10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended December 31, 2019

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	98-0691007
(State or other jurisdiction of incorporation or organization)	(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	Trading Symbol(s)	Name of each exchange on which registered
Ordinary shares, par value $0.001 per share	NCLH	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 ☒	Accelerated filer ◻
Non-accelerated filer ◻	Smaller reporting company ☐
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes  ☐    No  ☒

As of June 28, 2019, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of voting stock held by non-affiliates of the registrant based upon the closing sales price for the registrant’s ordinary shares as reported on The New York Stock Exchange was $11.5 billion.

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

Documents Incorporated by Reference

Portions of the Proxy Statement for the registrant’s 2020 Annual General Meeting of Shareholders, to be filed with the Securities and Exchange Commission not later than 120 days after December 31, 2019, are incorporated by reference in Part III herein.

NORWEGIAN CRUISE LINE HOLDINGS LTD.

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business	7
Item 1A.	Risk Factors	25
Item 1B.	Unresolved Staff Comments	36
Item 2.	Properties	36
Item 3.	Legal Proceedings	36
Item 4.	Mine Safety Disclosures	37
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	38
Item 6.	Selected Financial Data	39
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	41
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	54
Item 8.	Financial Statements and Supplementary Data	55
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	55
Item 9A.	Controls and Procedures	55
Item 9B.	Other Information	56
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	57
Item 11.	Executive Compensation	57
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	57
Item 13.	Certain Relationships and Related Transactions, and Director Independence	57
Item 14.	Principal Accounting Fees and Services	57
PART IV
Item 15.	Exhibits, Financial Statement Schedules	58
Item 16.	Form 10-K Summary	66
Signatures		67

Terms Used in this Annual Report

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

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

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

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

● Acquisition of Prestige. In November 2014, we acquired Prestige in a cash and stock transaction for total consideration of $3.025 billion, including the assumption of debt.

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

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

● Adjusted Net Cruise Cost Excluding Fuel. Net Cruise Cost Excluding Fuel adjusted for supplemental adjustments.

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

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

● Berths. Double occupancy capacity per cabin (single occupancy per studio cabin) even though many cabins can accommodate three or more passengers.

● Breakaway Class Ships. Norwegian Breakaway and Norwegian Getaway.

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

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

● Constant Currency. A calculation whereby foreign currency-denominated revenue and expenses in a period are converted at the U.S. dollar exchange rate of a comparable period to eliminate the effects of foreign exchange fluctuations.

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● Dry-dock. A process whereby a ship is positioned in a large basin where all of the fresh/sea water is pumped out in order to carry out cleaning and repairs of those parts of a ship which are below the water line.

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

● EPS. Earnings per share.

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

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

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

● Gross Tons. A unit of enclosed passenger space on a cruise ship, such that one gross ton equals 100 cubic feet or 2.831 cubic meters.

● Gross Yield. Total revenue per Capacity Day.

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

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

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

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

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

● Net Yield. Net Revenue per Capacity Day.

● Occupancy Percentage. The ratio of Passenger Cruise Days to Capacity Days. A percentage greater than 100% indicates that three or more passengers occupied some cabins.

● Passenger Cruise Days. The number of passengers carried for the period, multiplied by the number of days in their respective cruises.

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

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

● SEC. U.S. Securities and Exchange Commission.

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

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

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Cautionary Statement Concerning Forward-Looking Statements

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

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

• adverse incidents involving cruise ships;

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

• the spread of epidemics and viral outbreaks;

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

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

• mechanical malfunctions and repairs, delays in our shipbuilding program, maintenance and refurbishments and the consolidation of qualified shipyard facilities;

• the risks and increased costs associated with operating internationally;

• fluctuations in foreign currency exchange rates;

• the unavailability of ports of call;

• overcapacity in key markets or globally;

• our expansion into and investments in new markets;

• our inability to obtain adequate insurance coverage;

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

• pending or threatened litigation, investigations and enforcement actions;

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

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

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

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

• our inability to keep pace with developments in technology;

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

• other factors set forth under “Risk Factors.”

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

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PART I

Item 1. Business

History and Development of the Company

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

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

Additional Information

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

Our Company

Business Overview

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

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

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

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

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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)	Year Built	Primary Areas of Operation
Norwegian
Norwegian Encore	2019	Alaska, Bermuda, Canada & New England, Caribbean
Norwegian Bliss	2018	Alaska, Bahamas, Caribbean, Mexico-Pacific
Norwegian Joy	2017	Alaska, Bermuda, Canada & New England, Caribbean, Central America, Mexico-Pacific
Norwegian Escape	2015	Caribbean, Europe
Norwegian Getaway	2014	Bahamas, Caribbean, Europe
Norwegian Breakaway	2013	Bahamas, Bermuda, Canada & New England, Caribbean
Norwegian Epic	2010	Caribbean, Europe
Norwegian Gem	2007	Bermuda, Canada & New England, Caribbean, Mexico-Pacific
Norwegian Jade	2006	Africa, Asia, Caribbean, Europe
Norwegian Pearl	2006	Bahamas, Canada & New England, Caribbean, Europe,
Norwegian Jewel	2005	Alaska, Australia & New Zealand, Hawaii, South Pacific
Pride of America	2005	Hawaii
Norwegian Dawn	2002	Asia, Bahamas, Bermuda, Caribbean, Europe
Norwegian Star	2001	Europe, South America
Norwegian Sun	2001	Alaska, Bahamas, Caribbean, Central America
Norwegian Sky	1999	Bahamas, Caribbean
Norwegian Spirit	1998	Africa, Asia, Europe
Oceania Cruises
Oceania Riviera	2012	Caribbean, Europe
Oceania Marina	2011	Europe, South America
Oceania Nautica	2000	Africa, Asia, Europe
Oceania Sirena	1999	Africa, Asia, Caribbean, Europe
Oceania Regatta	1998	Alaska, Asia, Australia & New Zealand, Central America, South Pacific
Oceania Insignia	1998	Africa, Alaska, Asia, Bermuda, Canada & New England, Caribbean, Europe, Hawaii, Mexico-Pacific, South America, South Pacific
Regent
Seven Seas Splendor (2)	2020	Caribbean, Central America, Europe
Seven Seas Explorer	2016	Alaska, Asia, Australia & New Zealand, Caribbean, Europe
Seven Seas Voyager	2003	Africa, Asia, Australia & New Zealand, Europe, South America
Seven Seas Mariner	2001	Alaska, Asia, Australia & New Zealand, Caribbean, Europe, South America
Seven Seas Navigator	1999	Australia & New Zealand, Canada & New England, Caribbean, Central America, Europe, Hawaii, South America, South Pacific

(1) The table above does not include an additional 9 ships on order.

(2) Seven Seas Splendor was delivered in January 2020.

Our Mission and Competitive Strengths

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

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Rich Stateroom Mix

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

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

High-Quality Service

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

Diverse Selection of Premium Itineraries

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

Strong Cash Flow

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

Highly Experienced Team

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

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Our Business Strategies

Driving Demand

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

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

● creating diverse and unique itineraries in new and existing markets;

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

● strengthening our global footprint.

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

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

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

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

Maximize Revenue

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

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

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

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

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

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

Initiatives to Suppress Costs

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

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

Enhanced Product Offering and Guest Experience

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

Measured Fleet Expansion

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

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

Expand and Strengthen Our Product Distribution Channels

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

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

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

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

Itineraries

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

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

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

Passenger Ticket Revenue

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

Onboard and Other Revenue

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

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

Revenue Management Practices

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

Seasonality

Our revenue is seasonal and based on the demand for cruises. Historically, the seasonality of the North American cruise industry generally results in the greatest demand for cruises during the Northern Hemisphere’s summer months. This predictable seasonality in demand has resulted in fluctuations by quarter in our revenue and results of operations. The seasonality of our results is increased due to ships being taken out of service for regularly scheduled Dry-docks, which we typically schedule during non-peak demand periods.

Competition

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

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

Marketing Strategy

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

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

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

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

Ship Operations and Cruise Infrastructure

Ship Maintenance and Logistics

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

Suppliers

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

Crew and Staff

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

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

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

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

Insurance

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

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

● Protection and indemnity insurance (coverage for passenger, crew and third-party liabilities), including insurance against risk of pollution liabilities;

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

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

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

Trademarks and Tradenames

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

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

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

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

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

Regulatory Issues

Registration of Our Ships

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

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

Environmental Protection

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Permits for Glacier Bay, Alaska

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

Passenger Well-Being

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

Security and Safety

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

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

The SOLAS requirements are amended and extended by the IMO from time to time. For example, the International Port and Ship Facility Code (“ISPS Code”) was adopted by the IMO in December 2002 with the goal of strengthening maritime security by placing new requirements on governments, port authorities and shipping companies.

Amendments to SOLAS required that ships constructed in accordance with pre-1974 SOLAS requirements install automatic sprinkler systems. IMO adopted an amendment to SOLAS which requires partial bulkheads on stateroom balconies to be of non-combustible construction. The SOLAS regulation implemented Long-Range Identification and Tracking. All of our ships are in compliance with the requirements of SOLAS as amended and/or as applicable to the keel-laying date.

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

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

Maritime-Labor

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

Financial Requirements

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

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

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

Taxation

U.S. Income Taxation

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

Exemption of International Shipping Income under Section 883 of the Code

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

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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 Nasdaq Stock Market (the “Nasdaq”) until December 18, 2017, and since December 19, 2017, have been primarily and regularly traded on the New York Stock Exchange (“NYSE”). Both the Nasdaq and the NYSE are considered to be established securities markets in the U.S. Therefore, we believe that NCLH qualifies for the benefits of Section 883.

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

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

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

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

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

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

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

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

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

Other United States Taxation

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

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

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

U.K. Income Taxation

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

U.S. Taxation of Gain on Sale of Vessels

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

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

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

Changes in Tax Laws

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

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Employees

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

Ports and Facilities

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

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

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

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

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

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

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

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

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

Available Information

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

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

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

Information about our Executive Officers

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

Name	Age	Position
Frank J. Del Rio	65	Director, President and Chief Executive Officer
Mark A. Kempa	48	Executive Vice President and Chief Financial Officer
Robert Binder	55	Vice Chairman Oceania Cruises and Regent, President and Chief Executive Officer, Oceania Cruises brand
Jason M. Montague	46	President and Chief Executive Officer, Regent brand
Harry Sommer	52	President and Chief Executive Officer, Norwegian brand
Daniel S. Farkas	51	Executive Vice President, General Counsel and Assistant Secretary
T. Robin Lindsay	62	Executive Vice President, Vessel Operations
Faye L. Ashby	48	Senior Vice President and Chief Accounting Officer

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

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

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

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

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

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

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

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

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

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

Item 1A. Risk Factors

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

Risks Related to the Company

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Conducting business internationally may result in increased costs and risks.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Risks Related to the Regulatory Environment in Which We Operate

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Risks Related to NCLH’s Ordinary Shares

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

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

NCLH does not currently pay dividends on its ordinary shares.

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

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

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

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

● a classified board of directors;

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

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

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

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

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

Item 1B. Unresolved Staff Comments

Not applicable.

Item 2. Properties

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

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

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

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

Item 3. Legal Proceedings

Booksafe Travel Protection Plan

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

Helms-Burton Act

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

Other

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

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

Item 4. Mine Safety Disclosures

None.

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PART II

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

Market Information

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

Holders

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

Dividends

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

Purchases of Equity Securities by the Issuer

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

Stock Performance Graph

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

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

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

Item 6. Selected Financial Data

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

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

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	As of or for the Year Ended December 31,
(in thousands, except share data, per
share data and operating data)	2019			2018			2017			2016			2015
Statement of operations data:
Total revenue	$	6,462,376		$	6,055,126		$	5,396,175		$	4,874,340		$	4,345,048
Operating income	$	1,178,077		$	1,219,061		$	1,048,819		$	925,464		$	702,486
Net income	$	930,228		$	954,843		$	759,872		$	633,085		$	427,137
EPS:
Basic	$	4.33		$	4.28		$	3.33		$	2.79		$	1.89
Diluted	$	4.30		$	4.25		$	3.31		$	2.78		$	1.86
Weighted-average shares outstanding:
Basic		214,929,977			223,001,739			228,040,825			227,121,875			226,591,437
Diluted		216,475,076			224,419,205			229,418,326			227,850,286			230,040,132
Balance sheet data:
Total assets	$	16,684,599		$	15,205,970		$	14,094,869		$	12,973,911		$	12,264,757
Property and equipment, net	$	13,135,337		$	12,119,253		$	11,040,488		$	10,117,689		$	9,458,805
Long-term debt, including current portion	$	6,801,693		$	6,492,091		$	6,307,765		$	6,398,687		$	6,397,537
Total shareholders’ equity	$	6,515,579		$	5,963,001		$	5,749,766		$	4,537,726		$	3,780,880
Operating data:
Passengers carried		2,695,718			2,795,101			2,519,324			2,337,311			2,164,404
Passenger Cruise Days		20,637,949			20,276,568			18,523,030			17,588,707			16,027,743
Capacity Days		19,233,459			18,841,678			17,363,422			16,376,063			14,700,990
Occupancy Percentage		107.3	%		107.6	%		106.7	%		107.4	%		109.0	%

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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. Passenger ticket revenue primarily consists of revenue for accommodations, meals in certain restaurants on the ship, certain onboard entertainment, port fees and taxes and includes revenue for service charges and air and land transportation to and from the ship to the extent guests purchase these items from us. Onboard and other revenue primarily consists of revenue from casino, beverage sales, shore excursions, specialty dining, retail sales, spa services and photo services. Our onboard revenue is derived from onboard activities we perform directly or that are performed by independent concessionaires, from which we receive a share of their revenue.

Our cruise operating expense is classified as follows:

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

● Onboard and other primarily consists of direct costs incurred in connection with onboard and other revenue, including casino, beverage sales and shore excursions.

● Payroll and related consists of the cost of wages and benefits for shipboard employees and costs of certain inventory items, including food, for a third party that provides crew and other hotel services for certain ships.

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

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

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

Critical Accounting Policies

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

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Ship Accounting

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

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

Asset Impairment

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

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

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

● Changes in general macroeconomic conditions such as a deterioration in general economic conditions; limitations on accessing capital; fluctuations in foreign exchange rates; or other developments in equity and credit markets;

● Changes in industry and market conditions such as a deterioration in the environment in which an entity operates; an increased competitive environment; a decline in market-dependent multiples or metrics (in both

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

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

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

● Entity and reporting unit specific negative events such as changes in management, key personnel, strategy, or customers; litigation; or a change in the composition or carrying amount of net assets; and

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

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

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

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

Non-GAAP Financial Measures

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

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

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

We believe that Adjusted EBITDA is appropriate as a supplemental financial measure as it is used by management to assess operating performance. We also believe that Adjusted EBITDA is a useful measure in determining our performance as it reflects certain operating drivers of our business, such as sales growth, operating costs, marketing, general and administrative expense and other operating income and expense. Adjusted EBITDA is not a defined term under GAAP nor is it intended to be a measure of liquidity or cash flows from operations or a measure comparable to net income, as it does not take into account certain requirements such as capital expenditures and related depreciation, principal and interest payments and tax payments and it includes other supplemental adjustments.

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

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

Summary of Significant 2019 Events

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

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

In October 2019, Norwegian Encore was delivered.

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

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

Executive Overview

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

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

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

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

Results of Operations

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

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

	Year Ended December 31,
	2019		2018
Total revenue	$	6,462,376	$	6,055,126
Total cruise operating expense	$	3,663,261	$	3,377,076
Operating income	$	1,178,077	$	1,219,061
Net income	$	930,228	$	954,843
EPS:
Basic	$	4.33	$	4.28
Diluted	$	4.30	$	4.25

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

	Year Ended December 31,
	2019		2018
Revenue
Passenger ticket	69.9	%	70.4	%
Onboard and other	30.1	%	29.6	%
Total revenue	100.0	%	100.0	%
Cruise operating expense
Commissions, transportation and other	17.4	%	16.5	%
Onboard and other	6.1	%	5.8	%
Payroll and related	14.3	%	14.6	%
Fuel	6.3	%	6.5	%
Food	3.4	%	3.5	%
Other	9.2	%	8.9	%
Total cruise operating expense	56.7	%	55.8	%
Other operating expense
Marketing, general and administrative	15.1	%	14.8	%
Depreciation and amortization	10.0	%	9.3	%
Total other operating expense	25.1	%	24.1	%
Operating income	18.2	%	20.1	%
Non-operating income (expense)
Interest expense, net	(4.2)	%	(4.4)	%
Other income (expense), net	0.1	%	0.3	%
Total non-operating income (expense)	(4.1)	%	(4.1)	%
Net income before income taxes	14.1	%	16.0	%
Income tax benefit (expense)	0.3	%	(0.2)	%
Net income	14.4	%	15.8	%

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The following table sets forth selected statistical information:

	Year Ended December 31,
	2019		2018
Passengers carried	2,695,718		2,795,101
Passenger Cruise Days	20,637,949		20,276,568
Capacity Days	19,233,459		18,841,678
Occupancy Percentage	107.3	%	107.6	%

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

	Year Ended December 31,
			2019
			Constant
		2019	Currency		2018
Passenger ticket revenue	$	4,517,393	$	4,559,023	$	4,259,815
Onboard and other revenue		1,944,983		1,944,983		1,795,311
Total revenue		6,462,376		6,504,006		6,055,126
Less:
Commissions, transportation and other expense		1,120,886		1,129,491		998,948
Onboard and other expense		394,673		394,673		348,656
Net Revenue	$	4,946,817	$	4,979,842	$	4,707,522
Capacity Days		19,233,459		19,233,459		18,841,678
Gross Yield	$	336.00	$	338.16	$	321.37
Net Yield	$	257.20	$	258.92	$	249.85

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

	Year Ended December 31,
			2019
			Constant
	2019		Currency		2018
Total cruise operating expense	$	3,663,261	$	3,684,318	$	3,377,076
Marketing, general and administrative expense		974,850		980,047		897,929
Gross Cruise Cost		4,638,111		4,664,365		4,275,005
Less:
Commissions, transportation and other expense		1,120,886		1,129,491		998,948
Onboard and other expense		394,673		394,673		348,656
Net Cruise Cost		3,122,552		3,140,201		2,927,401
Less: Fuel expense		409,602		409,602		392,685
Net Cruise Cost Excluding Fuel		2,712,950		2,730,599		2,534,716
Less Non-GAAP Adjustments:
Non-cash deferred compensation (1)		2,135		2,135		2,167
Non-cash share-based compensation (2)		95,055		95,055		115,983
Secondary Equity Offering expenses (3)		—		—		883
Severance payments and other fees (4)		6,514		6,514		—
Redeployment of Norwegian Joy (5)		7,051		7,051		—
Other (6)		—		—		(1,412)
Adjusted Net Cruise Cost Excluding Fuel	$	2,602,195	$	2,619,844	$	2,417,095
Capacity Days		19,233,459		19,233,459		18,841,678
Gross Cruise Cost per Capacity Day	$	241.15	$	242.51	$	226.89
Net Cruise Cost per Capacity Day	$	162.35	$	163.27	$	155.37
Net Cruise Cost Excluding Fuel per Capacity Day	$	141.05	$	141.97	$	134.53
Adjusted Net Cruise Cost Excluding Fuel per Capacity Day	$	135.30	$	136.21	$	128.28

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

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

(3) Secondary Equity Offering expenses are included in marketing, general and administrative expense.

(4) Severance payments related to restructuring costs are included in marketing, general and administrative expense.

(5) Expenses related to the redeployment of Norwegian Joy from Asia to the U.S. and the closing of the Shanghai office, which are included in other cruise operating expense and marketing, general and administrative expense.

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

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

	Year Ended December 31,
	2019		2018
Net income	$	930,228	$	954,843
Non-GAAP Adjustments:
Non-cash deferred compensation (1)		3,514		3,453
Non-cash share-based compensation (2)		95,055		115,983
Secondary Equity Offering expenses (3)		—		883
Severance payments and other fees (4)		6,514		—
Extinguishment and modification of debt (5)		16,676		6,346
Amortization of intangible assets (6)		18,414		24,890
Redeployment of Norwegian Joy (7)		30,629		—
Other (8)		—		(1,412)
Adjusted Net Income	$	1,101,030	$	1,104,986
Diluted weighted-average shares outstanding - Net income and Adjusted Net Income		216,475,076		224,419,205
Diluted earnings per share	$	4.30	$	4.25
Adjusted EPS	$	5.09	$	4.92

(1) Non-cash deferred compensation expenses related to the crew pension plan and other crew expenses are included in payroll and related expense and other income (expense), net.

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

(3) Secondary Equity Offering expenses are included in marketing, general and administrative expense.

(4) Severance payments related to restructuring costs are included in marketing, general and administrative expense.

(5) Losses on extinguishments and modifications of debt are included in interest expense, net.

(6) Amortization of intangible assets related to the Acquisition of Prestige are included in depreciation and amortization expense.

(7) Expenses related to the redeployment of Norwegian Joy from Asia to the U.S. and the closing of the Shanghai office, which are included in other cruise operating expense, marketing, general and administrative expense and depreciation and amortization expense.

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

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

	Year Ended December 31,
	2019		2018
Net income	$	930,228	$	954,843
Interest expense, net		272,867		270,404
Income tax (benefit) expense		(18,863)		14,467
Depreciation and amortization expense		646,188		561,060
EBITDA		1,830,420		1,800,774
Other (income) expense, net (1)		(6,155)		(20,653)
Non-GAAP Adjustments:
Non-cash deferred compensation (2)		2,135		2,167
Non-cash share-based compensation (3)		95,055		115,983
Secondary Equity Offering expenses (4)		—		883
Severance payments and other fees (5)		6,514		—
Redeployment of Norwegian Joy (6)		7,051		—
Other (7)		—		(1,412)
Adjusted EBITDA	$	1,935,020	$	1,897,742

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

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

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

(4) Secondary Equity Offering expenses are included in marketing, general and administrative expense.

(5) Severance payments related to restructuring costs are included in marketing, general and administrative expense.

(6) Expenses related to the redeployment of Norwegian Joy from Asia to the U.S. and the closing of the Shanghai office, which are included in other cruise operating expense and marketing, general and administrative expense.

(7) Other primarily related to expenses and reimbursement for certain legal costs included in marketing, general and administrative expense.

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

Revenue

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

Expense

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

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

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

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

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

Liquidity and Capital Resources

General

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

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

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

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

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

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Sources and Uses of Cash

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

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

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

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

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

Future Capital Commitments

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

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

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

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

Off-Balance Sheet Transactions

None.

Contractual Obligations

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

			Less than						More than
	Total		1 year		1-3 years		3-5 years		5 years
Long-term debt (1)	$	6,926,677	$	746,358	$	1,566,662	$	2,834,787	$	1,778,870
Operating leases (2)		287,995		47,796		63,988		63,493		112,718
Ship construction contracts (3)		5,588,490		556,784		1,874,516		2,327,887		829,303
Port facilities (4)		2,086,925		79,418		135,720		145,212		1,726,575
Interest (5)		1,008,378		218,243		361,982		244,247		183,906
Other (6)		1,362,172		311,047		456,938		395,599		198,588
Total (7)	$	17,260,637	$	1,959,646	$	4,459,806	$	6,011,225	$	4,829,960

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

(2) Operating leases are primarily for offices, motor vehicles and office equipment.

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

(4) Port facilities are for our usage of certain port facilities.

(5) Interest includes fixed and variable rates with LIBOR held constant as of December 31, 2019.

(6) Other includes future commitments for service, maintenance and other business enhancement capital expenditure contracts.

(7) Total excludes $0.7 million of unrecognized tax benefits as of December 31, 2019, because an estimate of the timing of future tax settlements cannot be reasonably determined.

