S. FARKAS
Executive Vice President,
General Counsel, Chief Development Offi cer
and Assistant Secretary
FAYE L. ASHBY
Senior Vice President and
Chief Accounting Offi cer
N O RWE G I A N C R U I S E L I N E
DAVID J. HERRERA
President
O C E A N I A C R U I S E S
FRANK A. DEL RIO
President
REGENT SEVEN SEAS CRUISES
ANDREA DEMARCO
President
*Mr. Sommer will assume Mr. Del Rio’s seat on the Board of Directors on July 1, 2023.
NORWEGIAN CRUISE LINE HOLDINGS LTD. | 7665 CORPORATE CENTER DRIVE | MIAMI, FL 33126