Other

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

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

Funding Sources

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

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

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

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

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

General

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

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

Foreign Currency Exchange Rate Risk

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

54

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

Fuel Price Risk

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

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

Item 8. Financial Statements and Supplementary Data

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

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

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

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

Management’s Annual Report on Internal Control over Financial Reporting

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

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

Changes in Internal Control Over Financial Reporting

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

Limitations on the Effectiveness of Controls

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

Item 9B. Other Information

None.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance

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

Code of Ethical Business Conduct

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

Item 11. Executive Compensation

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

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

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

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

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

Item 14. Principal Accounting Fees and Services

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

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PART IV

Item 15. Exhibits, Financial Statement Schedules

(1) Financial Statements

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

(2) Financial Statement Schedules

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

(3) Exhibits

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

INDEX TO EXHIBITS

Exhibit Number	Description of Exhibit
3.1	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))
3.2	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))
4.1	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))
4.2	Form of Certificate of Ordinary Shares (incorporated herein by reference to Exhibit 4.7 to amendment no. 5 to Norwegian Cruise Line Holdings Ltd.’s registration statement on Form S-1 filed on January 8, 2013 (File No. 333-175579))
4.3**	Description of Securities of Norwegian Cruise Line Holdings Ltd.
9.1	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	Office Lease Agreement, dated as of November 27, 2006, by and between NCL (Bahamas) Ltd. and Hines Reit Airport Corporate Center LLC and related Guarantee by NCL Corporation Ltd., and First Amendment, dated November 27, 2006 (incorporated herein by reference to Exhibit 4.46 to NCL Corporation Ltd.’s annual report on Form 20-F filed on March 6, 2007 (File No. 333-128780))+
10.2	Amendment No. 1, dated December 1, 2006, Amendment No. 2, dated March 20, 2007, Amendment No. 3, dated July 31, 2007, and Amendment No. 4, dated December 10, 2007, to Office Lease Agreement, dated December 1, 2006, as amended, by and between Hines Reit Airport Corporate Center LLC and NCL (Bahamas) Ltd. (incorporated herein by reference to Exhibit 4.64 to NCL Corporation Ltd.’s annual report on Form 20-F filed on March 13, 2008 (File No. 333-128780))+

58

10.3	Amendment No. 5, dated February 2, 2010, to Office Lease Agreement, dated December 1, 2006, as amended, by and between Hines Reit Airport Corporate Center LLC and NCL (Bahamas) Ltd. (incorporated herein by reference to Exhibit 10.45 to amendment no. 2 to NCL Corporation Ltd.’s registration statement on Form S-1 filed on January 31, 2011 (File No. 333-170141))
10.4	Amendment No. 6, dated April 1, 2012, and Amendment No. 7, dated June 19, 2012, to Office Lease Agreement, dated December 1, 2006, as amended, by and between Hines Reit Airport Corporate Center LLC and NCL (Bahamas) Ltd. (incorporated herein by reference to Exhibit 10.6 to NCL Corporation Ltd.’s report on Form 6-K filed on November 2, 2012 (File No. 333-128780))+
10.5	Amendment No. 8, dated January 28, 2015, to Office Lease Agreement, dated December 1, 2006, as amended, by and between SPUS7 Miami ACC, LP and NCL (Bahamas) Ltd. (incorporated herein by reference to Exhibit 10.3 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on May 8, 2015 (File No. 001-35784))+
10.6	Amendment No. 9, dated June 30, 2015, to Office Lease Agreement, dated December 1, 2006, as amended, by and between SPUS7 Miami ACC, LP and NCL (Bahamas) Ltd. (incorporated herein by reference to Exhibit 10.2 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on August 7, 2015 (File No. 001-35784))+
10.7	Amendment No. 10, dated March 31, 2016, to Office Lease Agreement, dated December 1, 2006, as amended, by and between SPUS7 Miami ACC, LP and NCL (Bahamas) Ltd. (incorporated herein by reference to Exhibit 10.5 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on May 10, 2016 (File No. 001-35784))+
10.8	Amendment No. 11, dated February 8, 2017, to Office Lease Agreement, dated December 1, 2006, as amended, by and between SPUS7 Miami ACC, LP and NCL (Bahamas) Ltd. (incorporated herein by reference to Exhibit 10.1 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on May 10, 2017 (File No. 001-35784))+
10.9	Amendment No. 12, dated August 24, 2017, to Office Lease Agreement, dated December 1, 2006, as amended, by and between SPUS7 Miami ACC, LP and NCL (Bahamas) Ltd. (incorporated herein by reference to Exhibit 10.3 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on November 9, 2017 (File No. 001-35784))
10.10	Amendment No. 13, dated November 30, 2017, to Office Lease Agreement, dated December 1, 2006, as amended, by and between SPUS7 Miami ACC, LP and NCL (Bahamas) Ltd. (incorporated herein by reference to Exhibit 10.13 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27, 2018 (File No. 001-35784))+
10.11	Amendment No. 14, dated January 16, 2018, to Office Lease Agreement, dated December 1, 2006, as amended, by and between SPUS7 Miami ACC, LP and NCL (Bahamas) Ltd. (incorporated herein by reference to Exhibit 10.14 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27, 2018 (File No. 001-35784))
10.12	Amendment No. 15, dated March 1, 2018, to Office Lease Agreement, dated December 1, 2006, as amended, by and between SPUS7 Miami ACC, LP and NCL (Bahamas) Ltd. (incorporated herein by reference to Exhibit 10.1 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on May 7, 2018 (File No. 001-35784))+
10.13**	Amendment No. 16, dated November 15, 2019, to Office Lease Agreement, dated December 1, 2006, as amended, by and between W-Crocker Lam Office Owner VIII, L.L.C. and NCL (Bahamas) Ltd.#

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10.14	€529.8 million Breakaway One Credit Agreement, dated November 18, 2010, by and among Breakaway One, Ltd. and a syndicate of international banks and related Guarantee by NCL Corporation Ltd. (incorporated herein by reference to Exhibit 10.57 to amendment no. 4 to NCL Corporation Ltd.’s registration statement on Form S-1 filed on June 9, 2011 (File No. 333-170141))+
10.15	First Amendment, dated May 31, 2012, to €529.8 million Breakaway One Credit Agreement, dated November 18, 2010, as amended, by and among Breakaway One, Ltd. and a syndicate of international banks (incorporated herein by reference to Exhibit 10.13 to NCL Corporation Ltd.’s report on Form 6-K filed on November 2, 2012 (File No. 333-128780))+
10.16	Side Letter, dated April 25, 2019, to €529.8 million Breakaway One Credit Agreement, dated November 18, 2010, as amended, by and among Breakaway One, Ltd., NCL Corporation Ltd., NCL International, Ltd. and KfW IPEX Bank GmbH (incorporated herein by reference to Exhibit 10.2 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on August 8, 2019 (File No. 001-35784))#
10.17	€529.8 million Breakaway Two Credit Agreement, dated as of November 18, 2010, by and among Breakaway Two, Ltd. and a syndicate of international banks and related Guarantee by NCL Corporation Ltd. (incorporated herein by reference to Exhibit 10.58 to amendment no. 4 to NCL Corporation Ltd.’s registration statement on Form S-1 filed on June 9, 2011 (File No. 333-170141))+
10.18	First Amendment, dated December 21, 2010, to €529.8 million Breakaway Two Credit Agreement, dated as of November 18, 2010, by and among Breakaway Two, Ltd. and a syndicate of international banks and a related Guarantee by NCL Corporation Ltd. (incorporated herein by reference to Exhibit 10.59 to amendment no. 2 to NCL Corporation Ltd.’s registration statement on Form S-1 filed on January 31, 2011 (File No. 333-170141))
10.19	Second Amendment, dated May 31, 2012, to €529.8 million Breakaway Two Credit Agreement, dated as of November 18, 2010, by and among Breakaway Two, Ltd. and a syndicate of international banks (incorporated herein by reference to Exhibit 10.14 to NCL Corporation Ltd.’s report on Form 6-K filed on November 2, 2012 (File No. 333-128780))+
10.20	Side Letter, dated August 7, 2019, to €529.8 million Breakaway Two Credit Agreement, dated November 18, 2010, as amended, by and among Breakaway Two, Ltd., NCL Corporation Ltd., NCL International, Ltd. and KfW IPEX-Bank GmbH (incorporated herein by reference to Exhibit 10.2 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on November 8, 2019 (File No. 001-35784))#
10.21	€590.5 million Breakaway Three Credit Agreement, dated October 12, 2012, by and among Breakaway Three, Ltd. and various other lenders therein defined and a related Guaranty by NCL Corporation Ltd. (incorporated herein by reference to Exhibit 10.17 to NCL Corporation Ltd.’s report on Form 6-K/A filed on January 8, 2013 (File No. 333-128780))+
10.22	Supplemental Agreement, dated July 26, 2016, to €590.5 million Breakaway Four Credit Agreement, dated October 12, 2012, by and among Breakaway Four, Ltd., as borrower, NCL Corporation Ltd., as guarantor, NCL International, Ltd., as shareholder and KfW IPEX-Bank GmbH, as facility agent and lender (incorporated herein by reference to Exhibit 10.1 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on November 9, 2016 (File No. 001-35784))+
10.23	Fourth Amended and Restated Credit Agreement, dated as of January 2, 2019, by and among NCL Corporation Ltd., as borrower, Voyager Vessel Company, LLC, as co-borrower, JPMorgan Chase Bank, N.A., as administrative agent and as collateral agent and a syndicate of other banks party thereto as joint bookrunners, arrangers, co-documentation agents and lenders (incorporated herein by reference to Exhibit 10.25 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27, 2019 (File No. 001-35784))+
10.24	Supplemental Agreement, dated December 22, 2015, to €665.9 million Seahawk One Credit Agreement, dated July 14, 2014, by and among Seahawk One, Ltd. and various other lenders therein defined and a

60

	related guarantee by NCL Corporation Ltd. (incorporated herein by reference to Exhibit 10.33 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 29, 2016 (File No. 001-35784))+
10.25	Second Supplemental Agreement, dated August 15, 2019, to Seahawk Two Credit Agreement, dated July 14, 2014, by and among Seahawk Two, Ltd. and various other lenders therein defined and a related guarantee by NCL Corporation Ltd. (incorporated herein by reference to Exhibit 10.1 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on November 8, 2019 (File No. 001-35784))#
10.26	Amendment and Restatement Agreement, dated October 31, 2014, but effective as of November 19, 2014, relating to the loan agreement originally dated July 18, 2008, among Riviera New Build, LLC, as borrower, the banks and financial institutions listed in Schedule 1 as lenders, Crédit Agricole Corporate and Investment Bank and Société Générale, as mandated lead arrangers and Crédit Agricole Corporate and Investment Bank as agent and SACE agent (incorporated herein by reference to Exhibit 10.72 to Norwegian Cruise Line Holdings Ltd.’s Form  10-K filed on February 27, 2015 (File No. 001-35784))+
10.27	Guarantee relating to the loan agreement dated July 18, 2008 in respect of the Oceania Riviera, dated October 31, 2014, but effective November 19, 2014, among NCL Corporation Ltd., as guarantor, the banks and financial institutions listed in Schedule 1 as lenders, Crédit Agricole Corporate and Investment Bank and Société Générale, as mandated lead arrangers and Crédit Agricole Corporate and Investment Bank as agent (incorporated herein by reference to Exhibit 10.73 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27, 2015 (File No. 001-35784))+
10.28	Amendment and Restatement Agreement, dated October 31, 2014, but effective as of November 19, 2014, relating to the loan agreement originally dated July 18, 2008, among Marina New Build, LLC, as borrower, the banks and financial institutions listed in Schedule 1 as lenders, Crédit Agricole Corporate and Investment Bank and Société Générale, as mandated lead arrangers and Crédit Agricole Corporate and Investment Bank as agent and SACE agent (incorporated herein by reference to Exhibit 10.74 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27, 2015 (File No. 001-35784))+
10.29	Guarantee relating to the loan agreement dated July 18, 2008 in respect of the Oceania Marina, dated October 31, 2014, but effective November 19, 2014, among NCL Corporation Ltd., as guarantor, the banks and financial institutions listed in Schedule 1 as lenders, Crédit Agricole Corporate and Investment Bank and Société Générale, as mandated lead arrangers and Crédit Agricole Corporate and Investment Bank as agent (incorporated herein by reference to Exhibit 10.75 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27, 2015 (File No. 001-35784))+
10.30	Amendment and Restatement Agreement, dated October 31, 2014, but effective as of November 19, 2014, relating to the loan agreement originally dated July 31, 2013, among Explorer New Build, LLC, as borrower, the banks and financial institutions listed in Schedule 1 as lenders, Crédit Agricole Corporate and Investment Bank, Société Générale, HSBC Bank plc, KFW IPEX-Bank GmbH, as joint mandated lead arrangers and Crédit Agricole Corporate and Investment Bank as agent, SACE agent and security trustee (incorporated herein by reference to Exhibit 10.76 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27, 2015 (File No. 001-35784))+
10.31	Guarantee relating to the loan agreement dated July 31, 2013 in respect of the Seven Seas Explorer, dated October 31, 2014, but effective November 19, 2014, among NCL Corporation Ltd., as guarantor and Crédit Agricole Corporate and Investment Bank as security trustee (incorporated herein by reference to Exhibit 10.77 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27, 2015 (File No. 001-35784))
10.32	Explorer Class Newbuild Loan Agreement, dated March 30, 2016, among Explorer II New Build, LLC, as borrower, the banks and financial institutions listed in Schedule 1 as lenders, Crédit Agricole Corporate and Investment Bank, Société Générale, HSBC Bank plc, KFW IPEX-Bank GmbH, as joint mandated lead arrangers and Crédit Agricole Corporate and Investment Bank as agent and security trustee (incorporated herein by reference to Exhibit 10.6 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on May 10, 2016 (File No. 001-35784))+

61

10.33	Guarantee relating to the Explorer Class Newbuild Loan Agreement, dated March 30, 2016, among NCL Corporation Ltd., as guarantor, and Crédit Agricole Corporate and Investment Bank as Security Trustee (incorporated herein by reference to Exhibit 10.7 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on May 10, 2016 (File No. 001-35784))+
10.34	Amendment No. 1, dated November 21, 2017, to Leonardo One Loan Agreement, dated April 12, 2017, by and among Leonardo One, Ltd., as borrower, the banks and financial institutions listed in Schedule 1, as lenders, Crédit Agricole Corporate and Investment Bank, BNP Paribas Fortis S.A./N.V., HSBC Bank plc, KfW IPEX-Bank GmbH and Cassa Depositi e Prestiti S.p.A., as joint mandated lead arrangers and Crédit Agricole Corporate and Investment Bank as agent and SACE agent (incorporated herein by reference to Exhibit 10.35 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27, 2018 (File No. 001-35784))+
10.35	Guarantee relating to the Leonardo One Loan Agreement, dated April 12, 2017, by and among NCL Corporation Ltd., as guarantor and Crédit Agricole Corporate and Investment Bank as security trustee (incorporated herein by reference to Exhibit 10.4 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on May 10, 2017 (File No. 001-35784))+
10.36	Amendment No. 1, dated November 21, 2017, to Leonardo Two Loan Agreement, dated April 12, 2017, by and among Leonardo Two, Ltd., as borrower, the banks and financial institutions listed in Schedule 1, as lenders, Crédit Agricole Corporate and Investment Bank, BNP Paribas Fortis S.A./N.V., HSBC Bank plc, KfW IPEX-Bank GmbH and Cassa Depositi e Prestiti S.p.A., as joint mandated lead arrangers and Crédit Agricole Corporate and Investment Bank as agent and SACE agent (incorporated herein by reference to Exhibit 10.37 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27, 2018 (File No. 001-35784))+
10.37	Guarantee relating to the Leonardo Two Loan Agreement, dated April 12, 2017, by and among NCL Corporation Ltd., as guarantor and Crédit Agricole Corporate and Investment Bank as security trustee (incorporated herein by reference to Exhibit 10.6 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on May 10, 2017 (File No. 001-35784))+
10.38	Amendment No. 1, dated November 21, 2017, to Leonardo Three Loan Agreement, dated April 12, 2017, by and among Leonardo Three, Ltd., as borrower, the banks and financial institutions listed in Schedule 1, as lenders, BNP Paribas Fortis S.A./N.V., HSBC Bank plc, KfW IPEX-Bank GmbH and Cassa Depositi e Prestiti S.p.A., as joint mandated lead arrangers and BNP Paribas S.A. as agent and SACE agent (incorporated herein by reference to Exhibit 10.39 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27, 2018 (File No. 001-35784))+
10.39	Guarantee relating to the Leonardo Three Loan Agreement, dated April 12, 2017, by and among NCL Corporation Ltd., as guarantor and BNP Paribas S.A. as security trustee (incorporated herein by reference to Exhibit 10.8 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on May 10, 2017 (File No. 001-35784))+
10.40	Amendment No. 1, dated November 21, 2017, to Leonardo Four Loan Agreement, dated April 12, 2017, by and among Leonardo Four, Ltd., as borrower, the banks and financial institutions listed in Schedule 1, as lenders, BNP Paribas Fortis S.A./N.V., HSBC Bank plc, KfW IPEX-Bank GmbH and Cassa Depositi e Prestiti S.p.A., as joint mandated lead arrangers and BNP Paribas S.A. as agent and SACE agent (incorporated herein by reference to Exhibit 10.41 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27, 2018 (File No. 001-35784))+
10.41	Guarantee relating to the Leonardo Four Loan Agreement, dated April 12, 2017, by and among NCL Corporation Ltd., as guarantor and BNP Paribas S.A. as security trustee (incorporated herein by reference to Exhibit 10.10 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on May 10, 2017 (File No. 001-35784))+

62

10.42	Leonardo Five Loan Agreement, dated as of December 19, 2018, but effective as of January 8, 2019, among Leonardo Five, Ltd., as borrower, the banks and financial institutions listed in Schedule 1 as lenders, Crédit Agricole Corporate and Investment Bank, BNP Paribas Fortis S.A./N.V., HSBC Bank plc, KFW IPEX-Bank GmbH, Cassa Depositi E Prestiti S.P.A., Banco Santander, S.A. and Société Générale, as joint mandated lead arrangers, BNP Paribas as agent and HSBC Corporate Trustee Company (UK) Limited as security trustee (incorporated herein by reference to Exhibit 10.44 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27, 2019 (File No. 001-35784))+
10.43	Guarantee relating to the Leonardo Five Loan Agreement, dated as of December 19, 2018, but effective as of January 8, 2019, among NCL Corporation Ltd., as guarantor, and HSBC Corporate Trustee Company (UK) Limited as security trustee (incorporated herein by reference to Exhibit 10.45 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27, 2019 (File No. 001-35784))+
10.44	Leonardo Six Loan Agreement, dated as of December 19, 2018, but effective as of January 8, 2019, among Leonardo Six, Ltd., as borrower, the banks and financial institutions listed in Schedule 1 as lenders, Crédit Agricole Corporate and Investment Bank, BNP Paribas Fortis S.A./N.V., HSBC Bank plc, KFW IPEX-Bank GmbH, Cassa Depositi E Prestiti S.P.A., Banco Santander, S.A. and Société Générale, as joint mandated lead arrangers, BNP Paribas as agent and HSBC Corporate Trustee Company (UK) Limited as security trustee (incorporated herein by reference to Exhibit 10.46 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27, 2019 (File No. 001-35784))+
10.45	Guarantee relating to the Leonardo Six Loan Agreement, dated as of December 19, 2018, but effective as of January 8, 2019, among NCL Corporation Ltd., as guarantor, and HSBC Corporate Trustee Company (UK) Limited as security trustee (incorporated herein by reference to Exhibit 10.47 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27, 2019 (File No. 001-35784))+
10.46	O Class Plus One Loan Agreement, dated as of December 19, 2018, but effective as of January 8, 2019, among O Class Plus One, LLC, as borrower, the banks and financial institutions listed in Schedule 1 as lenders, Crédit Agricole Corporate and Investment Bank, BNP Paribas Fortis S.A./N.V., HSBC Bank plc, KFW IPEX-Bank GmbH, Cassa Depositi E Prestiti S.P.A., Banco Santander, S.A. and Société Générale, as joint mandated lead arrangers, BNP Paribas as agent and HSBC Corporate Trustee Company (UK) Limited as security trustee (incorporated herein by reference to Exhibit 10.48 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27, 2019 (File No. 001-35784))+
10.47	Guarantee relating to the O Class Plus One Loan Agreement, dated as of December 19, 2018, but effective as of January 8, 2019, among NCL Corporation Ltd., as guarantor, and HSBC Corporate Trustee Company (UK) Limited as security trustee (incorporated herein by reference to Exhibit 10.49 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27, 2019 (File No. 001-35784))+
10.48	O Class Plus Two Loan Agreement, dated as of December 19, 2018, but effective as of January 8, 2019, among O Class Plus Two, LLC, as borrower, the banks and financial institutions listed in Schedule 1 as lenders, Crédit Agricole Corporate and Investment Bank, BNP Paribas Fortis S.A./N.V., HSBC Bank plc, KFW IPEX-Bank GmbH, Cassa Depositi E Prestiti S.P.A., Banco Santander, S.A. and Société Générale, as joint mandated lead arrangers, BNP Paribas as agent and HSBC Corporate Trustee Company (UK) Limited as security trustee (incorporated herein by reference to Exhibit 10.50 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27, 2019 (File No. 001-35784))+
10.49	Guarantee relating to the O Class Plus Two Loan Agreement, dated as of December 19, 2018, but effective as of January 8, 2019, among NCL Corporation Ltd., as guarantor, and HSBC Corporate Trustee Company (UK) Limited as security trustee (incorporated herein by reference to Exhibit 10.51 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27, 2019 (File No. 001-35784))+
10.50	$230 million Credit Agreement, dated January 10, 2019, among NCL Corporation Ltd., as borrower, Nordea Bank ABP, New York Branch, as administrative agent and collateral agent and the other lenders party thereto as joint bookrunners, arrangers, co-documentation agents and lenders (incorporated herein

63

	by reference to Exhibit 10.52 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27, 2019 (File No. 001-35784))+
10.51	Explorer III New Build Loan Agreement, dated as of December 19, 2018, but effective as of January 15, 2019, among Explorer III New Build, LLC, as borrower, the banks and financial institutions listed in Schedule 1 as lenders, Crédit Agricole Corporate and Investment Bank, BNP Paribas Fortis S.A./N.V., HSBC Bank plc, KFW IPEX-Bank GmbH, Cassa Depositi E Prestiti S.P.A., Banco Santander, S.A. and Société Générale, as joint mandated lead arrangers, BNP Paribas as agent and HSBC Corporate Trustee Company (UK) Limited as security trustee (incorporated herein by reference to Exhibit 10.53 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27, 2019 (File No. 001-35784))+
10.52	Guarantee relating to the Explorer III New Build Loan Agreement, dated as of December 19, 2018, but effective as of January 15, 2019, among NCL Corporation Ltd., as guarantor, and HSBC Corporate Trustee Company (UK) Limited as security trustee (incorporated herein by reference to Exhibit 10.54 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27, 2019 (File No. 001-35784))+
10.53	$260 million Credit Agreement, dated May 15, 2019, among NCL Corporation Ltd., as borrower, Bank of America, N.A., as administrative agent and collateral agent and the other lenders party thereto as joint bookrunners, arrangers, co-documentation agents and lenders (incorporated herein by reference to Exhibit 10.1 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on August 8, 2019 (File No. 001-35784))#
10.54	Amended and Restated Regent Trademark License Agreement, dated February 21, 2011, by and between Regent Hospitality Worldwide, LLC and Seven Seas Cruises, S. DE R.L. (incorporated herein by reference to Exhibit 10.17 to Prestige Cruises International, Inc.’s Amendment No. 1 to Form S-1 filed on March 24, 2014 (File No. 333-193479))
10.55	Employment Agreement by and between NCL (Bahamas) Ltd. and Andrew Stuart, entered into on September 16, 2016 (incorporated herein by reference to Exhibit 10.2 to Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on September 19, 2016 (File No. 001-35784))*
10.56	Employment Agreement by and between NCL (Bahamas) Ltd. and T. Robin Lindsay, entered into on October 18, 2015 (incorporated herein by reference to Exhibit 10.2 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on May 10, 2017 (File No. 001-35784))*
10.57	Employment Agreement by and between Prestige Cruise Services, LLC and Jason Montague, entered into on September 16, 2016 (incorporated herein by reference to Exhibit 10.3 to Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on September 19, 2016 (File No. 001-35784))*
10.58	Amended and Restated Executive Employment Agreement by and between Oceania Cruises, Inc. and Frank J. Del Rio, entered into on June 5, 2014 (incorporated herein by reference to Exhibit 10.1 to Seven Seas Cruises S. DE R.L.’s Form 8-K filed on June 10, 2014 (File No. 333-178244))*
10.59	Letter Regarding Frank Del Rio’s Executive Employment Agreement, dated September 2, 2014 (incorporated herein by reference to Exhibit 10.89 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27, 2015 (File No. 001-35784))*
10.60	Letter Regarding Amendment to Frank J. Del Rio’s Executive Employment Agreement, dated August 4, 2015 (incorporated herein by reference to Exhibit 10.1 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on November 4, 2015 (File No. 001-35784))*
10.61	Letter Regarding Amendment to Frank J. Del Rio’s Executive Employment Agreement, dated August 1, 2017 (incorporated herein by reference to Exhibit 10.1 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on November 9, 2017 (File No. 001-35784))*
10.62	Employment Agreement by and between NCL (Bahamas) Ltd. and Mark Kempa, entered into on September 10, 2018 (incorporated herein by reference to Exhibit 10.1 to Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on September 11, 2018 (File No. 001-35784))*

64

10.63	Employment Agreement by and between Prestige Cruise Services, LLC and Robert J. Binder, entered into on September 16, 2016 (incorporated herein by reference to Exhibit 10.1 to Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on September 19, 2016 (File No. 001-35784))*
10.64**	Amendment to Employment Agreement by and between Prestige Cruise Services, LLC and Robert J. Binder, entered into on May 7, 2019*
10.65	Form of Indemnification Agreement by and between Norwegian Cruise Line Holdings Ltd. and each of its directors, executive officers and certain other officers (incorporated herein by reference to Exhibit 10.89 to amendment no. 5 to Norwegian Cruise Line Holdings Ltd.’s registration statement on Form S-1 filed on January 8, 2013 (File No. 333-175579))
10.66	Norwegian Cruise Line Holdings Ltd. Amended and Restated 2013 Performance Incentive Plan (incorporated herein by reference to Exhibit 10.1 to Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on May 24, 2016 (File No. 001-35784))*
10.67	Form of Notice of Grant of Option and Terms and Conditions of Option (incorporated herein by reference to Exhibit 10.1 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on May 8, 2013 (File No. 001-35784))*
10.68	Form of Director Restricted Share Award Agreement (incorporated herein by reference to Exhibit 10.2 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on July 30, 2013 (File No. 001-35784))*
10.69	Norwegian Cruise Line Holdings Ltd. Employee Stock Purchase Plan (incorporated herein by reference to Exhibit 10.3 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on July 31, 2014 (File No. 001-35784))*
10.70**	Directors’ Compensation Policy (effective January 1, 2020)*
10.71	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))*
10.72	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))*
10.73	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))*
10.74	Form of Norwegian Cruise Line Holdings Ltd. Time-based Restricted Share Unit Award Agreement (2017) (incorporated herein by reference to Exhibit 10.52 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27, 2017 (File No. 001-35784))*
10.75	Form of Norwegian Cruise Line Holdings Ltd. Performance-based Restricted Share Unit Award Agreement (2017) (incorporated herein by reference to Exhibit 10.53 to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 27, 2017 (File No. 001-35784))*
10.76	Form of Norwegian Cruise Line Holdings Ltd. Performance-based Restricted Share Unit Award Agreement (August 2017) (incorporated herein by reference to Exhibit 10.2 to Norwegian Cruise Line Holdings Ltd.’s Form 10-Q filed on November 9, 2017 (File No. 001-35784))*
10.77**	Form of Norwegian Cruise Line Holdings Ltd. Time-based Restricted Share Unit Award Agreement (2020)*
10.78**	Form of Norwegian Cruise Line Holdings Ltd. Performance-based Restricted Share Unit Award Agreement (2020)*
21.1**	List of Subsidiaries of Norwegian Cruise Line Holdings Ltd.

65

23.1**	Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm
24.1**	Power of Attorney (included on Signatures page of this Annual Report on Form 10-K)
31.1**	Certification of the Annual Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the President and Chief Executive Officer
31.2**	Certification of the Annual Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the Executive Vice President and Chief Financial Officer
32.1***	Certification of the Annual Report Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by the Chief Executive Officer and Chief Financial Officer

101**	The following materials from Norwegian Cruise Line Holdings Ltd.’s Annual Report on Form 10‑K formatted in Inline XBRL:
	(i)    the Consolidated Statements of Operations of NCLH for the years ended December 31, 2019, 2018 and 2017;
	(ii)   the Consolidated Statements of Comprehensive Income of NCLH for the years ended December 31, 2019, 2018 and 2017;
	(iii)  the Consolidated Balance Sheets of NCLH as of December 31, 2019 and 2018;
	(iv)  the Consolidated Statements of Cash Flows of NCLH for the years ended December 31, 2019, 2018 and 2017;
	(v)   the Consolidated Statements of Changes in Shareholders’ Equity of NCLH for the years ended December 31, 2019, 2018 and 2017;
	(vi)  the Notes to the Consolidated Financial Statements; and
	(vii)  Schedule II Valuation and Qualifying Accounts.
104**	The cover page from Norwegian Cruise Line Holdings Ltd.’s Annual Report on Form 10-K for the year ended December 31, 2019, formatted in Inline XBRL and included in the interactive data files submitted as Exhibit 101.

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

#     Certain portions of this document that constitute confidential information have been redacted in accordance with Regulation S-K Item 601(b)(10).

*     Management contract or compensatory plan.

**   Filed herewith.

*** Furnished herewith.

Item 16. Form 10-K Summary

None.

66

SIGNATURES

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

NORWEGIAN CRUISE LINE HOLDINGS LTD.
By:	/s/ Frank J. Del Rio
Name:	Frank J. Del Rio
Title:	Director, President and Chief Executive Officer

POWER OF ATTORNEY

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

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this annual report on Form 10-K has been signed below by the following persons in the capacities and on the date indicated.

Signature	Title	Date
/s/ Frank J. Del Rio	Director, President and Chief Executive Officer	February 27, 2020
Frank J. Del Rio	(Principal Executive Officer)
/s/ Mark A. Kempa	Executive Vice President and Chief Financial Officer	February 27, 2020
Mark A. Kempa	(Principal Financial Officer)
/s/ Faye L. Ashby	Senior Vice President and Chief Accounting Officer	February 27, 2020
Faye L. Ashby	(Principal Accounting Officer)
/s/ Adam M. Aron	Director	February 27, 2020
Adam M. Aron
/s/ John Chidsey	Director	February 27, 2020
John Chidsey
/s/ Chad A. Leat	Director	February 27, 2020
Chad A. Leat
/s/ Steve Martinez	Director	February 27, 2020
Steve Martinez
/s/ David M. Abrams	Director	February 27, 2020
David M. Abrams
/s/ Stella David	Director	February 27, 2020
Stella David
/s/ Russell W. Galbut	Director	February 27, 2020
Russell W. Galbut
/s/ Pamela Thomas-Graham	Director	February 27, 2020
Pamela Thomas-Graham
/s/ Mary E. Landry	Director	February 27, 2020
Mary E. Landry

67

Norwegian Cruise Line Holdings Ltd.

Schedule II Valuation and Qualifying Accounts (in thousands)

			Additions
			Charged to
	Balance		costs and		Charged to				Balance
Description	12/31/16		expenses		other accounts		Deductions (a)		12/31/17
Valuation allowance on deferred tax assets	$	64,573	$	—	$	—	$	(22,419)	$	42,154

			Charged to
	Balance		costs and		Charged to				Balance
Description	12/31/17		expenses			other accounts	Deductions (a)		12/31/18
Valuation allowance on deferred tax assets	$	42,154	$	—	$	276	$	(506)	$	41,924

			Charged to
	Balance		costs and		Charged to				Balance
Description	12/31/18		expenses			other accounts	Deductions (a)		12/31/19
Valuation allowance on deferred tax assets	$	41,924	$	—	$	—	$	(36,077)	$	5,847

(a) Amount relates to (i) utilization of deferred tax assets, (ii) revaluation of deferred tax assets from their functional currency to U.S. dollars and (iii) reversal of valuation allowances.

68

Index to Consolidated Financial Statements

	Page
Report of Independent Registered Public Accounting Firm	F-1
Consolidated Statements of Operations for the years ended December 31, 2019, 2018 and 2017	F-4
Consolidated Statements of Comprehensive Income for the years ended December 31, 2019, 2018 and 2017	F-5
Consolidated Balance Sheets as of December 31, 2019 and 2018	F-6
Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017	F-7
Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2019, 2018 and 2017	F-8
Notes to the Consolidated Financial Statements	F-9

69

Report of Independent Registered Public Accounting Firm

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

Opinions on the Financial Statements and Internal Control over Financial Reporting

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

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

Change in Accounting Principle

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

Basis for Opinions

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

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

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

F-1

Definition and Limitations of Internal Control over Financial Reporting

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

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

Critical Audit Matters

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

Ship Accounting - Improvement Costs

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

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

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 capitalization of ship improvements, including controls over the estimation of whether improvements add value to the ship and the useful lives assigned. These procedures also included, among others, testing the accuracy, existence/occurrence and valuation of capitalized ship improvement costs and evaluating whether costs capitalized add value to the ship. Evaluating the reasonableness of the useful lives assigned involved considering historical data and past experience with similar ship improvements. Professionals with specialized skill and knowledge were used to assist in the evaluation of the reasonableness of the assigned useful lives.

F-2

Goodwill Impairment Assessment - Oceania Cruises Reporting Unit

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

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

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

/s/ PricewaterhouseCoopers LLP

Miami, Florida

February 27, 2020

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

F-3

Norwegian Cruise Line Holdings Ltd.

Consolidated Statements of Operations

(in thousands, except share and per share data)

	Year Ended December 31,
	2019		2018		2017
Revenue
Passenger ticket	$	4,517,393	$	4,259,815	$	3,750,030
Onboard and other		1,944,983		1,795,311		1,646,145
Total revenue		6,462,376		6,055,126		5,396,175
Cruise operating expense
Commissions, transportation and other		1,120,886		998,948		894,406
Onboard and other		394,673		348,656		319,293
Payroll and related		924,157		881,606		803,632
Fuel		409,602		392,685		361,032
Food		222,602		216,031		198,357
Other		591,341		539,150		486,924
Total cruise operating expense		3,663,261		3,377,076		3,063,644
Other operating expense
Marketing, general and administrative		974,850		897,929		773,755
Depreciation and amortization		646,188		561,060		509,957
Total other operating expense		1,621,038		1,458,989		1,283,712
Operating income		1,178,077		1,219,061		1,048,819
Non-operating income (expense)
Interest expense, net		(272,867)		(270,404)		(267,804)
Other income (expense), net		6,155		20,653		(10,401)
Total non-operating income (expense)		(266,712)		(249,751)		(278,205)
Net income before income taxes		911,365		969,310		770,614
Income tax benefit (expense)		18,863		(14,467)		(10,742)
Net income	$	930,228	$	954,843	$	759,872
Weighted-average shares outstanding
Basic		214,929,977		223,001,739		228,040,825
Diluted		216,475,076		224,419,205		229,418,326
Earnings per share
Basic	$	4.33	$	4.28	$	3.33
Diluted	$	4.30	$	4.25	$	3.31

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

F-4

Norwegian Cruise Line Holdings Ltd.

Consolidated Statements of Comprehensive Income

(in thousands)

	Year Ended December 31,
	2019		2018		2017
Net income	$	930,228	$	954,843	$	759,872
Other comprehensive income (loss):
Shipboard Retirement Plan		(1,930)		2,697		(40)
Cash flow hedges:
Net unrealized gain (loss)		(123,015)		(161,214)		304,684
Amount realized and reclassified into earnings		(8,898)		(30,096)		36,795
Total other comprehensive income (loss)		(133,843)		(188,613)		341,439
Total comprehensive income	$	796,385	$	766,230	$	1,101,311

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

F-5

Norwegian Cruise Line Holdings Ltd.

Consolidated Balance Sheets

(in thousands, except share data)

	December 31,
	2019		2018
Assets
Current assets:
Cash and cash equivalents	$	252,876	$	163,851
Accounts receivable, net		75,109		55,249
Inventories		95,427		90,202
Prepaid expenses and other assets		306,733		241,011
Total current assets		730,145		550,313
Property and equipment, net		13,135,337		12,119,253
Goodwill		1,388,931		1,388,931
Tradenames		817,525		817,525
Other long-term assets		612,661		329,948
Total assets	$	16,684,599	$	15,205,970
Liabilities and shareholders’ equity
Current liabilities:
Current portion of long-term debt	$	746,358	$	681,218
Accounts payable		100,777		159,564
Accrued expenses and other liabilities		782,275		716,499
Advance ticket sales		1,954,980		1,593,219
Total current liabilities		3,584,390		3,150,500
Long-term debt		6,055,335		5,810,873
Other long-term liabilities		529,295		281,596
Total liabilities		10,169,020		9,242,969
Commitments and contingencies (Note 13)
Shareholders’ equity:
Ordinary shares, $0.001 par value; 490,000,000 shares authorized; 237,533,270 shares issued and 213,082,411 shares outstanding at December 31, 2019 and 235,484,613 shares issued and 217,650,644 shares outstanding at December 31, 2018		237		235
Additional paid-in capital		4,235,690		4,129,639
Accumulated other comprehensive income (loss)		(295,490)		(161,647)
Retained earnings		3,829,068		2,898,840
Treasury shares (24,450,859 and 17,833,969 ordinary shares at December 31, 2019 and December 31, 2018, respectively, at cost)		(1,253,926)		(904,066)
Total shareholders’ equity		6,515,579		5,963,001
Total liabilities and shareholders’ equity	$	16,684,599	$	15,205,970

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

F-6

Norwegian Cruise Line Holdings Ltd.

Consolidated Statements of Cash Flows

(in thousands)

	Year Ended December 31,
	2019		2018		2017
Cash flows from operating activities
Net income	$	930,228	$	954,843	$	759,872
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		647,102		566,972		521,484
Deferred income taxes, net		(26,134)		1,508		9,153
Loss on extinguishment of debt		13,397		6,346		22,211
Provision for bad debts and inventory obsolescence		3,884		5,570		2,431
Gain on involuntary conversion of assets		(4,152)		—		—
Share-based compensation expense		95,055		115,983		87,039
Net foreign currency adjustments		(1,934)		(5,537)		—
Changes in operating assets and liabilities:
Accounts receivable, net		(14,104)		(15,886)		15,050
Inventories		(6,155)		(9,052)		(17,129)
Prepaid expenses and other assets		(74,295)		(29,519)		(22,714)
Accounts payable		(58,635)		106,387		14,047
Accrued expenses and other liabilities		(29,028)		114,953		55,791
Advance ticket sales		347,376		262,603		154,012
Net cash provided by operating activities		1,822,605		2,075,171		1,601,247
Cash flows from investing activities
Additions to property and equipment, net		(1,637,170)		(1,566,796)		(1,372,214)
Cash received on settlement of derivatives		289		64,796		2,346
Cash paid on settlement of derivatives		(47,085)		(1,719)		(35,694)
Other		3,774		1,011		664
Net cash used in investing activities		(1,680,192)		(1,502,708)		(1,404,898)
Cash flows from financing activities
Repayments of long-term debt		(3,806,732)		(1,716,244)		(1,916,885)
Proceeds from long-term debt		4,122,297		1,904,865		1,816,390
Proceeds from employee related plans		31,937		28,819		30,032
Net share settlement of restricted share units		(20,939)		(13,855)		(6,342)
Purchases of treasury shares		(349,860)		(664,811)		—
Early redemption premium		(6,829)		(5,154)		(15,506)
Deferred financing fees		(23,262)		(118,422)		(56,195)
Net cash used in financing activities		(53,388)		(584,802)		(148,506)
Net increase (decrease) in cash and cash equivalents		89,025		(12,339)		47,843
Cash and cash equivalents at beginning of period		163,851		176,190		128,347
Cash and cash equivalents at end of period	$	252,876	$	163,851	$	176,190

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

F-7

Norwegian Cruise Line Holdings Ltd.

Consolidated Statements of Changes in Shareholders’ Equity

(in thousands)

					Accumulated
			Additional		Other						Total
	Ordinary		Paid-in		Comprehensive		Retained		Treasury		Shareholders’
	Shares		Capital		Income (Loss)		Earnings		Shares		Equity
Balance, December 31, 2016	$	232	$	3,890,119	$	(314,473)	$	1,201,103	$	(239,255)	$	4,537,726
Share-based compensation		—		87,039		—		—		—		87,039
Issuance of shares under employee related plans		1		30,031		—		—		—		30,032
Net share settlement of restricted share units		—		(6,342)		—		—		—		(6,342)
Cumulative change in accounting policy		—		(2,153)		—		2,153		—		—
Other comprehensive income, net		—		—		341,439		—		—		341,439
Net income		—		—		—		759,872		—		759,872
Balance, December 31, 2017		233		3,998,694		26,966		1,963,128		(239,255)		5,749,766
Share-based compensation		—		115,983				—		—		115,983
Issuance of shares under employee related plans		2		28,817		—		—		—		28,819
Treasury shares		—		—		—		—		(664,811)		(664,811)
Net share settlement of restricted share units		—		(13,855)		—		—		—		(13,855)
Cumulative change in accounting policy		—		—		(12)		(19,131)		—		(19,143)
Other comprehensive income, net		—		—		(188,601)		—		—		(188,601)
Net income		—		—		—		954,843		—		954,843
Balance, December 31, 2018		235		4,129,639		(161,647)		2,898,840		(904,066)		5,963,001
Share-based compensation		—		95,055		—		—		—		95,055
Issuance of shares under employee related plans		2		31,935		—		—		—		31,937
Treasury shares		—		—		—		—		(349,860)		(349,860)
Net share settlement of restricted share units		—		(20,939)		—		—		—		(20,939)
Other comprehensive loss, net		—		—		(133,843)		—		—		(133,843)
Net income		—		—		—		930,228		—		930,228
Balance, December 31, 2019	$	237	$	4,235,690	$	(295,490)	$	3,829,068	$	(1,253,926)	$	6,515,579

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

F-8

Norwegian Cruise Line Holdings Ltd.

Notes to the Consolidated Financial Statements

1. Description of Business and Organization

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

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

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

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

2. Summary of Significant Accounting Policies

Basis of Presentation

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

Cash and Cash Equivalents

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

Accounts Receivable, Net

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

Inventories

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

F-9

Advertising Costs

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

Earnings Per Share

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

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

	Year Ended December 31,
	2019		2018		2017
Net income	$	930,228	$	954,843	$	759,872
Basic weighted-average shares outstanding		214,929,977		223,001,739		228,040,825
Dilutive effect of share awards		1,545,099		1,417,466		1,377,501
Diluted weighted-average shares outstanding		216,475,076		224,419,205		229,418,326
Basic earnings per share	$	4.33	$	4.28	$	3.33
Diluted earnings per share	$	4.30	$	4.25	$	3.31

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

Property and Equipment, Net

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

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

	Useful Life
Ships	30 years
Computer hardware and software	3‑10 years
Other property and equipment	3‑40 years
Leasehold improvements	Shorter of lease term or asset life
Ship improvements	Shorter of asset life or life of the ship

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

F-10

evaluated at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets. We consider historical performance and future estimated results in our evaluation of potential impairment and then compare the carrying amount of the asset to the estimated future cash flows expected to result from the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, we measure the amount of the impairment by comparing the carrying amount of the asset to its fair value. We estimate fair value based on the best information available utilizing estimates, judgments and projections as necessary. Our estimate of fair value is generally measured by discounting expected future cash flows at discount rates commensurate with the associated risk.

Goodwill and Tradenames

Goodwill represents the excess of cost over the fair value of net assets acquired. Goodwill and other indefinite-lived assets, principally tradenames, are reviewed for impairment on an annual basis or earlier if there is an event or change in circumstances that would indicate that the carrying value of these assets may not be fully recoverable. We use the Step 0 Test which allows us to first assess qualitative factors to determine whether it is more likely than not (i.e., more than 50%) that the fair value of a reporting unit is less than its carrying value. For tradenames we also provide a qualitative assessment to determine if there is any indication of impairment.

In order to make this evaluation, we consider the following circumstances as well as others:

● Changes in general macroeconomic conditions such as a deterioration in general economic conditions; limitations on accessing capital; fluctuations in foreign exchange rates; or other developments in equity and credit markets;

● Changes in industry and market conditions such as a deterioration in the environment in which an entity operates; an increased competitive environment; a decline in market-dependent multiples or metrics (in both absolute terms and relative to peers); a change in the market for an entity’s products or services; or a regulatory or political development;

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

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

● Entity and reporting unit specific events such as changes in management, key personnel, strategy, or customers; litigation; or a change in the composition or carrying amount of net assets; and

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

We also may conduct a quantitative assessment comparing the fair value of each reporting unit to its carrying value, including goodwill. This is called the Step I Test which consists of a combined approach using discounted future cash flows and market multiples to determine the fair value of the reporting units. The market approach considers revenue and EBITDA multiples from an appropriate peer group. Our discounted cash flow valuation reflects our principal assumptions of 1) forecasted future operating results and growth rates, 2) forecasted capital expenditures for fleet growth and ship improvements and 3) a weighted average cost of capital of market participants, adjusted for an optimal capital structure.

We believe that the combined approach is the most representative method to assess fair value as it utilizes expectations of long-term growth as well as current market conditions. For the tradenames, we may also use a quantitative assessment, which utilizes the relief from royalty method and includes the same forecasts and discount rates from the discounted cash flow valuation in the goodwill assessment along with a tradename royalty rate assumption.

F-11

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

As of December 31, 2019, there was $523.0 million, $462.1 million and $403.8 million of goodwill for the Oceania Cruises, Regent Seven Seas and Norwegian reporting units, respectively. For our 2019 annual goodwill and tradename impairment evaluation, we elected to perform quantitative tests for the Oceania Cruises, Regent Seven Seas and Norwegian reporting units. Based on the results of the tests, we determined there was no impairment of goodwill or tradenames because the fair values exceeded the carrying values.

Revenue and Expense Recognition

Deposits on advance ticket sales are deferred when received and are subsequently recognized as revenue ratably during the voyage sailing days as services are rendered over time on the ship. Cancellation fees are recognized in passenger ticket revenue in the month of the cancellation. Goods and services associated with onboard revenue are generally provided at a point in time and revenue is recognized when the performance obligation is satisfied. A receivable is recognized for onboard goods and services rendered when the voyage is not completed before the end of the period. All associated direct costs of a voyage are recognized as incurred in cruise operating expenses.

Disaggregation of Revenue

Revenue and cash flows are affected by economic factors in various geographical regions.

Revenues by destination consisted of the following (in thousands):

	Year Ended December 31,
	2019		2018		2017
North America	$	3,807,576	$	3,543,282	$	3,285,903
Europe		1,666,751		1,462,698		1,347,381
Asia-Pacific		500,842		721,404		394,631
Other		487,207		327,742		368,260
Total revenue	$	6,462,376	$	6,055,126	$	5,396,175

Segment Reporting

We have concluded that our business has a single reportable segment. Each brand, Norwegian, Oceania Cruises and Regent, constitutes a business for which discrete financial information is available and management regularly reviews the brand level operating results and, therefore, each brand is considered an operating segment. Our operating segments have similar economic and qualitative characteristics, including similar long-term margins and similar products and services; therefore, we aggregate all of the operating segments into one reportable segment.

Although we sell cruises on an international basis, our passenger ticket revenue is primarily attributed to U.S.-sourced guests who make reservations in the U.S. Revenue attributable to U.S.-sourced guests was 81%, 77% and 77% for the years ended December 31, 2019, 2018 and 2017, respectively. No other individual country’s revenues exceeded 10% in any of our last three years.

Substantially all of our long-lived assets are located outside of the U.S. and consist primarily of our ships. We had 19 ships with Bahamas registry with a carrying value of $10.2 billion as of December 31, 2019 and 18 ships with Bahamas registry with a carrying value of $9.1 billion as of December 31, 2018. We had seven ships with Marshall Island registry with a carrying value of $1.9 billion as of December 31, 2019 and 2018. We also had one ship with U.S. registry with a carrying value of $0.3 billion as of December 31, 2019 and 2018.

F-12

Debt Issuance Costs

Debt issuance costs related to a recognized debt liability are presented in the consolidated balance sheets as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. For line of credit arrangements and for those debt facilities not fully drawn we defer and present debt issuance costs as an asset. These deferred issuance costs are amortized over the life of the loan. The amortization of deferred financing fees is included in depreciation and amortization expense in the consolidated statements of cash flows; however, for purposes of the consolidated statements of operations it is included in interest expense, net.

Foreign Currency

The majority of our transactions are settled in U.S. dollars. Gains or losses resulting from transactions denominated in other currencies are recognized in other income (expense), net at each balance sheet date. We recognized a loss of $7.0 million, a gain of $19.8 million and a loss of $14.2 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Derivative Instruments and Hedging Activity

We enter into derivative contracts to reduce our exposure to fluctuations in foreign currency exchange rates, interest rates and fuel prices. The criteria used to determine whether a transaction qualifies for hedge accounting treatment includes the correlation between fluctuations in the fair value of the hedged item and the fair value of the related derivative instrument and its effectiveness as a hedge. As the derivative is marked to fair value, we elected an accounting policy to net the fair value of our derivatives when a master netting arrangement exists with our counterparties.

A derivative instrument that hedges a forecasted transaction or the variability of cash flows related to a recognized asset or liability may be designated as a cash flow hedge. Changes in fair value of derivative instruments that are designated as cash flow hedges are recorded as a component of accumulated other comprehensive income (loss) until the underlying hedged transactions are recognized in earnings. To the extent that an instrument is not effective as a hedge, gains and losses are recognized in other income (expense), net in our consolidated statements of operations. Realized gains and losses related to our effective fuel hedges are recognized in fuel expense. For presentation in our consolidated statements of cash flows, we have elected to classify the cash flows from our cash flow hedges in the same category as the cash flows from the items being hedged.

Concentrations of Credit Risk

We monitor concentrations of credit risk associated with financial and other institutions with which we conduct significant business. Credit risk, including but not limited to counterparty non-performance under derivative instruments, our Revolving Loan Facility and new ship progress payment guarantees, is not considered significant, as we primarily conduct business with large, well-established financial institutions and insurance companies that we have well-established relationships with and that have credit risks acceptable to us or the credit risk is spread out among a large number of creditors. We do not anticipate non-performance by any of our significant counterparties.

Insurance

We use a combination of insurance and self-insurance for a number of risks including claims related to crew and guests, hull and machinery, war risk, workers’ compensation, property damage, employee healthcare and general liability. Liabilities associated with certain of these risks, including crew and passenger claims, are estimated actuarially based upon known facts, historical trends and a reasonable estimate of future expenses. While we believe these accruals are adequate, the ultimate losses incurred may differ from those recorded.

F-13

Income Taxes

Deferred tax assets and liabilities are calculated in accordance with the liability method. Deferred taxes are recorded using the currently enacted tax rates that apply in the periods that the differences are expected to reverse. Deferred taxes are not discounted.

We provide a valuation allowance on deferred tax assets when it is more likely than not that such assets will not be realized. With respect to acquired deferred tax assets, changes within the measurement period that result from new information about facts and circumstances that existed at the acquisition date shall be recognized through a corresponding adjustment to goodwill. Subsequent to the measurement period, all other changes shall be reported as a reduction or increase to income tax expense in our consolidated statements of operations.

Share-Based Compensation

We recognize expense for our share-based compensation awards using a fair-value-based method. Share-based compensation expense is recognized over the requisite service period for awards that are based on a service period and not contingent upon any future performance. We refer you to Note 11— “Employee Benefits and Share-Based Compensation.”

Recently Issued Accounting Guidance

In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-04, Intangibles—Goodwill and Other (Topic 350) — Simplifying the Test for Goodwill Impairment, which simplifies the test for goodwill impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. The guidance is effective for annual or any interim goodwill impairment tests in years beginning after December 15, 2019, with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company has not early adopted this guidance. The Company will evaluate, upon adoption of this guidance, the impact of this guidance on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which will require an entity to present the net amount expected to be collected for certain financial assets, including trade receivables. Under this update, on initial recognition and at each reporting period, an entity will be required to recognize an allowance that reflects the entity’s current estimate of credit losses expected to be incurred over the life of the financial instrument. The update will be applied prospectively with a cumulative-effect adjustment to retained earnings. This update will be effective for the Company for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. The adoption of this standard will not have a material impact on the Company’s consolidated financial statements.

3. Revenue and Expense from Contracts with Customers

Nature of Goods and Services

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

During the voyage, we generate onboard and other revenue for additional products and services which are not included in the cruise fare, including casino operations, certain food and beverage, gift shop purchases, spa services, photo services, Wi-Fi services and other similar items. Food and beverage, casino operations, photo services and shore excursions are generally managed directly by us while retail shops, spa services, art auctions and internet services may

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be managed through contracts with third-party concessionaires. These contracts generally entitle us to a percentage of the gross sales derived from these concessions, which is recognized on a net basis. While some onboard goods and services may be prepaid prior to the voyage, we utilize point-of-sale systems for discrete purchases made onboard. Certain of our product offerings are bundled and we allocate the value of the bundled goods and services between passenger ticket revenue and onboard and other revenue based upon the relative standalone selling prices of those goods and services.

Timing of Satisfaction of Performance Obligations and Significant Payment Terms

The payment terms and cancellation policies vary by brand, stateroom category, length of voyage, and country of purchase. A deposit for a future booking is required at or soon after the time of booking. Final payment is generally due between 120 days and 180 days before the voyage. Deposits on advance ticket sales are deferred when received and include amounts that are refundable. Deferred amounts are subsequently recognized as revenue ratably during the voyage sailing days as services are rendered over time on the ship. Deposits are generally cancellable and refundable prior to sailing, but may be subject to penalties, depending on the timing of cancellation. The inception of substantive cancellation penalties generally coincides with the dates that final payment is due, and penalties generally increase as the voyage sail date approaches. Cancellation fees are recognized in passenger ticket revenue in the month of the cancellation.

Goods and services associated with onboard revenue are generally provided at a point in time and revenue is recognized when the performance obligation is satisfied. Onboard goods and services rendered may be paid at disembarkation. A receivable is recognized for onboard goods and services rendered when the voyage is not completed before the end of the period.

Cruises that are reserved under full ship charter agreements are subject to the payment terms of the specific agreement and may be either cancelable or non-cancelable. Deposits received on charter voyages are deferred when received and included in advance ticket sales. Deferred amounts are subsequently recognized as revenue ratably over the voyage sailing dates.

Contract Balances

Receivables from customers are included within accounts receivables, net. As of December 31, 2019 and December 31, 2018, our receivables from customers were $15.3 million and $17.3 million, respectively.

Contract liabilities represent the Company’s obligation to transfer goods and services to a customer. A customer deposit held for a future cruise is generally considered a contract liability only when final payment is both due and paid by the customer and is usually recognized in earnings within 180 days of becoming a contract. Other deposits held and included within advance ticket sales or other long-term liabilities are not considered contract liabilities as they are largely cancelable and refundable. Our contract liabilities are included within advance ticket sales. As of December 31, 2019 and December 31, 2018, our contract liabilities were $1.4 billion and $1.2 billion, respectively. Of the amounts included within contract liabilities, approximately 55% were refundable in accordance with our cancellation policies. Approximately $1.2 billion of the December 31, 2018 contract liability balance has been recognized in revenue for the year ended December 31, 2019.

Our revenue is seasonal and based on the demand for cruises. Historically, the seasonality of the North American cruise industry generally results in the greatest demand for cruises during the Northern Hemisphere’s summer months. This predictable seasonality in demand has resulted in fluctuations by quarter in our revenue and results of operations. The seasonality of our results is increased due to ships being taken out of service for regularly scheduled Dry-docks, which we typically schedule during non-peak demand periods. This seasonality will result in higher contract liability balances as a result of an increased number of reservations preceding these peak demand periods. The addition of new ships also increases the contract liability balances prior to a new ship’s delivery, as staterooms are made available for reservation prior to the inaugural cruise. Norwegian Encore, with approximately 4,000 Berths, was delivered on October 30, 2019 and added 7% capacity to our fleet.

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Practical Expedients and Exemptions

We do not disclose information about remaining performance obligations that have original expected durations of one year or less. We recognize revenue in an amount that corresponds directly with the value to the customer of our performance completed to date. Variable consideration, which will be determined based on a future rate and passenger count, is excluded from the disclosure and these amounts are not material. These variable non-disclosed contractual amounts relate to our non-cancelable charter agreements and a leasing arrangement with a certain port, both of which are long-term in nature. Amounts that are fixed in nature due to the application of minimum guarantees are also not material and are not disclosed.

Contract Costs

Management expects that incremental commissions and credit card fees paid as a result of obtaining ticket contracts are recoverable; therefore, we recognize these amounts as assets when they are paid prior to the voyage. Costs of air tickets, port taxes and other fees that fulfill future performance obligations are also considered recoverable and are recorded as assets. Costs incurred to obtain customers were $143.5 million and $116.3 million as of December 31, 2019 and 2018, respectively. Costs to fulfill contracts with customers were $49.7 million and $32.5 million as of December 31, 2019 and 2018, respectively. Both costs to obtain and fulfill contracts with customers are recognized within prepaid expenses and other assets. Incremental commissions, credit card fees, air ticket costs, and port taxes and fees are recognized ratably over the voyage sailing dates, concurrent with associated revenue, and are primarily in commissions, transportation and other expense.

4. Goodwill and Intangible Assets

Goodwill and tradenames are not subject to amortization. As of December 31, 2019 and 2018, the carrying values were $1.4 billion for goodwill and $0.8 billion for tradenames.

The gross carrying amounts of intangible assets included within other long-term assets, the related accumulated amortization, the net carrying amounts and the weighted-average amortization periods of the Company’s intangible assets are listed in the following tables (in thousands, except amortization period):

	December 31, 2019
							Weighted-
							Average
	Gross Carrying		Accumulated		Net Carrying		Amortization
	Amount		Amortization		Amount		Period (Years)
Customer relationships	$	120,000	$	(110,169)	$	9,831	6.0
License		750		(331)		419	10.0
Total intangible assets subject to amortization	$	120,750	$	(110,500)	$	10,250

	December 31, 2018
							Weighted-
							Average
	Gross Carrying		Accumulated		Net Carrying		Amortization
	Amount		Amortization		Amount		Period (Years)
Customer relationships	$	120,000	$	(91,756)	$	28,244	6.0
Licenses		3,368		(2,874)		494	5.6
Total intangible assets subject to amortization	$	123,368	$	(94,630)	$	28,738

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The aggregate amortization expense is as follows (in thousands):

	Year Ended December 31,
	2019		2018		2017
Amortization expense	$	18,488	$	26,163	$	31,232

The following table sets forth the Company’s estimated aggregate amortization expense for each of the five years below (in thousands):

	Amortization
Year ended December 31,	Expense
2020	$	9,906
2021		75
2022		75
2023		75
2024		75

5.   Leases

On January 1, 2019, we adopted ASU No. 2016-02, Leases (“Topic 842”). Topic 842 supersedes the lease accounting requirements in Accounting Standards Codification (“ASC”) 840—Leases. In August 2018, the FASB issued ASU 2018-11, Targeted Improvements to Topic 842, which included an option to apply the new leases standard at the adoption date using a modified retrospective approach, which the Company elected.

Nature of Leases

We have finance leases for certain ship equipment and a corporate office. We have operating leases for port facilities, corporate offices, warehouses, and certain equipment. Many of our leases include both lease and non-lease components. We have adopted the practical expedient which allows us to combine lease and non-lease components by class of asset. We have applied this expedient for office leases, port facilities, and certain equipment.

Significant Assumptions and Judgments in Applying Topic 842 and Practical Expedients Elected

Our leases contain both fixed and variable payments. Fixed payments and variable lease payments that depend on a rate or index are included in the calculation of the right-of-use asset. Other variable payments are excluded from the calculation unless there is an unavoidable fixed minimum cost related to those payments such as a minimum annual guarantee. Our lease assets are amortized on a straight-line basis except for our rights to use port facilities. The expenses related to port facilities are amortized based on passenger counts as this basis represents the pattern in which the economic benefit is derived from the right to use the underlying asset.

For non-consecutive lease terms, which relate to our rights to use certain port facilities, the term of the lease is based on the number of days on which we have the right to use a specified asset. We have adopted the practical expedient to exclude leases with terms of less than one year from being included on the balance sheet. Lease expense for agreements that are short-term are disclosed below and include both fixed and variable payments.

Certain leases include one or more options to extend or terminate and are primarily in five-year increments. Lease extensions and terminations, including auto-renewing lease terms, were only included in the calculation of the right-of-use asset to the extent that the right to renew or terminate was at the option of the lessor only or where there was a more than insignificant penalty for termination.

As our leases do not have a readily determinable implicit rate, we used our weighted average cost of debt to determine the net present value of the lease payments at the adoption date. Our weighted average cost of debt is similar to the

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incremental borrowing rate we would have obtained if we had borrowed collateralized debt over the lease term to purchase the asset, and the rate was adjusted for longer term leases.

We have also adopted the practical expedient which allows us, by class of asset, to not separate lease and non-lease components when we are the lessor in the underlying transaction, the transactions would otherwise be accounted for under ASC 606–Revenue Recognition and the non-lease components are the predominant components of the agreements. We have applied this practical expedient to transactions with cruise passengers and concession service providers related to the use of our ships. We refer you to Note 3 – “Revenue and Expense from Contracts with Customers.”

Impacts on Financial Statements

As a result of the adoption of Topic 842 on January 1, 2019, we recorded operating lease right-of-use assets of $235.0 million and operating lease liabilities of $243.8 million. Another $8.8 million was reclassified to the operating right-of-use assets from other asset and liability accounts relating to the existing leases. The adoption of Topic 842 did not result in the identification of new finance leases. The adoption does not significantly change the timing, classification or amount of expense recognized in our consolidated financial statements nor does it change the timing, classification or amount of cash payments included within the consolidated statement of cash flows.

The components of lease expense and revenue were as follows (in thousands):

	Year Ended
	December 31, 2019
Operating lease expense	$	31,596
Variable lease expense		14,284
Short-term lease expense		50,832
Finance lease cost:
Amortization of right-of-use assets		1,765
Interest on lease liabilities		1,239
Operating lease revenue		446
Sublease income		1,615

Lease balances were as follows (in thousands):

	Balance Sheet location	December 31, 2019
Operating leases
Right-of-use assets	Other long-term assets	$	236,604
Current operating lease liabilities	Accrued expenses and other liabilities		39,126
Non-current operating lease liabilities	Other long-term liabilities		207,243
Finance leases
Right-of-use assets	Property and equipment, net		13,873
Current finance lease liabilities	Current portion of long-term debt		6,419
Non-current finance lease liabilities	Long-term debt		8,812

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Supplemental cash flow information related to leases was as follows (in thousands):

	Year Ended
	December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	75,539
Operating cash outflows from finance leases		1,051
Financing cash outflows from finance leases		2,826
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		24,834
Finance leases		705

As of December 31, 2019, maturities of lease liabilities, weighted-average remaining lease terms and discount rates for our leases were as follows (in thousands, except lease terms and discount rates):

	Operating			Finance
	leases			leases
2020	$	47,796		$	6,141
2021		32,144			4,912
2022		31,844			3,957
2023		31,740			730
2024		31,753			677
Thereafter		112,718			629
Total		287,995			17,046
Less: Present value discount		(41,626)			(1,815)
Present value of lease liabilities	$	246,369		$	15,231
Weighted average remaining lease term (years)		8.30			3.65
Weighted average discount rate		3.76	%		7.47	%

As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018, future minimum lease payments for operating leases having initial or remaining noncancelable lease terms in excess of one year were as follows under the previous lease accounting standard (ASC 840) (in thousands):

Year	December 31, 2018
2019	$	16,651
2020		16,105
2021		15,315
2022		14,391
2023		13,462
Thereafter		52,626
Total minimum annual rentals	$	128,550

Leases That Have Not Yet Commenced

We have multiple agreements that have been executed where the lease term has not commenced as of December 31, 2019. These are primarily related to our rights to use certain port facilities currently under construction. Although we may have provided design input, construction management services, or advances related to these assets, we have determined that we do not control these assets during the period of construction. These port facilities are expected to open for use during 2020 and include undiscounted minimum annual guarantees of approximately $1.1 billion of passenger fees.

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6. Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) was as follows (in thousands):

	Year Ended December 31, 2019
						Change
	Accumulated		Change			Related to
	Other		Related to			Shipboard
	Comprehensive		Cash Flow			Retirement
	Income (Loss)		Hedges			Plan
Accumulated other comprehensive income (loss) at beginning of period	$	(161,647)	$	(157,449)		$	(4,198)
Current period other comprehensive loss before reclassifications		(125,323)		(123,015)			(2,308)
Amounts reclassified into earnings		(8,520)		(8,898)	(1)		378	(2)
Accumulated other comprehensive income (loss) at end of period	$	(295,490)	$	(289,362)	(3)	$	(6,128)

	Year Ended December 31, 2018
						Change
	Accumulated		Change			Related to
	Other		Related to			Shipboard
	Comprehensive		Cash Flow			Retirement
	Income (Loss)		Hedges			Plan
Accumulated other comprehensive income (loss) at beginning of period	$	26,966	$	33,861		$	(6,895)
Current period other comprehensive income (loss) before reclassifications		(158,943)		(161,214)			2,271
Amounts reclassified into earnings		(29,670)		(30,096)	(1)		426	(2)
Accumulated other comprehensive income (loss) at end of period	$	(161,647)	$	(157,449)		$	(4,198)

	Year Ended December 31, 2017
						Change
	Accumulated		Change			Related to
	Other		Related to			Shipboard
	Comprehensive		Cash Flow			Retirement
	Income (Loss)		Hedges			Plan
Accumulated other comprehensive income (loss) at beginning of period	$	(314,473)	$	(307,618)		$	(6,855)
Current period other comprehensive income (loss) before reclassifications		304,226		304,684			(458)
Amounts reclassified into earnings		37,213		36,795	(1)		418	(4)
Accumulated other comprehensive income (loss) at end of period	$	26,966	$	33,861		$	(6,895)

(1) We refer you to Note 10— “Fair Value Measurements and Derivatives” in these notes to consolidated financial statements for the affected line items in the consolidated statements of operations.

(2) Amortization of prior-service cost and actuarial loss reclassified to other income (expense), net.

(3) Includes $16.5 million of loss expected to be reclassified into earnings in the next 12 months.

(4) Amortization of prior-service cost and actuarial loss reclassified to payroll and related expense.

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7. Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

	December 31,
	2019		2018
Ships	$	14,154,578	$	13,032,555
Ships improvements		1,865,272		1,407,989
Ships under construction		387,749		491,632
Land and land improvements		38,375		34,936
Other		672,975		558,052
		17,118,949		15,525,164
Less: accumulated depreciation		(3,983,612)		(3,405,911)
Property and equipment, net	$	13,135,337	$	12,119,253

The increase in ships was primarily due to the addition of Norwegian Encore. The Company capitalized approximately $458.9 million of costs associated with ship improvements. Depreciation expense for the years ended December 31, 2019, 2018 and 2017 was $627.7 million, $534.9 million and $478.7 million, respectively. Repairs and maintenance expenses including Dry-dock expenses were $199.7 million, $199.5 million and $157.2 million for the years ended December 31, 2019, 2018 and 2017, respectively, and were recorded within other cruise operating expense.

Ships under construction include progress payments to the shipyard, planning and design fees and other associated costs. Capitalized interest costs which were primarily associated with the construction or revitalization of ships amounted to $32.9 million, $30.4 million and $29.0 million for the years ended December 31, 2019, 2018 and 2017, respectively.

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8. Long-Term Debt

Long-term debt consisted of the following:

	Interest Rate					Balance
	December 31,				Maturities	December 31,
	2019		2018		Through	2019		2018
						(in thousands)
$875.0 million senior secured revolving credit facility	—		3.96	%	2024	$	—	$	130,000
$75.0 million revolving credit line	2.75	%	—		2020		75,000		—
Term Loan A	3.06	%	4.01	%	2024		1,565,512		1,256,167
$375.0 million Term Loan B (1)	—		4.26	%	2021		—		368,982
$700.0 million 4.750% senior unsecured notes	—		4.75	%	2021		—		561,021
$565.0 million 3.625% senior unsecured notes	3.63	%	—		2024		558,781		—
€662.9 million Norwegian Epic term loan (2)	—		4.58	%	2022		—		259,394
$260 million Norwegian Jewel term loan	2.54	%	—		2022		221,860		—
$230 million Pride of America term loan	2.81	%	—		2021		229,621		—
€529.8 million Breakaway one loan (2)	2.84	%	4.09	%	2025		305,969		360,680
€529.8 million Breakaway two loan (2)	4.10	%	4.50	%	2026		370,531		426,503
€590.5 million Breakaway three loan (2)	2.98	%	2.98	%	2027		478,665		537,223
€729.9 million Breakaway four loan (2)	2.98	%	2.98	%	2029		630,088		694,536
€710.8 million Seahawk 1 term loan (2)	3.92	%	3.92	%	2030		692,150		756,061
€748.7 million Seahawk 2 term loan (2)	3.92	%	3.92	%	2031		856,188		187,612
Leonardo newbuild one loan	2.68	%	2.68	%	2034		48,009		48,009
Leonardo newbuild two loan	2.77	%	2.77	%	2035		48,009		48,009
Leonardo newbuild three loan	1.22	%	1.22	%	2036		42,700		43,667
Leonardo newbuild four loan	1.31	%	1.31	%	2037		42,700		43,667
Sirena loan	—		2.75	%	2019		—		13,856
Explorer newbuild loan	3.43	%	3.43	%	2028		242,449		268,970
Marina newbuild loan (3)	2.75	%	3.07	%	2023		156,319		201,007
Riviera newbuild loan (4)	2.48	%	3.32	%	2024		202,233		247,203
Finance lease and license obligations	Various		Various		2028		34,909		39,524
Total debt							6,801,693		6,492,091
Less: current portion of long-term debt							(746,358)		(681,218)
Total long-term debt						$	6,055,335	$	5,810,873

(1) Includes original issue discount of $0.7 million as of December 31, 2018.

(2) Currently U.S. dollar-denominated.

(3) Includes premium of $0.1 million as of December 31, 2019 and 2018.

(4) Includes premium of $0.1 million and $0.2 million as of December 31, 2019 and 2018, respectively.

On December 16, 2019, NCLC issued $565.0 million aggregate principle amount of 3.625% senior unsecured notes due December 2024 (the “Notes”) in a private offering (the “Offering”) at par. NCLC used the net proceeds from the Offering, after deducting the initial purchasers’ discount and estimated fees and expenses, together with cash on hand, to redeem $565.0 million principal amount of outstanding 4.75% Senior Notes due 2021 at a price equal to 100% of the principal amount being redeemed and paid the premium of $6.7 million. The redemption also resulted in a write-off of $2.7 million of deferred fees.

NCLC will pay interest on the Notes at 3.625% per annum, semiannually on June 15 and December 15 of each year, commencing on June 15, 2020, to holders of record at the close of business on the immediately preceding June 1 and December 1, respectively. NCLC may redeem the Notes, in whole or part, at any time prior to December 15, 2021, at a price equal to 100% of the principal amount of the Notes redeemed plus accrued and unpaid interest to, but not including, the redemption date and a “make-whole premium.” NCLC may redeem the Notes, in whole or in part, on or

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after December 15, 2021, at the redemption prices set forth in the indenture governing the Notes. At any time (which may be more than once) on or prior to December 15, 2021, NCLC may choose to redeem up to 40% of the aggregate principal amount of the Notes at a redemption price equal to 103.625% of the face amount thereof with an amount equal to the net proceeds of one or more equity offerings, so long as at least 60% of the aggregate principal amount of the Notes issued remains outstanding following such redemption. The indenture governing the Notes contains covenants that limit NCLC’s ability to, among other things: (i) create liens on certain assets to secure debt; (ii) enter into sale leaseback transactions; and (iii) consolidate, merge, sell or otherwise dispose of all or substantially all of its assets. The indenture governing the Notes also provides for events of default, which, if any of them occurs, would permit or require the principal, premium (if any), interest and other monetary obligations on all of the then-outstanding Notes to become due and payable immediately.

On October 30, 2019, we took delivery of Norwegian Encore. We had export financing in place for 80% of the contract price. The associated $882.9 million term loan bears interest at a fixed rate of 3.92% with a maturity date of October 30, 2031. Principal and interest payments are payable semiannually.

In October 2019, we entered into a $75 million revolving credit line agreement that matures in October 2020 and bears interest at LIBOR plus a margin of 0.95%.

NCLC entered into a $260 million credit agreement, dated as of May 15, 2019, with Bank of America, N.A., as administrative agent and collateral agent, and certain other lenders. The proceeds of this term loan were used to prepay the then outstanding principal and accrued interest of the Norwegian Epic term loan. The $260 million term loan is secured by Norwegian Jewel Limited, bears interest at LIBOR plus a margin of 0.80%, and matures on May 15, 2022. The transaction resulted in a loss on extinguishment of debt of $1.1 million.

NCLC entered into a $230 million credit agreement, dated as of January 10, 2019, with Nordea Bank ABP, New York Branch, as administrative agent and collateral agent, and certain other lenders. The proceeds of this term loan will be used for general corporate purposes, including to finance the pre-delivery installments due to the builder under the Company’s shipbuilding contracts. The $230 million term loan is secured by Pride of America Ship Holding, LLC and bears interest at LIBOR plus a margin of 1.00%. The term loan matures on January 10, 2021; however, NCLC may elect to extend the maturity date to January 10, 2022 provided certain conditions are met. Should NCLC elect to extend the maturity date, the interest rate will be LIBOR plus a margin of 1.10% for the third year.

NCLC entered into a Fourth Amended and Restated Credit Agreement, dated as of January 2, 2019, with a subsidiary of NCLC, as co-borrower and JPMorgan Chase Bank, N.A., as administrative agent, and certain other lenders. This revised facility, among other things, (a) reduced the pricing of our existing $875 million Revolving Loan Facility, (b) reduced the pricing and increased the approximately $1.3 billion principal amount outstanding under the term loan A facility to $1.6 billion, and (c) extended the maturity dates for our Revolving Loan Facility and our term loan A facility to 2024, subject to certain conditions. We used the proceeds from the increase in our term loan A facility to prepay all of the then outstanding amounts under our term loan B facility. The transaction resulted in a loss on extinguishment of debt of $2.9 million.

The applicable margin under the new term loan A facility and new Revolving Loan Facility is determined by reference to a total leverage ratio, with an applicable margin of between 1.75% and 1.00% with respect to Eurocurrency loans and between 0.75% and 0.00% with respect to base rate loans. The margin as of December 31, 2019 for borrowings under the new term loan A facility and new Revolving Loan Facility was 1.25% with respect to Eurocurrency borrowings. In addition to paying interest on outstanding principal under the borrowings, we are obligated to pay a quarterly commitment fee at a rate determined by reference to a total net leverage ratio, with a maximum commitment fee of 0.30%.

Interest expense, net for the year ended December 31, 2019 was $272.9 million which included $27.5 million of amortization of deferred financing fees and a $16.7 million loss on extinguishment and modification of debt. Interest expense, net for the year ended December 31, 2018 was $270.4 million which included $31.4 million of amortization of deferred financing fees and a $6.3 million loss on extinguishment of debt. Interest expense, net for the year ended

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December 31, 2017 was $267.8 million which included $32.5 million of amortization of deferred financing fees and a $23.9 million loss on extinguishment and modification of debt.

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

The following are scheduled principal repayments on long-term debt including finance lease obligations as of December 31, 2019 for each of the next five years (in thousands):

Year	Amount
2020	$	746,358
2021		899,206
2022		667,456
2023		574,492
2024		2,260,295
Thereafter		1,778,870
Total	$	6,926,677

We had an accrued interest liability of $33.3 million and $37.2 million as of December 31, 2019 and 2018, respectively.

9. Related Party Disclosures

Transactions with Genting HK and Apollo

In December 2018, as part of a public equity offering of NCLH’s ordinary shares owned by Apollo and Genting HK, NCLH repurchased 1,683,168 of its ordinary shares sold in the offering for approximately $85.0 million pursuant to its Repurchase Program.

In March 2018, as part of a public equity offering of NCLH’s ordinary shares owned by Apollo and Genting HK, NCLH repurchased 4,722,312 of its ordinary shares sold in the offering for approximately $263.5 million pursuant to its then existing share repurchase program.

10. Fair Value Measurements and Derivatives

Fair value is defined as the price at which an orderly transaction to sell an asset or to transfer a liability would take place between market participants at the measurement date under current market conditions (that is, an exit price at the measurement date from the perspective of a market participant that holds the asset or owes the liability).

Fair Value Hierarchy

The following hierarchy for inputs used in measuring fair value should maximize the use of observable inputs and minimize the use of unobservable inputs by requiring that the most observable inputs be used when available:

Level 1 — Quoted prices in active markets for identical assets or liabilities that are accessible at the measurement dates.

Level 2 — Significant other observable inputs that are used by market participants in pricing the asset or liability based on market data obtained from independent sources.

Level 3 — Significant unobservable inputs we believe market participants would use in pricing the asset or liability based on the best information available.

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Derivatives

We are exposed to market risk attributable to changes in interest rates, foreign currency exchange rates and fuel prices. We attempt to minimize these risks through a combination of our normal operating and financing activities and through the use of derivatives. We assess whether derivatives used in hedging transactions are “highly effective” in offsetting changes in the cash flow of our hedged forecasted transactions. We use regression analysis for this hedge relationship and high effectiveness is achieved when a statistically valid relationship reflects a high degree of offset and correlation between the fair values of the derivative and the hedged forecasted transaction. Cash flows from the derivatives are classified in the same category as the cash flows from the underlying hedged transaction. If it is determined that the hedged forecasted transaction is no longer probable of occurring, then the amount recognized in accumulated other comprehensive income (loss) is released to earnings. There are no amounts excluded from the assessment of hedge effectiveness and there are no credit-risk-related contingent features in our derivative agreements. We monitor concentrations of credit risk associated with financial and other institutions with which we conduct significant business. Credit risk, including but not limited to counterparty non-performance under derivatives, is not considered significant, as we primarily conduct business with large, well-established financial institutions with which we have established relationships, and which have credit risks acceptable to us, or the credit risk is spread out among many creditors. We do not anticipate non-performance by any of our significant counterparties.

As of December 31, 2019, we had fuel swaps, which are used to mitigate the financial impact of volatility of fuel prices pertaining to approximately 1.1 million metric tons of our projected fuel purchases, maturing through December 31, 2022.

As of December 31, 2019, we had foreign currency forward contracts, matured foreign currency options and matured foreign currency collars which are used to mitigate the financial impact of volatility in foreign currency exchange rates related to our ship construction contracts denominated in euros. The notional amount of our foreign currency forward contracts was €1.8 billion, or $2.0 billion based on the euro/U.S. dollar exchange rate as of December 31, 2019.

As of December 31, 2019, we had interest rate swaps and collars, which are used to hedge our exposure to interest rate movements and manage our interest expense. The notional amount of our outstanding debt associated with the interest rate swaps and collars was $1.7 billion as of December 31, 2019.

The derivatives measured at fair value and the respective location in the consolidated balance sheets includes the following (in thousands):

		Assets				Liabilities
		December 31,		December 31,		December 31,		December 31,
	Balance Sheet Location	2019		2018		2019		2018
Derivative Contracts Designated as Hedging Instruments
Fuel contracts
	Prepaid expenses and other assets	$	—	$	2,583	$	—	$	1
	Other long-term assets		277		197		—		29
	Accrued expenses and other liabilities		2,300		1,173		18,257		19,547
	Other long-term liabilities		683		933		17,763		51,184
Foreign currency contracts
	Prepaid expenses and other assets		—		5,285		—		1,497
	Other long-term assets		—		3,514		—		—
	Accrued expenses and other liabilities		—		112		33,475		5,145
	Other long-term liabilities		169		2,874		118,500		40,476
Interest rate contracts
	Prepaid expenses and other assets		—		519		—		—
	Other long-term assets		—		27		—		—
	Accrued expenses and other liabilities		—		—		2,178		—
	Other long-term liabilities		—		—		1,861		—
Total derivatives designated as hedging instruments		$	3,429	$	17,217	$	192,034	$	117,879

The fair values of swap and forward contracts are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. The Company determines the value of options

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and collars utilizing an option pricing model based on inputs that are either readily available in public markets or can be derived from information available in publicly quoted markets. The option pricing model used by the Company is an industry standard model for valuing options and is used by the broker/dealer community. The inputs to this option pricing model are the option strike price, underlying price, risk-free rate of interest, time to expiration, and volatility. The fair value of option contracts considers both the intrinsic value and any remaining time value associated with those derivatives that have not yet settled. The Company also considers counterparty credit risk and its own credit risk in its determination of all estimated fair values.

Our derivatives and financial instruments were categorized as Level 2 in the fair value hierarchy, and we had no derivatives or financial instruments categorized as Level 1 or Level 3. Our derivative contracts include rights of offset with our counterparties. We have elected to net certain assets and liabilities within counterparties when the rights of offset exist. We are not required to post cash collateral related to our derivative instruments.

The gross and net amounts recognized within assets and liabilities include the following (in thousands):

			Gross				Gross
	Gross		Amounts		Total Net		Amounts
December 31, 2019	Amounts		Offset		Amounts		Not Offset		Net Amounts
Assets	$	277	$	—	$	277	$	—	$	277
Liabilities		192,034		(3,152)		188,882		(149,863)		39,019

			Gross				Gross
	Gross		Amounts		Total Net		Amounts
December 31, 2018	Amounts		Offset		Amounts		Not Offset		Net Amounts
Assets	$	12,125	$	(1,527)	$	10,598	$	(6,872)	$	3,726
Liabilities		116,352		(5,092)		111,260		(35,718)		75,542

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	Amount of Gain (Loss) Reclassified
	Amount of Gain (Loss)						Other Comprehensive	from Accumulated Other
	Recognized in Other						Income (Loss) into	Comprehensive
Derivatives	Comprehensive Income						Income	Income (Loss) into Income
	Year Ended December 31,							Year Ended December 31,
	2019		2018		2017			2019		2018		2017
Fuel contracts	$	46,154	$	(52,949)	$	50,263	Fuel	$	14,093	$	34,410	$	(29,721)
Foreign currency contracts		(163,197)		(108,911)		254,070	Depreciation and amortization		(3,062)		(3,463)		(4,077)
Interest rate contracts		(5,972)		646		351	Interest expense, net		(2,133)		(851)		(2,997)
Total gain (loss) recognized in other comprehensive income	$	(123,015)	$	(161,214)	$	304,684		$	8,898	$	30,096	$	(36,795)

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The effects of cash flow hedge accounting on the consolidated statements of operations include the following (in thousands):

	Year Ended December 31, 2019						Year Ended December 31, 2018
			Depreciation						Depreciation
			and		Interest				and		Interest
	Fuel		Amortization		Expense, net		Fuel		Amortization		Expense, net
Total amounts of income and expense line items presented in the consolidated statements of operations in which the effects of cash flow hedges are recorded	$	409,602	$	646,188	$	272,867	$	392,685	$	561,060	$	270,404
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income
Fuel contracts		14,093		—		—		34,410		—		—
Foreign currency contracts		—		(3,062)		—		—		(3,463)		—
Interest rate contracts		—		—		(2,133)		—		—		(851)

The effects of cash flow hedge accounting on the consolidated statements of operations include the following (in thousands):

	Year Ended December 31, 2017
			Depreciation
			and		Interest
	Fuel		Amortization		Expense, net
Total amounts of income and expense line items presented in the consolidated statements of operations in which the effects of cash flow hedges are recorded	$	361,032	$	509,957	$	267,804
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income
Fuel contracts		(29,721)		—		—
Foreign currency contracts		—		(4,077)		—
Interest rate contracts		—		—		(2,997)

Other

The carrying amounts reported in the consolidated balance sheets of all other financial assets and liabilities approximate fair value.

Long-Term Debt

As of December 31, 2019 and 2018, the fair value of our long-term debt, including the current portion, was $6,957.8 million and $6,601.9 million, respectively, which was $31.3 million higher and $8.4 million lower, respectively, than the carrying values. The difference between the fair value and carrying value of our long-term debt is due to our fixed and variable rate debt obligations carrying interest rates that are above or below market rates at the measurement dates. Market risk associated with our long-term variable rate debt is the potential increase in interest expense from an increase in interest rates. The fair value of our long-term debt was calculated based on estimated rates for the same or similar instruments with similar terms and remaining maturities, which represent Level 2 inputs in the fair value hierarchy.

Non-Recurring Measurements of Non-Financial Assets

Goodwill and other indefinite-lived assets, principally tradenames, are reviewed for impairment on an annual basis or earlier if there is an event or change in circumstances that would indicate that the carrying value of these assets may not be fully recoverable.

We believe our estimates and judgments with respect to our long-lived assets, principally ships, and goodwill and other indefinite-lived intangible assets are reasonable. Nonetheless, if there was a material change in assumptions used in the determination of such fair values or if there is a material change in the conditions or circumstances that influence such assets, we could be required to record an impairment charge. We estimate fair value based on the best information

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available utilizing estimates, judgments and projections as necessary. As of December 31, 2019, our annual review supports the carrying value of these assets.

11. Employee Benefits and Share-Based Compensation

Amended and Restated 2013 Performance Incentive Plan

In January 2013, NCLH adopted the 2013 Performance Incentive Plan, which provided for the issuance of up to 15,035,106 of NCLH’s ordinary shares pursuant to awards granted under the plan, with no more than 5,000,000 shares being granted to one individual in any calendar year. In May 2016, the plan was amended and restated (“Restated 2013 Plan”) pursuant to approval from the Board of Directors and NCLH’s shareholders. Among other things, under the Restated 2013 Plan, the number of NCLH’s ordinary shares that may be delivered pursuant to all awards granted under the plan was increased by an additional 12,430,000 shares to a new maximum aggregate limit of 27,465,106 shares. Additionally, the expiration date of the Restated 2013 Plan was extended to March 30, 2026. Share options under the plan are granted with an exercise price equal to the closing market price of NCLH shares at the date of grant. The vesting period for time-based options is typically set at three, four or five years with a contractual life ranging from seven to 10 years. The vesting period for time-based and performance-based restricted share units is generally three years. Forfeited awards will be available for subsequent awards under the Restated 2013 Plan.

Share Option Awards

There were no time-based share option awards granted for the years ended December 31, 2019, 2018 and 2017 or performance-based share option awards granted for the year ended December 31, 2019. The performance-based options awarded to our President and Chief Executive Officer in August 2015 were subject to performance conditions such that the number of awards that ultimately vested depended on the adjusted earnings per share (“Adjusted EPS”) and adjusted return on invested capital (“Adjusted ROIC”) achieved by the Company during the performance period compared to targets established at the award date. Although the terms of the performance-based awards provide the compensation committee with the discretion to make certain adjustments to the performance calculation, it was determined that a mutual understanding of the key terms and conditions of the awards had been ascertained. In 2018, the grant date was therefore established for performance-based awards granted in prior years. The fair value of each performance-based option award is estimated on the date of grant using the Black-Scholes option-pricing model. The estimated fair value of the share options is amortized over the requisite service period using the straight-line method. The assumptions used within the option-pricing model for the performance-based awards are as follows:

	2018	2017
Dividend yield	—%	—%
Expected share price volatility	31.50% - 32.20%	25.97%
Risk-free interest rate	2.48% - 2.58%	1.81%
Expected term	3.72 - 4.22 years	4.20 years

Expected volatility was determined based on the historical share prices in our industry. The risk-free rate was based on U.S. Treasury zero coupon issues with a remaining term equal to the expected option term at grant date. The expected term was calculated under the simplified method.

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The following table sets forth a summary of option activity under NCLH’s Restated 2013 Plan for the period presented:

										Weighted-
	Number of Share Option Awards			Weighted-Average Exercise Price						Average	Aggregate
	Time-	Performance-	Market-	Time-		Performance-		Market-		Contractual	Intrinsic
	Based	Based	Based	Based		Based		Based		Term	Value
	Awards	Awards	Awards	Awards		Awards		Awards		(years)	(in thousands)
Outstanding as of January 1, 2019	5,686,793	410,499	208,333	$	50.65	$	45.67	$	59.43	6.22	$	13,946
Exercised	(636,073)	(138,759)	—		40.30		19.00		—
Forfeited and cancelled	(132,166)	(156,251)	—		56.13		59.43		—
Outstanding as of December 31, 2019	4,918,554	115,489	208,333	$	51.84	$	59.11	$	59.43	5.42	$	33,413
Vested and expected to vest as of December 31, 2019	4,918,554	115,489	—	$	51.84	$	59.11	$	—	5.41	$	33,413
Exercisable as of December 31, 2019	4,917,721	115,489	—	$	51.84	$	59.11	$	—	5.41	$	33,411

The weighted-average grant-date fair value of performance-based options granted (or where a grant date had not been previously established, the fair value recognized) during the years ended December 31, 2018 and 2017 was $15.20 and $8.55, respectively. The total intrinsic value of share options exercised during 2019, 2018 and 2017 was $13.3 million, $16.7 million and $18.9 million, respectively, and total cash received by the Company from exercises was $28.3 million, $25.8 million and $27.4 million, respectively. As of December 31, 2019, there was no unrecognized compensation cost, related to options granted under our share-based incentive plans.

Restricted Ordinary Share Awards

The following is a summary of NCLH’s restricted ordinary share activity for the period presented:

	Number of
	Time-	Weighted-
	Based	Average Grant
	Awards	Date Fair Value
Non-vested as of January 1, 2019	429	$	58.41
Vested	(429)		58.41
Non-vested as of December 31, 2019	—	$	—

Restricted Share Unit (“RSU”) Awards

On March 1, 2019, NCLH granted to certain employees 1.9 million time-based RSU awards which vest equally over three years. Also on March 1, 2019, NCLH granted to certain members of our management team 0.5 million performance-based RSU awards, which vest upon the achievement of certain pre-established performance targets and which amount assumes the maximum level of achievement.

The fair value of the time-based and performance-based RSUs is equal to the closing market price of NCLH shares at the date of grant. The performance-based RSUs awarded to certain members of our management team are subject to performance conditions such that the number of shares that ultimately vest depends on the Adjusted EPS and Adjusted ROIC achieved by the Company during the performance period compared to targets established at the award date. Although the terms of the performance-based RSU awards provide the compensation committee with the discretion to make certain adjustments to the performance calculation, it was determined that a mutual understanding of the key terms and conditions of the awards has been ascertained. In 2018, the grant date was therefore established for performance-based RSU awards granted in prior years. The Company remeasures the probability and the cumulative share-based compensation expense of the awards each reporting period until vesting or forfeiture occurs.

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The following table sets forth a summary of RSU activity for the period presented:

	Number of	Weighted-		Number of		Weighted-		Number of	Weighted-
	Time-Based	Average Grant		Performance-		Average Grant		Market-	Average Grant
	Awards	Date Fair Value		Based Awards		Date Fair Value		Based Awards	Date Fair Value
Non-vested as of January 1, 2019	2,973,032	$	53.98	825,614		$	56.58	50,000	$	59.43
Granted	1,929,495		55.00	462,282	(1)		55.27	—		—
Vested	(1,430,291)		53.02	(121,000)			56.27	—		—
Forfeited or expired	(226,611)		55.04	(37,500)			56.27	—		—
Non-vested as of December 31, 2019	3,245,625	$	54.94	1,129,396		$	56.09	50,000	$	59.43
Non-vested and expected to vest as of December 31, 2019	3,245,625	$	54.94	483,976		$	56.61	—	$	—

(1) Number of performance-based restricted share units included assumes maximum achievement of performance targets.

As of December 31, 2019, there was total unrecognized compensation costs related to non-vested time-based, non-vested performance-based and market-based RSUs of $106.5 million, $9.2 million and $0, respectively. The costs are expected to be recognized over a weighted-average period of 1.8 years, 1.1 years and 0 years, respectively, for the time-based, performance-based and market-based RSUs. Taxes paid pursuant to net share settlements in 2019, 2018 and 2017 were $20.9 million, $13.9 million and $6.3 million, respectively.

Employee Stock Purchase Plan (“ESPP”)

In April 2014, NCLH’s shareholders approved the ESPP. The purpose of the ESPP is to provide eligible employees with an opportunity to purchase NCLH’s ordinary shares at a favorable price and upon favorable terms in consideration of the participating employees’ continued services. A maximum of 2,000,000 of NCLH’s ordinary shares may be purchased under the ESPP. To be eligible to participate in an offering period, on the grant date of that period, an individual must be customarily employed by the Company or a participating subsidiary for more than twenty hours per week and for more than five months per calendar year. Participation in the ESPP is also subject to certain limitations. The ESPP is considered to be compensatory based on: a) the 15% purchase price discount and b) the look-back purchase price feature. Since the plan is compensatory, compensation expense must be recorded in the consolidated statements of operations on a straight-line basis over the six-month withholding period. As of December 31, 2019 and 2018, we had a liability for payroll withholdings received of $2.1 million and $1.9 million, respectively.

The compensation expense recognized for share-based compensation for the periods presented include the following (in thousands):

	Year Ended December 31,
Classification of expense	2019		2018		2017
Payroll and related (1)	$	17,597	$	15,629	$	9,455
Marketing, general and administrative (2)		77,458		100,354		77,584
Total share-based compensation expense	$	95,055	$	115,983	$	87,039

(1) Amounts relate to equity granted to certain of our shipboard officers.

(2) Amounts relate to equity granted to certain of our corporate employees.

Employee Benefit Plans

We offer annual incentive bonuses pursuant to our Restated 2013 Plan for our executive officers and other key employees. Bonuses under the plan become earned and payable based on the Company’s performance during the applicable performance period and the individual’s continued employment. Company performance criteria include the attainment of certain financial targets and other strategic objectives.

Certain employees are employed pursuant to agreements that provide for severance payments. Severance is generally only payable upon an involuntary termination of the employment by us without cause or a termination by the employee

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for good reason. Severance generally includes a series of cash payments based on the employee’s base salary (and in some cases, bonus), and our payment of the employee’s continued medical benefits for the applicable severance period.

We maintain a 401(k) Plan for our shoreside employees, including our executive officers. Participants may contribute up to 100% of eligible compensation each pay period, subject to certain limitations. We make matching contributions equal to 100% of the first 3% and 50% of amounts greater than 3% to and including 10% of each participant’s contributions subject to certain limitations. In addition, we may make discretionary supplemental contributions to the 401(k) Plan, which shall be allocated pro rata to each eligible participant based on the compensation of the participant relative to the total compensation of all participants. Our matching contributions are vested according to a five-year schedule. The 401(k) Plan is subject to the provisions of ERISA and is intended to be qualified under section 401(a) of the U.S. Internal Revenue Code (the “Code”).

Our matching contributions are reduced by amounts forfeited by those employees who leave the 401(k) Plan prior to vesting fully in the matching contributions. Forfeited contributions of $0.2 million, $0.3 million and $0.3 million were utilized in the years ended December 31, 2019, 2018 and 2017, respectively.

We recorded total expenses related to the above 401(k) Plan of $9.1 million, $9.3 million and $7.3 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Effective January 2009, we implemented the Shipboard Retirement Plan which computes benefits based on years of service, subject to eligibility requirements. The Shipboard Retirement Plan is unfunded with no plan assets. The current portion of the projected benefit obligation of $0.9 million and $1.0 million was included in accrued expenses and other liabilities as of December 31, 2019 and 2018, respectively, and $27.8 million and $23.3 million was included in other long-term liabilities in our consolidated balance sheets as of December 31, 2019 and 2018, respectively.

The amounts related to the Shipboard Retirement Plan were as follows (in thousands):

	As of or for the Year Ended December 31,
	2019		2018		2017
Pension expense:
Service cost	$	2,135	$	2,167	$	1,987
Interest cost		1,001		857		887
Amortization of prior service cost		378		378		378
Amortization of actuarial loss		—		51		40
Total pension expense	$	3,514	$	3,453	$	3,292
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	24,318	$	24,587	$	22,605
Service cost		2,135		2,167		1,987
Interest cost		1,001		857		887
Actuarial gain (loss)		2,308		(2,271)		458
Direct benefit payments		(1,067)		(1,022)		(1,350)
Projected benefit obligation at end of year	$	28,695	$	24,318	$	24,587
Amounts recognized in the consolidated balance sheets:
Projected benefit obligation	$	28,695	$	24,318	$	24,587

	For the Year Ended December 31,
	2019		2018		2017
Amounts recognized in accumulated other comprehensive income (loss):
Prior service cost	$	(3,781)	$	(4,159)	$	(4,537)
Accumulated actuarial loss		(3,413)		(1,105)		(3,426)
Accumulated other comprehensive income (loss)	$	(7,194)	$	(5,264)	$	(7,963)

The discount rates used in the net periodic benefit cost calculation for the years ended December 31, 2019, 2018 and 2017 were 4.2%, 3.6% and 4.0%, respectively, and the actuarial loss is amortized over 18.91 years. The discount rate is

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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	Amount
2020	$	922
2021		949
2022		1,045
2023		1,208
2024		1,340
Next five years		10,585

12. Income Taxes

We are incorporated in Bermuda. Under current Bermuda law, we are not subject to tax on income and capital gains. We have received from the Minister of Finance under The Exempted Undertakings Tax Protection Act 1966, as amended, an assurance that, in the event that Bermuda enacts legislation imposing tax computed on profits, income, any capital asset, gain or appreciation, or any tax in the nature of estate duty or inheritance, then the imposition of any such tax shall not be applicable to us or to any of our operations or shares, debentures or other obligations, until March 31, 2035.

The components of net income before income taxes consist of the following (in thousands):

	Year Ended December 31,
	2019		2018		2017
Bermuda	$	—	$	—	$	—
Foreign - Other		911,365		969,310		770,614
Net income before income taxes	$	911,365	$	969,310	$	770,614

The components of the provision for income taxes consisted of the following benefit (expense) (in thousands):

	Year Ended December 31,
	2019		2018		2017
Current:
Bermuda	$	—	$	—	$	—
United States		(975)		(7,409)		1,828
Foreign - Other		(6,294)		(5,371)		(4,617)
Total current:		(7,269)		(12,780)		(2,789)
Deferred:
Bermuda		—		—		—
United States		25,785		(1,912)		(8,439)
Foreign - Other		347		225		486
Total deferred:		26,132		(1,687)		(7,953)
Income tax benefit (expense)	$	18,863	$	(14,467)	$	(10,742)

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Our reconciliation of income tax expense computed by applying our Bermuda statutory rate and reported income tax benefit (expense) was as follows (in thousands):

	Year Ended December 31,
	2019		2018		2017
Tax at Bermuda statutory rate	$	—	$	—	$	—
Foreign income taxes at different rates		(18,630)		(17,540)		(28,188)
Tax contingencies		(206)		(5)		11,184
Return to provision adjustments		2,014		2,961		(1,397)
Benefit (expense) from change in tax rate		(14)		117		7,659
Valuation allowance		35,699		—		—
Income tax benefit (expense)	$	18,863	$	(14,467)	$	(10,742)

Deferred tax assets and liabilities were as follows (in thousands):

	As of December 31,
	2019		2018
Deferred tax assets:
Loss carryforwards	$	54,342	$	63,201
Other		3,573		2,535
Valuation allowance		(5,847)		(41,924)
Total net deferred assets		52,068		23,812
Deferred tax liabilities:
Property and equipment		(39,571)		(37,448)
Total deferred tax liabilities		(39,571)		(37,448)
Net deferred tax asset (liability)	$	12,497	$	(13,636)

We have U.S. net operating loss carryforwards of $238.8 million and $278.3 million for the years ended December 31, 2019 and 2018, respectively, which begin to expire in 2031, a portion of which relate to Prestige discussed further below. We have state net operating loss carryforwards of $3.4 million and $4.8 million for the years ended December 31, 2019 and 2018, respectively, which expire between 2025 through 2035.

Included above are deferred tax assets associated with our operations in Norway for which we have provided a full valuation allowance. We have Norway net operating loss carryforwards of $13.3 million and $13.9 million for the years ended December 31, 2019 and 2018, respectively, which can be carried forward indefinitely.

Included above are deferred tax assets associated with our branch operations in the U.K. for which we have provided a full valuation allowance. We have U.K. net operating loss carryforwards of $5.5 million and $7.5 million for the years ended December 31, 2019 and 2018, respectively, which can be carried forward indefinitely.

Included above are deferred tax assets associated with Prestige. We have U.S. net operating loss carryforwards of $145.0 million and $177.5 million for the years ended December 31, 2019 and 2018, respectively, which begin to expire in 2031. Utilization of the Prestige net operating loss carryforwards may be subject to a substantial annual limitation due to ownership change limitations that have occurred previously and/or that could occur in the future, as provided by Section 382 of the Internal Revenue Code of 1986 (“Section 382”). Ownership changes may limit the amount of net operating loss carryforwards that can be utilized to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain shareholders or public groups in the stock of a corporation by more than 50 percentage points over a three-year period. If we have experienced an ownership change, utilization of Prestige’s net operating loss carryforwards would be subject to an annual limitation under Section 382. Any limitation may result in expiration of a portion of the net operating loss carryforwards before utilization. Subsequent ownership changes could further impact the limitation in future years. We implemented certain tax restructuring strategies that created our ability to utilize the net operating loss carryforwards of Prestige, for which we had previously provided a full valuation allowance. In March 2019, we completed a Section 382 study that determined the amount of the Prestige net operations loss carryforwards that can be utilized against future

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taxable income resulting in a tax benefit of $35.7 million in connection with the reversal of substantially all of the Prestige valuation allowance.

In December 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted. Among other provisions, the Act reduces the U.S. federal corporate tax rate from 35% to 21%. Also in December 2017, the SEC staff issued SAB No. 118, which addresses the recognition of provisional amounts when a company does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting for the effect of the changes in the Act. The measurement period ends when a company has obtained, prepared and analyzed the information necessary to finalize its accounting, but cannot extend beyond one year. The Company completed the accounting for the tax effects of enactment of the Act. There is no material change to the $7.4 million reduction of the value of net deferred tax liabilities (which represents future tax expenses) recorded in 2017 as a discrete tax benefit resulting from the federal corporate income tax rate reduction. Other aspects of the Act were either not applicable or did not have a material impact on the Company’s consolidated financial statements.

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits (in thousands):

	As of December 31,
	2019		2018
Unrecognized tax benefits, beginning of the year	$	532	$	532
Gross increases in tax positions from prior periods		200		—
Unrecognized tax benefits, end of year	$	732	$	532

If the $0.7 million of unrecognized tax benefits at December 31, 2019 were recognized, our effective tax rate would be minimally affected. We believe that there will not be a significant increase or decrease to the tax positions within 12 months of the reporting date. We recognize interest and penalties related to unrecognized tax benefits in income tax benefit (expense).

We file income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions and foreign jurisdictions. We are generally no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by authorities for years prior to 2016, except for years in which NOLs generated prior to 2016 are utilized.

Due to our international structure as well as the existence of international tax treaties that exempt taxation on certain activities, the repatriation of earnings from our subsidiaries would have no tax impact.

We derive our income from the international operation of ships. We are engaged in a trade or business in the U.S. and receive income from sources within the U.S. Under Section 883, certain foreign corporations are exempt from U. S. federal income or branch profits tax on U.S.-source income derived from or incidental to the international operation of ships. Applicable U.S. treasury regulations provide that a foreign corporation will qualify for the benefits of Section 883 if, in relevant part: (i) the foreign country in which the corporation is organized grants an equivalent exemption for income from the international operation of ships to corporations organized in the U.S., and (ii) the foreign corporation has one or more classes of stock that are “primarily and regularly traded on an established securities market” in the U.S. or another qualifying country. We believe that we qualify for the benefits of Section 883 because we are incorporated in qualifying countries and our ordinary shares are primarily and regularly traded on an established securities market in the U.S.

13. Commitments and Contingencies

Ship Construction Contracts

For the Norwegian Brand, Project Leonardo will introduce an additional six ships, each approximately 140,000 Gross Tons with approximately 3,300 Berths, with expected delivery dates from 2022 through 2027, subject to certain conditions. The effectiveness of the contracts to construct two of the ships, expected to be delivered in 2026 and 2027, is contingent upon certain Italian government approvals. For the Regent brand, we have an Explorer Class Ship, Seven Seas Splendor, with approximately 55,000 Gross Tons and 750 Berths, which was delivered in January 2020. We refer

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you to Note 18 – “Subsequent Events” for additional information. We have one additional order for an Explorer Class Ship to be delivered in 2023. For the Oceania Cruises brand, we have orders for two Allura Class Ships to be delivered in 2022 and 2025, one of which is contingent upon certain Italian government approvals. Each of the Allura Class Ships will be approximately 67,000 Gross Tons and 1,200 Berths.

The combined contract prices of the 10 ships on order for delivery, including Seven Seas Splendor, which was delivered in January 2020, was approximately €7.4 billion, or $8.3 billion based on the euro/U.S. dollar exchange rate as of December 31, 2019.

We have obtained export credit financing for the ships on order which is expected to fund approximately 80% of each contract price, subject to certain conditions. We do not anticipate any contractual breaches or cancellation to occur. However, if any such events were to occur, it could result in, among other things, the forfeiture of prior deposits or payments made by us and potential claims and impairment losses which may materially impact our business, financial condition and results of operations.

As of December 31, 2019, minimum annual payments for non-cancelable ship construction contracts with initial or remaining terms in excess of one year were as follows (in thousands):

Year	Amount
2020	$	556,784
2021		279,254
2022		1,595,262
2023		1,439,097
2024		888,790
Thereafter		829,303
Total minimum annual payments	$	5,588,490

Port Facility Commitments

As of December 31, 2019, future commitments to pay for usage of certain port facilities were as follows (in thousands):

Year	Amount
2020	$	79,418
2021		67,671
2022		68,049
2023		70,100
2024		75,112
Thereafter		1,726,575
Total port facility future commitments	$	2,086,925

Other Commitments

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

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.

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Litigation

Helms-Burton Act

On August 27, 2019, two lawsuits were filed against Norwegian Cruise Line Holdings Ltd. in the United States District Court for the Southern District of Florida under Title III of the Cuban Liberty and Solidarity (Libertad) Act of 1996, also known as the Helms-Burton Act. The complaint filed by Havana Docks Corporation alleges it holds an interest in the Havana Cruise Port Terminal and the complaint filed by Javier Garcia-Bengochea alleges that he holds an interest in the Port of Santiago, Cuba, both of which were expropriated by the Cuban Government. The complaints further allege that the Company “trafficked” in those properties by embarking and disembarking passengers at these facilities. The plaintiffs seek all available statutory remedies, including the value of the expropriated property, plus interest, treble damages, attorneys’ fees and costs. On January 7, 2020, the United States District Court for the Southern District of Florida dismissed the claim by Havana Docks Corporation. We believe that the plaintiff plans to appeal the order. Although we believe we have meritorious defenses to the claims and intend to vigorously defend these matters, as of December 31, 2019, we are unable to reasonably estimate any potential contingent loss from these matters due to a lack of legal precedence.

Other

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

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

14. Other Income (Expense), Net

Other income (expense), net was income of $6.2 million, income of $20.7 million, and expense of $10.4 million for the years ended December 31, 2019, 2018 and 2017, respectively. In 2019, the income was primarily due to gains from insurance proceeds and a litigation settlement partially offset by losses on foreign currency exchange. In 2018, the income was primarily due to foreign currency exchange gains. In 2017, the expense was primarily related to foreign currency exchange losses.

15. Concentration Risk

We contract with a single vendor to provide many of our hotel and restaurant services including both food and labor costs. We incurred expenses of $153.6 million, $153.7 million and $152.3 million for the years ended December 31, 2019, 2018 and 2017, respectively, which are recorded in payroll and related in our consolidated statements of operations.

16. Supplemental Cash Flow Information

For the year ended December 31, 2019, we had non-cash investing activities related to property and equipment of $8.2 million. For the year ended December 31, 2019, we paid income taxes of $13.4 million and interest and related fees, net of capitalized interest, of $291.2 million.

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For the year ended December 31, 2018, we had non-cash investing activities related to property and equipment of $39.7 million and net foreign currency adjustments of $5.5 million related to euro-denominated debt related to the financing of two of our Project Leonardo ships. For the year ended December 31, 2018, we paid income taxes of $10.0 million and interest and related fees, net of capitalized interest, of $350.4 million.

For the year ended December 31, 2017, we had non-cash investing activities in connection with property and equipment of $20.0 million and non-cash investing activities related to capital leases of $13.3 million. For the year ended December 31, 2017, we paid income taxes of $11.7 million and interest and related fees, net of capitalized interest, of $284.9 million.

17. Quarterly Selected Financial Data (Unaudited) (in thousands, except per share data)

	First Quarter				Second Quarter				Third Quarter				Fourth Quarter
	2019		2018		2019		2018		2019		2018		2019		2018
Total revenue	$	1,403,630	$	1,293,403	$	1,664,277	$	1,522,174	$	1,913,851	$	1,858,356	$	1,480,618	$	1,381,193
Operating income	$	158,296	$	167,053	$	308,681	$	292,152	$	511,724	$	550,276	$	199,376	$	209,580
Net income	$	118,157	$	103,155	$	240,190	$	226,676	$	450,584	$	470,378	$	121,297	$	154,634
Earnings per share:
Basic	$	0.54	$	0.45	$	1.11	$	1.02	$	2.10	$	2.12	$	0.57	$	0.70
Diluted	$	0.54	$	0.45	$	1.11	$	1.01	$	2.09	$	2.11	$	0.56	$	0.70

The seasonality of the North American cruise industry generally results in the greatest demand for cruises during the Northern Hemisphere’s summer months. This predictable seasonality in demand has resulted in fluctuations in our revenue and results of operations. The seasonality of our results is increased due to ships being taken out of service for regularly scheduled Dry-docks, which we typically scheduled during non-peak demand periods.

18. Subsequent Events

In January 2020, we took delivery of Seven Seas Splendor. We had export financing in place for 80% of the contract price. The associated $426.0 million term loan bears interest at a fixed rate of 3.01% with a maturity date of January 30, 2032. Principal and interest payments are payable semiannually.

In late January 2020, the COVID-19 coronavirus outbreak began impacting the Company’s financial performance and operations. The Company has begun to experience costs and lost revenue related to itinerary modifications, travel restrictions and advisories, the unavailability of ports and/or destinations, cancellations and redeployments. The COVID-19 coronavirus is also impacting consumer sentiment regarding cruise travel generally. Due to the unknown duration and extent of the outbreak, the full effect on our financial performance cannot be quantified at this time.

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EX-4.3

Exhibit 4.3

DESCRIPTION OF SHARE CAPITAL

Norwegian Cruise Line Holdings Ltd. (“NCLH” or the “Company”)  was incorporated on February 21, 2011 as a Bermuda exempted company organized under the Companies Act 1981 of Bermuda (the “Companies Act”). We are registered with the Registrar of Companies in Bermuda under registration number 45125. Our registered office is located at Walkers Corporate (Bermuda) Limited, Park Place, 3rd Floor, 55 Par-la-Ville Road, Hamilton HM 11, Bermuda. The rights of our shareholders are governed by Bermuda law, our memorandum of association and our amended and restated bye-laws, which we refer to as our “bye-laws.” The Companies Act differs in some material respects from laws generally applicable to U.S. corporations and their shareholders.

The following descriptions are qualified in their entirety by reference to our memorandum of association and bye-laws.  The following summary is a description of the material terms of our share capital. The following summary also highlights material differences between Bermuda and Delaware corporate laws.

Share Capital

Our authorized share capital is $500,000 divided into 490,000,000 ordinary shares of par value $0.001 per share and 10,000,000 preference shares of par value $0.001 per share.

Pursuant to our bye-laws, subject to the requirements of the New York Stock Exchange (“NYSE”) and to any resolution of the shareholders to the contrary, our Board of Directors is authorized to issue any of our authorized but unissued ordinary shares. There are no limitations on the right of non-Bermudians or non-residents of Bermuda to hold or vote our shares.

Ordinary Shares

All of our issued and outstanding ordinary shares are fully paid.

In the event of our liquidation, dissolution or winding up, the holders of ordinary shares are entitled to share equally and ratably in our assets, if any, remaining after the payment of all of our debts and liabilities and subject to any preferential rights to payments owing to preference shareholders.

If we issue any preference shares, the rights, preferences and privileges of holders of ordinary shares will be subject to, and may be adversely affected by, the rights of the holders of our preference shares. See “—Preference Shares” below.

Voting

Holders of ordinary shares have no pre-emptive, redemption, conversion or sinking fund rights. Holders of ordinary shares are entitled to one vote per share on all matters submitted to a vote of holders of ordinary shares. Unless a different majority is required by law or by our bye-laws, resolutions to be approved by holders of ordinary shares require approval by a simple majority of votes cast at a meeting at which a quorum is present. Our bye-laws provide that no bye-law shall be rescinded, altered or amended, and no new bye-law shall be made, unless it is in accordance with the Companies Act and until it shall have been approved by a resolution of our Board of Directors and by a resolution of our shareholders holding a majority of the then-outstanding shares of the Company (or, where required, of a separate class or classes of shareholders).

Our bye-laws provide that no alteration to our memorandum of association shall be made, unless it is in accordance with the Companies Act and until it shall have been approved by a resolution of our Board of Directors and by a resolution of our shareholders holding a majority of the then- outstanding shares of the Company (or, where required, of a separate class or classes of shareholders). Holders of ordinary shares will vote together as a single class on all matters presented to the shareholders for their vote or approval, including the election of directors.

Any individual who is a shareholder of the Company and who is present at a meeting may vote in person, as may any corporate shareholder that is represented by a duly authorized representative at a meeting of shareholders. Our bye-laws also permit attendance at general meetings by proxy, provided the instrument appointing the proxy is in the form specified in the bye-laws or such other form as our Board of Directors may determine.

The Companies Act also provides that shareholders may take action by written resolution. Subject to the following, anything (except for the removal of an auditor before the expiration of the term of his or her office or director before the expiration of the term of his or her office) which may be done by resolution of the Company in general meeting or by resolution of a meeting of any class of the shareholders may, without a meeting, be done by resolution in writing signed by, or in the case of a shareholder that is a corporation whether or not a company within the meaning of the Companies Act, on behalf of, such number of shareholders who, at the date that the notice of resolution is given, represent not less than the minimum number of votes as would be required if the resolution was voted on at a meeting of shareholders at which all shareholders entitled to attend and vote were present and voting.

Dividends

Under our bye-laws, each ordinary share is entitled to dividends if, as and when dividends are declared by our Board of Directors, subject to any preferential dividend right of the holders of any preference shares.  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. Our debt agreements also impose restrictions on the ability of our subsidiaries to pay distributions to us and our ability to pay dividends to our shareholders.

We are a holding company and have no direct operations. As a result, we will depend upon distributions from our subsidiaries to pay any dividends.

Additionally, we are subject to Bermuda legal constraints that may affect our ability to pay dividends on our ordinary shares and make other payments. Under the Companies Act, we may declare or pay a dividend only if we have reasonable grounds for believing that we are, or would after

the payment be, able to pay our liabilities as they become due and if the realizable value of our assets would thereby not be less than our liabilities.

Transfer Restrictions

Under Section 883 of the Internal Revenue Code of 1986, as amended (the “Code”) and the related regulations, a foreign corporation will be exempt from U.S. federal income taxation on its U.S.-source international shipping income if, among other requirements, 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 United States (and certain exceptions do not apply), to which we refer as the “Publicly Traded Test.” 

The regulations under Section 883 of the Code provide, in pertinent part, that a class of stock will not be considered to be “regularly traded” on an established securities market for any taxable year in which 50% or more of the outstanding shares of such class of stock are owned on more than half the days during the taxable year by persons who each own 5% or more of the outstanding shares of such class of stock, to which we refer as the “Five Percent Override Rule.” The “Five Percent Override Rule” will not apply if NCLH can substantiate that the number of NCLH’s ordinary shares owned for more than half of the number of days in the taxable year (1) directly or indirectly applying attribution rules, by its qualified shareholders, and (2) by its non-5% shareholders, is greater than 50% of its outstanding ordinary shares.

As of February 27, 2020, NCLH’s direct non-5% shareholders own more than 50% of its ordinary shares. Based on the foregoing, as of February 27, 2020, we believe that NCLH’s ordinary shares will be considered to be “regularly traded on an established securities market.”

Because we are relying on the substantial ownership by non-5% shareholders in order to satisfy the regularly traded test, there is the potential that if another shareholder becomes a 5% shareholder our qualification under the Publicly Traded Test could be jeopardized. If we were to fail to satisfy the Publicly Traded Test, we likely would become subject to U.S. income tax on income associated with our cruise operations in the United States.

Therefore, as a precautionary matter, we have provided protections in our bye-laws to reduce the risk of the Five Percent Override Rule applying. In this regard, our bye-laws provide that no one person or group of related persons, may own, or be deemed to own by virtue of the attribution provisions of the Code, more than 4.9% of our ordinary shares, whether measured by vote, value or number, unless such ownership is approved by our Board of Directors. In addition, any person or group of related persons that own 3% or more (or a lower percentage if required by the U.S. Treasury Regulations under the Code) of our ordinary shares will be required to meet certain notice requirements as provided for in our bye-laws. Our bye-laws generally restrict the transfer of any of our ordinary shares if such transfer would cause us to be subject to tax on our U.S. shipping income. In general, detailed attribution rules, that treat a shareholder as owning shares that are owned by another person, are applied in determining whether a person is a 5% shareholder. For purposes of the 4.9% limit, a “transfer” will include any sale, transfer, gift, assignment, devise or other disposition, whether voluntary or involuntary, whether of record, constructively or beneficially, and whether by operation of law or otherwise.

Our bye-laws provide that our Board of Directors may waive the 4.9% limit or transfer restrictions, in any specific instance. Our Board of Directors may also terminate the limit and transfer restrictions generally at any time for any reason. If a purported transfer or other event results in the ownership of ordinary shares by any shareholder in violation of the 4.9% limit, or causes us to be subject to U.S. income tax on shipping operations, such ordinary shares in excess of the 4.9% limit, or which would cause us to be subject to U.S. shipping income tax will automatically be designated as “excess shares” to the extent necessary to ensure that the purported transfer or other event does not result in ownership of ordinary shares in violation of the 4.9% limit or cause us to become subject to U.S. income tax on shipping operations, and any proposed transfer that would result in such an event would be void. Any purported transferee or other purported holder of excess shares will be required to give us written notice of a purported transfer or other event that would result in excess shares. The purported transferee or holders of such excess shares shall have no rights in such excess shares, other than a right to the payments described below.

Excess shares will not be treasury shares but rather will continue to be issued and outstanding ordinary shares. While outstanding, excess shares will be transferred to a trust. The trustee of such trust has been appointed by us and is independent of us and the purported holder of the excess shares. The beneficiary of such trust will be one or more charitable organizations that is a qualified shareholder selected by the trustee. The trustee is entitled to vote the excess shares on behalf of the beneficiary. If, after purported transfer or other event resulting in excess shares and prior to the discovery by us of such transfer or other event, dividends or distributions are paid with respect to such excess shares, such dividends or distributions will be immediately due and payable to the trustee for payment to the charitable beneficiary. All dividends received or other income declared by the trust will be paid to the charitable beneficiary. Upon our liquidation, dissolution or winding up, the purported transferee or other purported holder will receive a payment that reflects a price per share for such excess shares generally equal to the lesser of:

· the amount per share of any distribution made upon such liquidation, dissolution or winding up, and

· in the case of excess shares resulting from a purported transfer, the price per share paid in the transaction that created such excess shares, or, in the case of certain other events, the market price per share for the excess shares on the date of such event, or in the case of excess shares resulting from an event other than a purported transfer, the market price for the excess shares on the date of such event.

At the direction of our Board of Directors, the trustee will transfer the excess shares held in trust to a person or persons, including us, whose ownership of such excess shares will not violate the 4.9% limit or otherwise cause us to become subject to U.S. shipping income tax within 180 days after the later of the transfer or other event that resulted in such excess shares or we become aware of such transfer or event. If such a transfer is made, the interest of the charitable beneficiary will terminate, the designation of such shares as excess shares will cease and the purported holder of the excess shares will receive the payment described below. The purported transferee or holder of the excess shares will receive a payment that reflects a price per share for such excess shares equal to the lesser of:

· the price per share received by the trustee, and

2

· the price per share such purported transferee or holder paid in the purported transfer that resulted in the excess shares, or, if the purported transferee or holder did not give value for such excess shares, through a gift, devise or other event, a price per share equal to the market price on the date of the purported transfer or other event that resulted in the excess shares.

A purported transferee or holder of the excess shares will not be permitted to receive an amount that reflects any appreciation in the excess shares during the period that such excess shares were outstanding. Any amount received in excess of the amount permitted to be received by the purported transferee or holder of the excess shares must be turned over to the charitable beneficiary of the trust. If the foregoing restrictions are determined to be void or invalid by virtue of any legal decision, statute, rule or regulation, then the intended transferee or holder of any excess shares may be deemed, at our option, to have acted as an agent on our behalf in acquiring or holding such excess shares and to hold such excess shares on our behalf.

We have the right to purchase any excess shares held by the trust for a period of 90 days from the later of:

· the date the transfer or other event resulting in excess shares has occurred, and

· the date our Board of Directors determines in good faith that a transfer or other event resulting in excess shares has occurred.

The price per excess share to be paid by us will be equal to the lesser of:

· the price per share paid in the transaction that created such excess shares, or, in the case of certain other events, the market price per share for the excess shares on the date of such event, or

· the lowest market price for the excess shares at any time after their designation as excess shares and prior to the date we accept such offer.

These provisions in our bye-laws could have the effect of delaying, deferring or preventing a change in our control or other transaction in which our shareholders might receive a premium for their ordinary shares over the then-prevailing market price or which such holders might believe to be otherwise in their best interest. Our Board of Directors may determine, in its sole discretion, to terminate the 4.9% limit and the transfer restrictions of these provisions. While both the mandatory offer protection and 4.9% protection remain in place, no third party will be able to acquire control of the Company.

Listing

Our ordinary shares are listed on the NYSE under the symbol “NCLH.”

Preference Shares

Pursuant to our bye-laws, our Board of Directors by resolution may establish one or more series of preference shares having such number of shares, designations, dividend rates, relative voting rights, conversion or exchange rights, redemption rights, liquidation rights and other relative participation, optional or other special rights, qualifications, limitations or restrictions as may be fixed by our Board of Directors without any further shareholder approval. Such rights, preferences, powers and limitations as may be established could also have the effect of discouraging an attempt to obtain control of the Company. We currently have authorized 10,000,000 preference shares of par value $0.001 per share. No preference shares have been issued or outstanding as of February 27, 2020. We have no present plans to issue any preference shares.

Composition of Board of Directors; Election; Quorum

In accordance with our bye-laws, the number of directors comprising our Board of Directors will be as determined from time to time by resolution of our Board of Directors, provided, that there shall be at least seven but no more than eleven directors. Each director is to hold office until his or her successor is duly elected and qualified or until his or her earlier death, resignation or removal. At any meeting of our Board of Directors, our bye-laws will provide that a majority of the directors then in office will constitute a quorum for all purposes. Our Board of Directors is divided into three classes, each of whose members will serve for staggered three-year terms.

Transfer Agent and Registrar

The register of members is maintained at the registered office of the Company in Bermuda in accordance with Bermuda law, and a branch register is maintained in the United States by American Stock Transfer & Trust Company, LLC, who serves as branch registrar and transfer agent.

Certain Corporate Anti-Takeover Protections

Certain provisions in our bye-laws may be deemed to have an anti-takeover effect and may delay, deter or prevent a tender offer or takeover attempt that a shareholder might consider to be in its best interests, including attempts that might result in a premium being paid over the market price for the ordinary shares held by shareholders.

Preference Shares

Our Board of Directors has the authority to issue series of preference shares with such voting rights and other powers as our Board of Directors may determine, as described above.

Classified Board

3

Our Board of Directors is classified into three classes. Each Director will serve a three-year term and will stand for re-election once every three years.

Removal of Directors, Vacancies

Our shareholders will be able to remove directors with or without cause at an annual or special general meeting by the affirmative vote of a majority of votes cast (and in the event of an equality of votes the resolution shall fail). Vacancies on our Board of Directors may be filled only by a majority of our Board of Directors, except with respect to any vacancies filled by shareholders at a special general meeting at which a director is removed.

Advance Notice Requirements for Shareholder Proposals and Director Nominations

Our bye-laws provide that shareholders seeking to nominate candidates for election as directors or to bring business before an annual general meeting of shareholders must provide timely notice of their proposal in writing to the corporate secretary.

Generally, to be timely, a shareholder’s notice must be received at our principal executive offices not less than 90 days or more than 120 days prior to the first anniversary date of the previous year’s annual general meeting. Our bye-laws also specify requirements as to the form and content of a shareholder’s notice. These provisions may impede shareholders’ ability to bring matters before an annual general meeting of shareholders or make nominations for directors at an annual general meeting of shareholders.

Bermuda Law

We are an exempted company organized under the laws of Bermuda. The rights of our shareholders are governed by Bermuda law, our memorandum of association and our bye-laws. The laws of Bermuda differ in some material respects from laws generally applicable to U.S. corporations and their shareholders. The following is a summary of material provisions of Bermuda law and our organizational documents not discussed above.

Variation of Rights

If at any time we have more than one class of shares, the rights attaching to any class, unless otherwise provided for by the terms of issue of the relevant class, may be varied either: (i) with the consent in writing of the holders of at least two-thirds of the issued shares of that class; or (ii) with the sanction of a resolution passed by a majority of the votes cast at a general meeting of the relevant class of shareholders at which a quorum consisting of at least two persons holding or representing one-third of the issued shares of the relevant class is present. Our bye-laws specify that the creation or issue of shares ranking equally with existing shares will not, unless expressly provided by the terms of issue of existing shares, vary the rights attached to existing shares. In addition, the creation or issue of preference shares ranking prior to ordinary shares will not be deemed to vary the rights attached to ordinary shares or, subject to the terms of any other series of preference shares, to vary the rights attached to any other series of preference shares.

Rights in Liquidation

Under Bermuda law, in the event of a liquidation or winding-up of a company, after satisfaction in full of all claims and amounts due to creditors and subject to the preferential rights accorded to any series of preference shares and subject to any specific provisions of the Company’s bye-laws, the proceeds of the liquidation or winding-up are distributed pro rata among the holders of ordinary shares.

Meetings of Shareholders

Under Bermuda law, a company is required to convene at least one general meeting of shareholders each calendar year unless the shareholders specifically resolve to dispense with the holding of annual general meetings. Bermuda law provides that a special general meeting of shareholders may be called by the board of directors of a company and must be called upon the request of shareholders holding not less than 10% of the paid-up capital of the company carrying the right to vote at general meetings. Our bye-laws require that unless otherwise provided, shareholders be given not less than ten nor more than sixty days’ advance notice of a general meeting, but the accidental omission to give notice to any person does not invalidate the proceedings at a meeting. Our bye-laws provide that our Board of Directors may convene an annual general meeting or a special general meeting. This notice requirement is subject to the ability to hold such meetings on shorter notice if such notice is agreed: (i) in the case of an annual general meeting by all of the shareholders entitled to attend and vote at such meeting; or (ii) in the case of a special general meeting by a majority in number of the shareholders entitled to attend and vote at the meeting holding not less than 95% in nominal value of the shares entitled to vote at such meeting.

Our bye-laws provide that the presence in person or by proxy of two or more shareholders entitled to attend and vote and holding shares representing more than 50% of the combined voting power constitutes a quorum at any general meeting of shareholders.

Access to Books and Records and Dissemination of Information

Members of the general public have a right to inspect the public documents of a company available at the office of the Registrar of Companies in Bermuda. These documents include the company’s certificate of incorporation, its memorandum of association, including its objects and powers, certain alterations to the memorandum of association and its register of directors and officers. The shareholders have the additional right to inspect the bye-laws of the company, minutes of general meetings and the company’s audited financial statements, which must be presented at the annual general meeting. The register of members of a company is also open to inspection by shareholders and by members of the general public without charge. The

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register of members is required to be open for inspection for not less than two hours in any business day (subject to the ability of a company to close the register of members for not more than thirty days a year). A company is required to maintain its share register in Bermuda but may, subject to the provisions of the Companies Act, establish a branch register outside of Bermuda. We maintain a register of members at the registered office of the Company in Hamilton, Bermuda and a branch register in the United States by American Stock Transfer & Trust Company, LLC, who serves as branch registrar and transfer agent. A company is required to keep at its registered office a register of directors and officers that is open for inspection for not less than two hours in any business day by members of the public without charge. Bermuda law does not, however, provide a general right for shareholders to inspect or obtain copies of any other corporate records.

Board Actions

The bye-laws of the Company provide that its business is to be managed and conducted by our Board of Directors. At common law, members of a board of directors owe a fiduciary duty to the company to act in good faith in their dealings with or on behalf of the company and exercise their powers and fulfill the duties of their office honestly. This duty includes the following elements: (i) a duty to act in good faith in the best interests of the company; (ii) a duty not to make a personal profit from opportunities that arise from the office of a director; (iii) a duty to avoid conflicts of interest; and (iv) a duty to exercise powers for the purpose for which such powers were intended.

The Companies Act also imposes a duty on directors and officers of a Bermuda company to: (i) act honestly and in good faith with a view to the best interests of the company; and (ii) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

Our bye-laws provide that to the fullest extent permitted by the Companies Act, a director shall not be liable to the Company or its shareholders for breach of fiduciary duty as a director. Our bye-laws also provide for indemnification of directors as described in “—Indemnification of Directors and Officers.”

There is no requirement in our bye-laws or Bermuda law that directors hold any of our shares. There is also no requirement in our bye-laws or Bermuda law that our directors must retire at a certain age. 

The remuneration of our directors is determined by our Board of Directors. Our directors may also be paid all travel, hotel and other expenses properly incurred by them in connection with our business or their duties as directors.

Provided a director discloses a direct or indirect interest in any contract or arrangement with us as required by Bermuda law, such director is entitled to vote in respect of any such contract or arrangement in which he or she is interested unless he or she is disqualified from voting by the chairman of the relevant board meeting. A director (including the spouse or children of the director or any company of which such director, spouse or children own or control more than 20% of the capital or loan debt) cannot borrow from us (except loans made to directors who are bona fide employees or former employees pursuant to an employees’ share scheme), unless shareholders holding 90% of the total voting rights have consented to the loan.

Transfer of Shares

Our Board of Directors may in its absolute discretion and without assigning any reason refuse to register the transfer of a share if it is not fully paid. Our Board of Directors may also refuse to recognize an instrument of transfer of a share unless it is accompanied by the relevant share certificate and such other evidence of the transferor’s right to make the transfer as our Board of Directors shall reasonably require. Subject to these restrictions, and the 4.9% limit and related transfer restrictions described in “—Ordinary Shares—Transfer Restrictions,” a holder of ordinary shares may transfer the title to all or any of his ordinary shares by completing a form of transfer in the form set out in our bye-laws (or as near thereto as circumstances admit) or in such other ordinary form as our Board of Directors may accept. The instrument of transfer must be signed by the transferor and transferee, although in the case of a fully paid share our Board of Directors may accept the instrument signed only by the transferor. In this case, where the ordinary shares are listed, transfer of shares will be effected through the duly appointed transfer agent and the registrar of the Company.

Indemnification of Directors and Officers

Section 98 of the Companies Act provides generally that a Bermuda company may indemnify its directors, officers and auditors against any liability which by virtue of any rule of law would otherwise be imposed on them in respect of any negligence, default, breach of duty or breach of trust, except in cases where such liability arises from fraud or dishonesty of which such director, officer or auditor may be guilty in relation to the company. Section 98 further provides that a Bermuda company may indemnify its directors, officers and auditors against any liability incurred by them in defending any proceedings, whether civil or criminal, in which judgment is awarded in their favor or in which they are acquitted or granted relief by the Supreme Court of Bermuda pursuant to Section 281 of the Companies Act.

We have adopted provisions in our bye-laws that, subject to certain exemptions and conditions, require us to indemnify to the full extent permitted by the Companies Act in the event each person who is involved in legal proceedings by reason of the fact that person is or was a director, officer or resident representative of the Company, or is or was serving at the request of the Company as a director, officer, resident representative, employee or agent of another company or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan against all expense, liability and loss (including attorneys’ fees, judgments, fines, amounts paid or to be paid in settlement, and excise taxes or penalties arising under the Employee Retirement Income Security Act of 1974) incurred and suffered by the person in connection therewith. We are also required under our bye-laws to advance to such persons expenses incurred in defending a proceeding to which indemnification might apply, provided if the Companies Act requires, the recipient provides an undertaking agreeing to repay all such advanced amounts if it is ultimately determined that he is not entitled to be indemnified. In addition, the bye-laws specifically provide that the indemnification rights granted thereunder are non-exclusive.

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In addition, we have entered into separate contractual indemnification arrangements with our directors. These arrangements provide for indemnification and the advancement of expenses to these directors in circumstances and subject to limitations substantially similar to those described above. Section 98A of the Companies Act and our bye-laws permit us to purchase and maintain insurance for the benefit of any officer or director in respect of any loss or liability attaching to him in respect of any negligence, default, breach of duty or breach of trust, whether or not we may otherwise indemnify such officer or director.

Amendment of Memorandum of Association and Bye-Laws

Bermuda law provides that the memorandum of association of a company may be amended by a resolution passed at a general meeting of shareholders of which due notice has been given. Bermuda law requires that the bye-laws may be rescinded, altered or amended only if approved by a resolution of our shareholders and directors. Our bye-laws provide for amendment of our memorandum of association and bye-laws as described above in “—Ordinary Shares—Voting.” 

Under Bermuda law, the holders of an aggregate of not less than 20% in par value of a company’s issued share capital or any class thereof have the right to apply to the Supreme Court of Bermuda for an annulment of any amendment of the memorandum of association adopted by shareholders at any general meeting, other than an amendment which alters or reduces a company’s share capital as provided in the Companies Act. Where such an application is made, the amendment becomes effective only to the extent that it is confirmed by the Bermuda court. An application for an annulment of an amendment of the memorandum of association must be made within 21 days after the date on which the resolution altering the company’s memorandum of association is passed and may be made on behalf of the persons entitled to make the application by one or more of their number as they may appoint in writing for the purpose. No application may be made by shareholders voting in favor of the amendment.

Amalgamations, Mergers and Appraisal Rights

A Bermuda exempted company may amalgamate or merge with another Bermuda exempted company or a company incorporated outside Bermuda in accordance with the provisions of the Companies Act.

Under Bermuda law, in the event of an amalgamation or merger of a Bermuda company with another company, a shareholder of the Bermuda company who did not vote in favor of the amalgamation or merger and who is not satisfied that fair value has been offered for his or her shares in the Bermuda company may within one month of notice of the shareholders meeting, apply to the Supreme Court of Bermuda to appraise the fair value of his or her shares. Under Bermuda law, the amalgamation or merger of the Company with another company or corporation (other than certain affiliated companies) requires an amalgamation agreement or merger agreement to first be approved and then recommended by our Board of Directors and by resolution of our shareholders.

Shareholder Suits

Class actions and derivative actions are generally not available to shareholders under Bermuda law. The Bermuda courts, however, would ordinarily be expected to permit a shareholder to commence an action in the name of a company to remedy a wrong done to the company where the act complained of is alleged to be beyond the corporate power of the company or is illegal or would result in violation of the company’s memorandum of association or bye-laws. Furthermore, consideration would be given by a Bermuda court to acts that are alleged to constitute a fraud against the minority shareholders or, for instance, where an act requires the approval of a greater percentage of the company’s shareholders than that which actually approved it.

When the affairs of a company are being conducted in a manner which is oppressive or prejudicial to the interests of some part of the shareholders, one or more shareholders may apply to the Supreme Court of Bermuda which may make such order as it sees fit, including an order regulating the conduct of the company’s affairs in the future or ordering the purchase of the shares of any shareholder, by other shareholders or by the company.

Discontinuance

Under Bermuda law, an exempted company may be discontinued and be continued in a jurisdiction outside Bermuda as if it had been incorporated under the laws of that other jurisdiction. Our bye-laws provide that our Board of Directors may exercise all our power to discontinue to another jurisdiction without the need of any shareholder approval.

Takeovers/Compulsory Acquisition of Shares Held by Minority Holders

An acquiring party is generally able to acquire compulsorily the ordinary shares of minority holders in the following ways:

· If the acquiring party is a company it may compulsorily acquire all the shares of the target company by acquiring, pursuant to a tender offer, 90% of the shares or class of shares not already owned by, or by a nominee for, the acquiring party (the offeror), or any of its subsidiaries. If an offeror has, within four months after the making of an offer for all the shares or class of shares not owned by, or by a nominee for, the offeror, or any of its subsidiaries, obtained the approval of the holders of 90% or more of all the shares to which the offer relates, the offeror may, at any time within two months beginning with the date on which the approval was obtained, require, by notice, any nontendering shareholder to transfer its shares on the same terms as the original offer. In those circumstances, nontendering shareholders will be compelled to sell their shares unless the Supreme Court of Bermuda (on application made within a one-month period from the date of the offeror’s notice of its intention to acquire such shares) orders otherwise.

· By a procedure under the Companies Act known as a “scheme of arrangement”. A scheme of arrangement could be effected by obtaining the agreement of the Company and of holders of ordinary shares, representing in the aggregate a majority in number and at least 75% in value of

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the ordinary shareholders present and voting at a court ordered meeting held to consider the scheme of arrangement. The scheme of arrangement must then be sanctioned by the Bermuda Supreme Court. If a scheme of arrangement receives all necessary agreements and sanctions, upon the filing of the court order with the Registrar of Companies in Bermuda, all holders of ordinary shares could be compelled to sell their shares under the terms of the scheme of arrangement.

· Where one or more parties holds not less than 95% of the shares or a class of shares of a company such holder(s) may, pursuant to a notice given to the remaining shareholders or class of shareholders, acquire the shares of such remaining shareholders or class of shareholders. When this notice is given, the acquiring party is entitled and bound to acquire the shares of the remaining shareholders on the terms set out in the notice, unless a remaining shareholder, within one month of receiving such notice, applies to the Supreme Court of Bermuda for an appraisal of the value of their shares. This provision only applies where the acquiring party offers the same terms to all holders of shares whose shares are being acquired.

Material Bermuda Tax Considerations

At the present time, there is no Bermuda income or profits tax, withholding tax, capital gains tax, capital transfer tax, estate duty or inheritance tax payable by our shareholders in respect of our shares. We have obtained an assurance from the Minister of Finance of Bermuda under the Exempted Undertakings Tax Protection Act 1966 that, in the event that any legislation is enacted in Bermuda imposing any tax computed on profits or income, or computed on any capital asset, gain or appreciation or any tax in the nature of estate duty or inheritance tax, such tax shall not, until March 31, 2035, be applicable to us or to any of our operations or to our shares, debentures or other obligations except insofar as such tax applies to persons ordinarily resident in Bermuda or to any taxes payable by us in respect of real property owned or leased by us in Bermuda. We pay annual Bermuda government fees.

Delaware Law

The terms of share capital of corporations incorporated in the United States, including Delaware, differ from corporations incorporated in Bermuda. The following discussion highlights material differences of the rights of a shareholder of a Delaware corporation compared with the rights of our shareholders under Bermuda law, as outlined above.

Under Delaware law, a corporation may indemnify its director or officer (other than in action by or in the right of the companies) against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in defense of an action, suit or proceeding by reason of such position if such director or officer (i) acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the corporation and (ii) with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful.

Delaware law provides that a majority of the shares entitled to vote, present in person or represented by proxy, constitutes a quorum at a meeting of shareholders. In matters other than the election of directors, with the exception of special voting requirements related to extraordinary transactions, the affirmative vote of a majority of shares present in person or represented by proxy at the meeting and entitled to vote is required for shareholder action, and the affirmative vote of a plurality of shares is required for the election of directors. With certain exceptions, a merger, consolidation or sale of all or substantially all the assets of a corporation must be approved by the board of directors and a majority of the outstanding shares entitled to vote thereon. Under Delaware law, a shareholder of a corporation participating in certain major corporate transactions may, under certain circumstances, be entitled to appraisal rights pursuant to which such shareholder may receive cash in the amount of the fair value of the shares held by such shareholder (as determined by a court) in lieu of the consideration such shareholder would otherwise receive in the transaction.

Under Delaware law, subject to any restrictions contained in the company’s certificate of incorporation, a company may pay dividends out of surplus or, if there is no surplus, out of net profits for the fiscal year in which the dividend is declared and for the preceding fiscal year. Delaware law also provides that dividends may not be paid out of net profits if, after the payment of the dividend, capital is less than the capital represented by the outstanding shares of all classes having a preference upon the distribution of assets.

Under Delaware law, the business and affairs of a corporation are managed by or under the direction of its board of directors. In exercising their powers, directors are charged with a fiduciary duty of care to protect the interests of the corporation and a fiduciary duty of loyalty to act in the best interests of its shareholders.

Delaware law permits any shareholder to inspect or obtain copies of a corporation’s shareholder list and its other books and records for any purpose reasonably related to such person’s interest as a shareholder.

Class actions and derivative actions generally are available to shareholders under Delaware law for, among other things, breach of fiduciary duty, corporate waste and actions not taken in accordance with applicable law, and the court generally has discretion in such actions to permit the winning party to recover attorneys’ fees.

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EX-10.13

Exhibit 10.13

[*]: THE IDENTIFIED INFORMATION HAS BEEN OMITTED FROM THE AGREEMENT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED.

SIXTEENTH AMENDMENT TO LEASE AGREEMENT

(Norwegian Cruise Line – The Landing at MIA)

THIS SIXTEENTH AMENDMENT TO LEASE (“Amendment”) is dated effective and for identification purposes as of November 15, 2019 (“Effective Date”), which shall be the date the last of Landlord and Tenant to sign and deliver a fully executed copy to the other party, and is made by and between W­CROCKER LAM OFFICE  OWNER VIII, L.L.C., a Delaware limited liability company authorized to transact business in Florida (the “Landlord”), and NCL (BAHAMAS) LTD., a Bermuda company authorized to transact business in Florida (the “Tenant”), who, for good and valuable consideration, the receipt and sufficiency of which are acknowledged, agree as follows:

1. Background.

1.1. Hines REIT Airport Corporate Center LLC (“Original Landlord”) and Tenant entered into that certain Airport Corporate Center Office Lease Agreement dated December 1, 2006 (as amended, the “Lease”) for certain Leased Premises located in The Landing at MIA (f/k/a Airport Corporate Center), 7665 Corporate Center Drive and 7650 Corporate Center Drive, Miami, Florida.

1.2. Original Landlord and Tenant entered into that certain First Amendment to Airport Corporate Center Office Lease dated November 27, 2006.

1.3. Original Landlord and Tenant entered into that certain Second Amendment to Airport Corporate Center Office Lease dated March 22, 2007, which, among other things, expanded the Leased Premises to include additional space.

1.4. Original Landlord and Tenant entered into that certain Third Amendment to Airport Corporate Center Office Lease dated July 31, 2007, which, among other things, expanded the Leased Premises to include Permanent Storage Space.

1.5. Original Landlord and Tenant entered into that certain Fourth Amendment to Airport Corporate Center Office Lease dated December 10, 2007, which, among other things, expanded the Leased Premises to include additional space.

1.6. Original Landlord and Tenant entered into that certain Fifth Amendment to Airport Corporate Center Office Lease dated February 2, 2010.

1.7. Original Landlord and Tenant entered into that certain Sixth Amendment to Airport Corporate Center Office Lease dated April 1, 2012, which, among other things, terminated a portion of the Leased Premises and extended the Lease Term with respect to the Retained Premises.

1.8. Original Landlord and Tenant entered into that certain Seventh Amendment to Airport Corporate Center Office Lease dated June 29, 2012, which, among other things, expanded the Leased Premises to include New Warehouse Premises.

1.9. SPUS7 Miami ACC, LP (“Second Landlord”) and Tenant entered into that certain Eighth Amendment to Lease dated January 28, 2015, which, among other things, extended the Lease Term for the Original Office Premises only and expanded the Leased Premises to include additional space.

1.10. Second Landlord and Tenant entered into that certain Ninth Amendment to Lease dated June 30, 2015, which, among other things, expanded the Leased Premises to include additional space.

1.11. Second Landlord and Tenant entered into that certain Tenth Amendment to Lease dated March 31, 2016, which, among other things, expanded the Leased Premises to include additional space.

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1.12. Second Landlord and Tenant entered into that certain Eleventh Amendment to Lease dated February 8, 2017.

1.13. Second Landlord and Tenant entered into that certain Twelfth Amendment to Lease dated August 24, 2017.

1.14. Second Landlord and Tenant entered into that certain Thirteenth Amendment to Lease dated November 30, 2017, which, among other things, expanded the Leased Premises to include additional space.

1.15. Second Landlord and Tenant entered into that certain Fourteenth Amendment to Lease dated January 16, 2018.

1.16. Second Landlord and Tenant entered into that certain Fifteenth Amendment to Lease dated March 1, 2018, which, among other things, expanded the Leased Premises to include additional space.

1.17. Landlord is the successor in title and interest to the Second Landlord and is the owner and holder of the Second Landlord’s interest under the Lease.

1.18. The parties have now agreed to further expand the Leased Premises, extend the Lease Term, and amend the Lease on the terms and conditions contained in this Amendment.

2. Definitions.Capitalized terms used but not defined in this Amendment shall have the same definitions given to them in the Lease, unless the context clearly indicates a contrary intent.  If there is any conflict or inconsistency between the terms of this Amendment and the Lease, the terms of this Amendment shall control.

3. Landlord’s Notice Address.  W­CROCKER LAM OFFICE OWNER VIII, L.L.C., c/o CPPM LMIA LLC, [*].  

4. Landlord’s Address for Payments.  

If by wire:

[*]

If by U.S. Mail First Class:

[*]

If by courier delivery:

[*]

5. Current Premises.  Prior to this Amendment, the Premises consisted of the leased premises more particularly described on EXHIBIT “A” and shown on EXHIBIT “A-1” attached hereto and incorporated herein (the “Current Premises”).  The total rentable square feet of the Current Premises is 335,855 square feet.

6. Expansion of Premises. 

6.1. General.Upon the Expansion Space Commencement Date (as defined below), the Current Premises shall be expanded to include 38,189 rentable square feet on the fourth floor of Building 8 (the “Building 8 Expansion Space”), and 2,053 rentable square feet known as Bay D in Building 3 (the “Building 3 Expansion Space”), all of which space is depicted in the sketch attached to this Amendment as EXHIBIT “B” (collectively, the “Expansion Space” or “Expansion Spaces”), as well as all of the space previously demised under the Lease.  The total rentable square feet of the Expansion Space is conclusively deemed for all purposes under this Amendment and the Lease to be 40,242 square feet.  The rentable square feet of the Premises, including the Expansion Space, is conclusively deemed for all purposes under this Amendment and the Lease to be 376,097 

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square feet.  This square footage figure includes an add-on factor for Common Areas in the Buildings and has been agreed upon by the parties as final and correct and is not subject to challenge or dispute by either party.  From and after the Expansion Space Commencement Date, whenever the term Premises is used in the Lease or this Amendment it shall include the previously demised Premises and the Expansion Space.

6.2. Expansion Space Commencement Date.  The “Expansion Space Commencement Date” or “ESCD”) for each of the Expansion Spaces shall mean 30 days following the earlier to occur of (a) the date when Tenant takes possession of the respective Expansion Space or any portion of the respective Expansion Space for the conduct of its business, (b) the date of substantial completion of the Tenant Improvements (as defined below) to each of the Expansion Spaces, or (c) the date which is six months after Landlord’s delivery of the respective Expansion Space to Tenant subject to delays to the construction of the Tenant Improvements caused by Force Majeure (the “Outside Date”).  As used herein, “substantial completion” shall mean the date on which a Certificate of Occupancy or its equivalent, including a Temporary or Conditional Certificate of Occupancy, is issued by the appropriate local governmental entity for the Tenant Improvements, or, if no Certificate of Occupancy will be issued for the Tenant Improvements, the date on which the Tenant Improvements have been substantially completed so that Tenant may use the respective Expansion Space for its intended purpose, notwithstanding that minor punchlist items or insubstantial details concerning construction, decoration, or mechanical adjustment remain to be performed.  Promptly after the Expansion Space Commencement Date, for each respective Expansion Space, Landlord and Tenant shall execute an instrument hereinafter defined as the “Memorandum of Expansion Space Commencement Date” in the form attached hereto as EXHIBIT “C” and such instrument when executed is hereby made a part of this Amendment and incorporated herein by reference.  Tenant’s use of the respective Expansion Space for the purposes of installing fixtures, furniture, and equipment, and cabling and wiring shall not be considered possession of the respective Expansion Space, but shall be subject to all of the terms of the Lease except the payment of Rent.

7. Base Rent.  Effective as of the Expansion Space Commencement Date, the Base Rent for the Expansion Space only shall be:

Building 8 Expansion Space:  

Period	Rate P/S/F Per Annum	Monthly Base Rent	Period Base Rent
ESCD – 9/30/20	[*]	[*]	[*]
10/1/20 – 9/30/21	[*]	[*]	[*]
10/1/21 – 9/30/22	[*]	[*]	[*]
10/1/22 – 9/30/23	[*]	[*]	[*]
10/1/23 – 9/30/24	[*]	[*]	[*]
10/1/24 – 9/30/25	[*]	[*]	[*]
10/1/25 – 9/30/26	[*]	[*]	[*]
10/1/26 – 9/30/27	[*]	[*]	[*]
10/1/27 – 1/31/28	[*]	[*]	[*]

Building 3 Expansion Space:  

Period	Rate P/S/F Per Annum	Monthly Base Rent	Period Base Rent
ESCD – Month 12	[*]	[*]	[*]
Months 13 – 24	[*]	[*]	[*]
Months 25 – 36	[*]	[*]	[*]
Months 37 – 48	[*]	[*]	[*]
Months 49 – 60	[*]	[*]	[*]
Months 61 – 72	[*]	[*]	[*]
Months 73 – 84	[*]	[*]	[*]
Months 85 – 96	[*]	[*]	[*]
Month 97 – 1/31/28	[*]	[*]	[*]

Base Rent amounts shown above do not include applicable sales tax.

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*Provided that Tenant is not in monetary default of the Lease beyond any applicable grace period at any time during the rent credit period, Tenant shall have a Rent credit in the amount of the Base Rental and the additional rent for Tenant’s Proportionate Share of Operating Expenses owed for each of the Expansion Spaces only for the first three full calendar months following the Expansion Space Commencement Date for the respective Expansion Space, which credit shall be applied to the installments of Base Rent and the additional rent for Tenant’s Proportionate Share of Operating Expenses due for those months; and a Rent credit in the amount of 50% of the Base Rental and the additional rent for Tenant’s Proportionate Share of Operating Expenses owed for each of the Expansion Spaces only for the fourth through 12th full calendar months following the Expansion Space Commencement Date for the respective Expansion Space, which credit shall be applied to the installments of Base Rent and the additional rent for Tenant’s Proportionate Share of Operating Expenses due for those months.  If the Expansion Space Commencement Date for a respective Expansion Space occurs on a day other than the first day of the month, the prorated Rent for the first partial month in which the Expansion Space Commencement Date occurs shall be due on the Expansion Space Commencement Date for the respective Expansion Space.

8. Lease Term/Existing Warehouse Premises. 

8.1. The Lease Term with respect to Bay C in Building 3 is extended for an additional 60 calendar months commencing February 1, 2023 and expiring January 31, 2028.  The rentable square feet of Bay C is 7,067.

8.2. The Lease Term with respect to Bay F in Building 3 is extended for an additional 40 calendar months commencing October 1, 2024 and expiring January 31, 2028.  The rentable square feet of Bay F is 8,563.

9. Base Rent/Existing Warehouse Premises. 

9.1. The Base Rent during the extended Lease Term for Bay C in Building 3 shall align with the Base Rent rates for the Building 3 Expansion Space as follows:

Period	Rate P/S/F Per Annum	Monthly Base Rent	Period Base Rent
2/1/23 – Month 48	[*]	[*]	[*]
Months 49 – 60	[*]	[*]	[*]
Months 61 – 72	[*]	[*]	[*]
Months 73 – 84	[*]	[*]	[*]
Months 85 – 96	[*]	[*]	[*]
Month 97 – 1/31/28	[*]	[*]	[*]

*Varies based on number of months in the period.  “Month 48” and each month thereafter shall align with the actual Month 48 date as determined under the Building 3 Expansion Space rent table in Section 7 above.

9.2. The Base Rent during the extended Lease Term for Bay F in Building 3 shall align with the Base Rent rates for the Building 3 Expansion Space as follows:

Period	Rate P/S/F Per Annum	Monthly Base Rent	Period Base Rent
10/1/24 – Month 60	[*]	[*]	[*]
Months 61 – 72	[*]	[*]	[*]
Months 73 – 84	[*]	[*]	[*]
Months 85 – 96	[*]	[*]	[*]
Month 97 – 1/31/28	[*]	[*]	[*]

Base Rent amounts shown above do not include applicable sales tax.

**Varies based on number of months in the period.  “Month 60” and each month thereafter shall align with the actual Month 60 date as determined under the Building 3 Expansion Space rent table in Section 7 above

10. Condition of Premises and Tenant Improvements. 

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10.1. General.  Landlord has made no representation or promise as to the condition of the Premises including the Expansion Space.  Landlord shall not perform any alterations, additions, or improvements in order to make the Premises including the Expansion Space suitable and ready for occupancy and use by Tenant.  Tenant accepts the Premises including the Expansion Space in its present “as is,” “where is,” and “with all faults” condition, and without any warranty, express or implied, or representation as to fitness or suitability.  Notwithstanding anything herein to the contrary, if, in order for Tenant to receive a building permit for Tenant Improvements or a certificate of occupancy or completion for the Premises, any portion of the existing building systems located outside of and serving any portion of the Premises or any portion of existing common areas at the Project are required by applicable governmental authority, to be made compliant with the currently applicable building code or fire code or applicable requirements of the Americans with Disabilities Act (“ADA”) (collectively, the “Current Code”), then Landlord agrees that Landlord shall, at its sole cost and expense, perform all necessary work to make those portions of the existing building systems and/or existing common areas compliant with the Current Code; however, Tenant acknowledges and agrees that Landlord is only responsible for the building systems up to the point of common connection where the applicable portion of the Premises are located and as long as such work is not required for any special use by Tenant (i.e., any use which is not typical office or warehouse usage).

10.2. Tenant Improvements and Plans.  Tenant shall perform all work necessary or desirable for Tenant’s occupancy of the Expansion Space and continued occupancy of the Current Premises (the “Tenant Improvements”).  Tenant shall furnish to Landlord, for Landlord’s written approval, a permit set (final construction drawings) of plans and specifications for the Tenant Improvements (the “Plans”).  The Plans shall include the following:  fully dimensioned architectural plans; electric/telephone outlet diagram; reflective ceiling plan with light switches; mechanical plan; furniture plan; electric power circuitry diagram; plumbing plans; all special equipment and fixture specifications; and fire sprinkler design drawings.  The Plans will be prepared by a licensed architect and the electrical and mechanical plans will be prepared by a licensed professional engineer.  The Plans shall be produced on CAD.  The architect and engineer selected by Tenant will be subject to Landlord’s approval, which shall not be unreasonably withheld, conditioned, or delayed.  Notwithstanding the foregoing to the contrary, Landlord acknowledges and agrees that it will approve the following architects and professional engineers:  [*]. The Plans shall comply with all applicable laws, ordinances, directives, rules, regulations, and other requirements imposed by any and all governmental authorities having or asserting jurisdiction over the Premises.  Landlord shall review the Plans and either approve or disapprove them, within seven (7) business days after Landlord’s receipt of the Plans (and any delay beyond such seven (7) day period shall be deemed approval by Landlord).  In the event of disapproval of the Plans, Landlord shall provide in writing a detailed description indicating why the Plans were disapproved, and Tenant shall make any necessary modifications and resubmit the Plans to Landlord in final form within ten (10) days following receipt of Landlord’s disapproval of them.  If Landlord notifies Tenant that the resubmitted Plans are not in accordance with the changes required for Landlord’s approval, Tenant shall submit revised Plans to Landlord.  Landlord shall then respond to Tenant’s request for approval of its revised Plan within five (5) business days thereafter.  If there are any further comments or revisions to the revised Plans, Landlord and Tenant shall proceed in the manner as outlined above, except that each party shall provide responses or approvals within five (5) business days.  Landlord and Tenant shall continue this process in good faith until the revised Plans are finally approved.  Any changes to the Plans required by any local governmental field inspector shall be approved by Landlord.  To expedite the review and approval process Landlord shall cooperate with Tenant by discussing or reviewing preliminary plans and specifications, at Tenant’s request, prior to completion of the permit set. The approval by Landlord of the Plans and any approval by Landlord of any similar plans and specifications for any other alterations or the supervision by Landlord of any work performed on behalf of Tenant shall not: (a) imply Landlord’s approval of the plans and specifications as to quality of design or fitness of any material or device used; (b) imply that the plans and specifications are in compliance with any codes or other requirements of governmental authority (it being agreed that compliance with these requirements is solely Tenant’s responsibility); (c) impose any liability on Landlord to Tenant or any third party; or (d) serve as a waiver or forfeiture of any right of Landlord. 

10.3. Contractor.  The Tenant Improvements shall be constructed by a general contractor selected and paid by Tenant and approved by Landlord, which approval shall not be unreasonably withheld, conditioned, or delayed. Notwithstanding the foregoing to the contrary, Landlord acknowledges and agrees that it will approve the following general contractors:  [*]. A copy of the contractor's license(s) to do business in the jurisdiction(s) in which the Premises are located, the fully executed contract between Tenant and the general contractor, the general contractor’s work schedule, and all building or other governmental permits required for the Tenant Improvements shall be delivered to Landlord before commencement of the Tenant Improvements.  Tenant shall cause the Tenant Improvements to be completed promptly and with due diligence, and in accordance with the Plans in a good and workmanlike manner using new materials in accordance with Building standards.  All work shall be done in compliance with all other applicable provisions of the Lease and with all applicable laws, ordinances, directives, rules, regulations, and other requirements of any governmental authorities having or asserting jurisdiction over the Premises, including the making of any alterations or improvements to the Premises or the Project  which are required to comply

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with the ADA and the payment by Tenant of any impact fees, sales taxes, or assessments arising from or relating to the Tenant Improvements or occupancy.  All Tenant Improvements shall utilize no less than Landlord’s Building standard grade materials unless otherwise approved by Landlord.  Before the commencement of any work by Tenant, Tenant shall furnish to Landlord certificates evidencing the existence of builder’s risk, commercial general and auto liability, and workers' compensation insurance complying with Landlord’s requirements for contractors.  Any damage to any part of the Project that occurs as a result of the Tenant Improvements shall be promptly repaired by Tenant.

10.4. Compliance.  Tenant shall also ensure compliance with the following requirements concerning construction of the Tenant Improvements:

10.4.1. Tenant and all construction personnel shall abide by Landlord’s job site rules, requirements, and regulations and fully cooperate with Landlord’s construction representatives in coordinating all construction activities in the Project, including rules and regulations concerning working hours and parking, and, if applicable, use of the construction elevator.  A copy of the landlord construction contractor rules and regulations as of the Effective Date are attached as EXHIBIT “D”.  Notwithstanding anything in EXHIBIT “D” to the contrary, for purposes of this Amendment, Landlord acknowledges and agrees that the rates set forth in paragraph 25 of EXHIBIT “D” shall not apply to Tenant.

10.4.2. All transportation of construction materials shall be on the padded construction elevator only, if any.

10.4.3. Tenant shall deliver to Landlord all forms of approval provided by the appropriate local governmental authorities to certify that the Tenant Improvements have been completed and the Premises are ready for occupancy, including original building permit and a final, unconditional Certificate of Occupancy or its equivalent, including a Certificate of Completion or Certificate of Final Inspection.

10.4.4. At all times during construction, Tenant shall allow Landlord access to the Premises for inspection purposes.  Upon completion of the Tenant Improvements, Tenant’s general contractor shall review the Premises with Landlord and Tenant and obtain Landlord’s and Tenant’s acceptance of the Tenant Improvements and provide a punch-list of items which need correction (if any).

10.4.5. Tenant shall be responsible for cleaning up any refuse or other materials left behind by construction personnel at the end of each work day.  If required by Landlord, workers shall provide their own temporary toilet facilities, trash facilities, water coolers, and construction materials dumpsters and shall locate them along with any construction trailers or field offices in areas reasonably designated by Landlord.

10.4.6. Any work that may disturb tenants of the Building (including welding, cutting torch, drilling or cutting of the concrete floor slab or temporary interruption of any utility service), shall only occur before or after normal business hours and as otherwise specified by Landlord.  No painting or spraying of chemicals, varnishes, lacquers, finishes, or paint will be allowed during normal business hours if odors or fumes will affect other nearby tenants of the Project.  Such activities shall only occur during days and times specifically preapproved by Landlord.  All workers must stay in their designated work areas, and the use of radios, loud music, alcoholic beverages, narcotics, or smoking of any kind, whether electronic or otherwise, is prohibited on the Project.

10.4.7. Reasonable quantities of water and electricity for lighting, portable power tools, and other common uses, including reasonably available parking and dumpster storage, as well as use of the construction elevator will be furnished by the Landlord to the contractor at no additional cost.  The contractor shall make all utility connections, furnish any necessary extensions, and promptly and professionally remove such connections and extensions on completion of work.

10.4.8. Any work that will involve the draining of a sprinkler line or otherwise affect the Building’s fire sprinkler system must be approved by Landlord in advance.  In all instances where this is done, the system shall not be left inoperable overnight or over a prolonged period.

10.4.9. All equipment installed shall be compatible with the base building fire alarm system and the contractor shall perform work related to any connection to the base building fire alarm system only after proper notification to

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Landlord and on an after-hours basis.  Any disruption to the existing fire alarm system or damage as a result of contractor’s work will be the sole responsibility of Tenant.

10.4.10. All additional electrical circuits added to existing electrical panels or any new circuits added to new electrical panels will be appropriately labeled as to the area or equipment serviced by the circuit in question.  Any electrical panel covers removed to facilitate installation or connection shall be reattached.

10.4.11. Tenant shall deliver copies to Landlord of all Notices to Owner received in connection with the Tenant Improvements within five (5) business days of receipt of such notices.

10.4.12. Should a Notice of Commencement be filed in the public records for leasehold work by or on behalf of Tenant, the legal description therein shall specifically be limited to Tenant’s interest in the Premises, and Tenant shall be responsible for having a corresponding Notice of Termination timely recorded in the County in which the Expansion Space is located upon the completion of such work.

10.4.13. Upon completion of the Tenant Improvements, Tenant shall also deliver to Landlord two complete copies of each of the following:

(a) “as-built” construction documents in PDF file format on CDs;

(b) general contractor’s one-year warranty and subcontractor warrantees, as well as factory warrantees on equipment installed;

(c) operating and maintenance manuals for all equipment installed;

(d) fire sprinkler system permit set of drawings (if required by governmental authorities);

(e) HVAC test and balance reports;

(f) subcontractor listing with contact and phone numbers included;

(g) final payment application from general contractor;

(h) final releases of lien from Tenant’s general contractor and all lienors giving notice to owner as defined in the Florida Construction Lien Law (in form required by Florida Statutes) and a final contractor’s affidavit from the general contractor in accordance with the Florida Construction Lien Law, indicating all “lienors” have been paid in full; and

(i) documentation from the applicable governmental agency evidencing that all final inspections have been completed and all building and other governmental permits have been closed and evidence that any Notice of Commencement filed in connection with the Tenant Improvements has been duly terminated in accordance with the requirements of Florida ConstructionLien Law.

Tenant shall pay to Landlord an amount equal to [*]% of the cost of the work, as a supervisory fee, which Landlord may deduct from the Tenant Improvement Allowance.

10.5. Tenant Improvement Allowance. 

10.5.1. If and for as long as Tenant is not in default under the Lease beyond any applicable grace period, Tenant shall be entitled to a tenant improvement allowance in the amount of $[*] allocated as follows:  $[*] ($[*]/sf) for the Building 8 Expansion Space, and $[*]($[*]/sf) for the Building 3 Expansion Space (the “Tenant Improvement Allowance” or “Allowance”).  Tenant shall have the right to apply the Tenant Improvement Allowance towards Tenant Improvements within its Premises whereby the Tenant Improvement Allowance is not required to be disbursed or allocated towards only the Expansion Spaces. The Tenant Improvement Allowance shall be paid to Tenant in reimbursement for the total out of pocket costs paid by Tenant for the design professional fees and the “hard costs” of construction of the Tenant Improvements to the Premises,

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including architectural and engineering fees, specialty consultants including acoustical and lighting specialists, permitting and expeditor fees, construction of interior improvements including millwork, built-in furniture, furniture systems, data cabling and wiring, telecommunications systems, relocation expenses, security, studio equipment, project management fees, and other similar expenses in fitting out the Expansion Space.  If the total amount paid by Tenant for the Tenant Improvements is less than the Tenant Improvement Allowance, Tenant may receive a credit for the unused portion of the Allowance up to $[*] ($[*]/sf) applied towards the next payment(s) of Base Rental and Tenant’s Percentage Share of Operating Expenses due, until such sum is exhausted. 

10.5.2. The Allowance shall be disbursed on a percentage of completion basis (i.e., the ratio of the amount to be disbursed, together with all prior disbursements, so the total Allowance will not exceed the ratio of the Tenant Improvements completed on the date of disbursement to the total Tenant Improvements).  By way of example, if the Tenant Improvement Allowance is $[*], the total Tenant Improvements cost is $[*], and on the date of Tenant’s first draw request 25% of the Tenant Improvements have been completed (i.e., contractor’s invoice is equal to $[*]), then Landlord shall be obligated to pay an amount equal to 25% of the Allowance, or $[*]. By way of a second example, if the Tenant Improvement Allowance is $[*], the total Tenant Improvements cost is $[*], and on the date of Tenant’s first draw request 25% of the Tenant Improvements have been completed (i.e., contractor’s invoice is equal to $[*]), then Landlord shall be obligated to pay an amount equal to 100% of the Allowance equal to $[*].  If the request for disbursement of the Allowance pertains to furniture and equipment, relocation expenses, or other related items, then Tenant shall be entitled to have the Allowance disbursed with respect to such items without regard to the percentage-of-completion formula specified herein.  Tenant may apply for disbursements of the Allowance not more frequently than monthly.  Except as otherwise provided by written notice from Tenant to Landlord, each request shall constitute Tenant’s affirmation that as of the date of the request this Lease is in full force and effect and Landlord is not in default under this Lease. 

10.5.3. The Tenant Improvement costs shall be deducted by Landlord from the Tenant Improvement Allowance and reimbursed to Tenant within 30 days following receipt of Tenant’s payment request consisting of the following: (a) AIA G702/703 form (or other form acceptable to Landlord); (b) a written certification signed by Tenant stating the work then performed or materials provided with respect to the Tenant Improvements and the amount requested for the current disbursement along with true copies of invoices paid by Tenant for the Tenant Improvements and evidence of payment such as cancelled checks, wiring confirmations, etc.; and (c) a contractor’s affidavit from Tenant’s general contractor in accordance with the Florida Construction Lien Law, final or partial releases of lien, as applicable, from Tenant’s general contractor and all lienors giving notice to owner as defined in the Florida Construction Lien Law and vendors associated with the disbursement request.  Landlord will approve or disapprove such documentation, or portions thereof, within seven (7) business days of Landlord’s receipt thereof.  If Landlord disapproves, any of such documentation, Landlord shall notify Tenant in writing of the reason therefor.  Thereafter, to the extent that such documentation is approved or resubmitted by Tenant and then approved by Landlord, payment shall be made with thirty (30) days following receipt of the additionally requested information.  The final disbursement shall be paid to Tenant within 30 days after all of the following events have occurred: (a) the Tenant Improvements have been substantially completed; (b) Tenant has delivered to Landlord final releases of lien from Tenant’s general contractor and all lienors giving notice to owner as defined in the Florida Construction Lien Law and a final contractor’s affidavit from the general contractor in accordance with the Florida Construction Lien Law, and all other receipts and supporting information concerning payment for the work that Landlord may reasonably request; and (c) Tenant has moved into the Premises and opened for business in the Premises.

10.5.4. Tenant shall pay the entire amount of the Tenant Improvement costs which is in excess of the Allowance. Tenant’s right to application of the Tenant Improvement Allowance shall expire on the date that is 24 months after Landlord’s delivery of vacant possession of the applicable Expansion Space to Tenant.  Tenant’s right to request a credit against Rent and any requests for reimbursement submitted to Landlord after such date shall not be paid from the Allowance, and Tenant shall thereafter be solely responsible for the costs of the Tenant Improvements without reimbursement from Landlord.  If Landlord has received written notice of any claims of lien, at Landlord’s option, the Tenant Improvement Allowance or any portion of it may be paid by Landlord directly to the general contractor performing the Tenant Improvements or to any lienor giving notice as defined in the Florida Construction Lien Law.  If Tenant is in default under the Lease beyond the expiration of any applicable notice and cure periods, or if Landlord has received written notice of any claims of lien relating to any portion of the Tenant Improvement work or materials in connection therewith (other than claims which will be paid in full from such disbursement), or if there is an unbonded lien outstanding against the Project, the Expansion Space, or Tenant’s interest therein, by reason of work done, or materials supplied or specifically fabricated, to or for Tenant or the Premises, Landlord may, in addition to all its other available rights and remedies, withhold payment of any unpaid portion of the Tenant Improvement Allowance.  The Tenant Improvement Allowance provisions shall not apply to any additional space added to the Premises at any

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time after the Effective Date, whether by any options under the Lease or otherwise, or to any portion of the Premises or any additions to the Premises in the event of a renewal or extension of the Lease Term, whether under any options under the Lease or otherwise, unless expressly so provided in this Amendment or an amendment to the Lease.  The rights granted to Tenant under this paragraph to the Allowance are personal to the original named Tenant in this Amendment and any Affiliate or Successor, and may not be assigned or exercised by anyone or for the benefit of anyone (including, any subtenant) other than such Tenant and any Affiliate or Successor and only while such Tenant or an Affiliate or Successor is in possession of the entire Premises.  In addition to the Tenant Improvement Allowance, Landlord shall pay or reimburse Tenant for the cost of an initial test-fit plan not to exceed $[*] ($[*]/sf).

11. Parking.  As of Landlord’s delivery of vacant possession of the Expansion Space to Tenant, and so long as Tenant does not exercise its rights to terminate an applicable Expansion Space as contained in Section 12 of this Amendment, and at no additional cost to Tenant, Tenant shall be entitled to 188 additional parking spaces, of which spaces 2 shall be reserved spaces, and the location of the parking spaces is set forth on EXHIBIT “E” to this Amendment. Landlord will engage in commercially reasonable efforts to manage the availability of the parking spaces to which Tenant is entitled under this Amendment.  Attached hereto as EXHIBIT “F” is a diagram of parking spaces available to the Current Premises.  Attached hereto as EXHIBIT “G” is a Schedule of fees being charged for the parking spaces for the Current Premises.

12. Amendment Termination Contingency. 

12.1. Building 8 Expansion Space.  The Building 8 Expansion Space is currently occupied by an existing tenant (the “Existing Tenant”).  Landlord has obtained a fully executed agreement with the Existing Tenant to surrender the Building 8 Expansion Space on December 31, 2019.  In the event of any holdover by the Existing Tenant, Landlord shall use all reasonable diligence in pursuing legal proceedings to obtain possession of the Building 8 Expansion Space affected by the holdover, at its sole cost and expense, in order to dispossess the Existing Tenant which holds over or is in unlawful possession of the Building 8 Expansion Space beyond December 31, 2019.  If the Existing Tenant has not vacated the Building 8 Expansion Space by January 15, 2020 (the “Building 8Surrender Date”), then Tenant shall receive, as its sole and exclusive remedy for such failure to deliver, [*] day free Base Rent for the Building 8 Expansion Space (“Rent Credit”) for each twenty-four hour period beyond the Building 8 Surrender Date, to the day the Building 8 Expansion Space is delivered to Tenant in the condition required under this Lease.  In the event the Landlord fails to tender exclusive possession of the Building 8 Expansion Space to Tenant for any reason beyond March 1, 2020 (the “Outside Building 8 Delivery Date”), Tenant shall have the right to terminate the Building 8 Expansion Space by written notice to the Landlord.  If Tenant terminates the Building 8 Expansion Space, Landlord shall reimburse Tenant for its actual and reasonable architectural and engineering fees incurred with respect to the terminated Building 8 Expansion Space (not to exceed $[*]/sf) within 30 days after receipt of an invoice.  Except as expressly set forth in this section, Landlord shall not be liable to Tenant for any costs, damages, or expenses whatsoever resulting from the Existing Tenant's failure to vacate the Building 8 Expansion Space by the Building 8 Surrender Date or any time thereafter.  In the event Tenant terminates the Building 8 Expansion Space under this section, Tenant’s parking rights, the Tenant Improvement Allowance, and any other rights of Tenant under the this Amendment determined on a square foot basis shall be proportionally adjusted to reflect the termination of such Building 8 Expansion Space.  In the event that Tenant chooses not to terminate the Building 8 Expansion Space in accordance with this section, Tenant shall continue to accrue additional Rent Credit at the rate set forth above until delivery of the Building 8 Expansion Space to Tenant (in any event, not to exceed a period of 30 days in total).

12.2. Building 3 Expansion Space.  The Building 3 Expansion Space is currently occupied by an existing licensee (the “Existing Licensee”).  Landlord has delivered a termination notice requiring the Existing Licensee to surrender the Building 3 Expansion Space on or before November 30, 2019.  In the event of any holdover by the Existing Licensee, Landlord shall use all reasonable diligence in pursuing legal proceedings to obtain possession of the Building 3 Expansion Space affected by the holdover, at its sole cost and expense, in order to dispossess the Existing Licensee which holds over or is in unlawful possession of the Building 3 Expansion Space beyond November 30, 2019.  If the Existing Licensee has not vacated the Building 3 Expansion Space by December 15, 2019 (the “Building 3 Surrender Date”), then Tenant shall receive, as its sole and exclusive remedy for such failure to deliver, [*] free Base Rent for the Building 3 Expansion Space (“Rent Credit”) for each twenty-four hour period beyond the Building 3 Surrender Date, to the day the Building 3 Expansion Space is delivered to Tenant in the condition required under this Lease.  In the event the Landlord fails to tender exclusive possession of the Building 3 Expansion Space to Tenant for any reason beyond March 1, 2020 (the “Outside Building 3 Delivery Date”), Tenant shall have the right to terminate the Building 3 Expansion Space by written notice to the Landlord.  If Tenant terminates the Building 3 Expansion Space, Landlord shall reimburse Tenant for its actual and reasonable architectural and engineering fees incurred with respect to the terminated Building 3 Expansion Space (not to exceed $[*]/sf) within 30 days after receipt of an invoice.  Except as expressly

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set forth in this section, Landlord shall not be liable to Tenant for any costs, damages, or expenses whatsoever resulting from the Existing Licensee’s failure to vacate the Building 3 Expansion Space by the Building 3 Surrender Date or any time thereafter.  In the event Tenant terminates the Building 3 Expansion Space under this section, Tenant’s parking rights, the Tenant Improvement Allowance, and any other rights of Tenant under the this Amendment determined on a square foot basis shall be proportionally adjusted to reflect the termination of such Building 3 Expansion Space.  In the event that Tenant chooses not to terminate the Building 3 Expansion Space in accordance with this section, Tenant shall continue to accrue additional Rent Credit at the rate set forth above until delivery of the Building 3 Expansion Space to Tenant (in any event, not to exceed a period of [*] days in total).

13. Ratification.  Except as modified by this Amendment, the Lease shall remain otherwise unmodified and in full force and effect and the parties ratify and confirm the terms of the Lease as modified by this Amendment.  The Lease, as amended, contains the entire agreement between Landlord and Tenant as to the Premises, and there are no other agreements, oral or written, between Landlord and Tenant relating to the Premises.  Each of Tenant and Landlord hereby certifies:  (a) that it has no offsets, defenses, or claims as to Landlord’s or Tenant’s obligations under the Lease; (b) that there are no defaults existing under the Lease on the part of either Landlord or Tenant; and (c) except as otherwise set forth in this Amendment as to the Expansion Space, there is no existing basis for Tenant to terminate the Lease.  All future references to the Lease shall mean the Lease as modified by any and all prior amendments and by this Amendment.

14. Broker.  Landlord and Tenant each represent and warrant that they have neither consulted nor negotiated with any broker or finder regarding the Premises, except [*] (“Landlord’s Broker”) and [*] (“Tenant’s Broker”).  Landlord shall pay Landlord’s Broker and Tenant’s Broker pursuant to separate written agreements, provided that neither the foregoing nor anything else in the Lease is intended to grant such Brokers any rights under the Lease or make them third party beneficiaries of this Amendment.  Tenant shall indemnify, defend, and hold Landlord harmless from and against any claims for commissions from any real estate broker other than Landlord’s Broker and Tenant’s Broker with whom it has dealt in connection with this Amendment.  Landlord shall indemnify, defend, and hold Tenant harmless from and against payment of any leasing commission due Landlord’s Broker and Tenant’s Broker in connection with this Amendment and any claims for commissions from any real estate broker other than Landlord’s Broker and Tenant’s Broker with whom Landlord has dealt in connection with this Amendment.  The terms of this section shall survive the expiration or earlier termination of the Lease. 

15. Corporate Seal.  The scroll seal set forth immediately below the signature of the individual executing this Amendment on Tenant’s behalf has been adopted by the corporation as its seal for the purpose of execution of this Amendment and the scroll seal has been affixed to this Amendment as the seal of the corporation and not as the personal or private seal of the officer executing this Amendment on behalf of the corporation.

16. Security Deposit.  Section 2.5 of the Lease is hereby amended to permit Tenant to replace the existing Letter of Credit with an unconditional, irrevocable bond in the amount of $[*] (the “LeaseBond”).   The form of acceptable Lease Bond is attached hereto as EXHIBIT “I”.

16.1. Lease Bond Issuer. The Lease Bond shall be issued by an issuer acceptable to Landlord (rated at least “А- VII” in the then most current issue of Best’s Insurance Reports, or its equivalent).

16.2. Term of Lease Bond. The Lease Bond shall have an expiration date not sooner than one year following the cancellation date of the Letter of Credit, as security for the full and faithful performance of every provision of the Lease to be performed by Tenant. Tenant shall use its best efforts to renew or replace the Lease Bond annually prior to the expiration date of the then applicable Lease Bond, for additional periods of not less than one year, provided however, in the last year of the Lease Term or any renewal, the date of the Lease Bond shall coincide with the expiration date of the Lease.

16.3. Tenant Responsible for All Costs. All costs of obtaining, maintaining, replacing, renewing, and/or restoring the Lease Bond in accordance with this section shall be borne by Tenant.

16.4. Draws Under the Lease Bond.

16.4.1. The Lease Bond may be drawn upon in part or in full, periodically, or at one time, upon presentation of only the Lease Bond and a written statement from an authorized representative of Landlord stating that the Tenant is in default of the Lease and the amount to be drawn.

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16.4.2. If Landlord shall at any time draw upon the Lease Bond in accordance with this section, Tenant shall restore all amounts drawn by Landlord within 10 days of such draw.

16.4.3. Tenant agrees that the Lease Bond may be presented by Landlord for payment: (A) upon the occurrence of a default by Tenant under the Lease, and/or (B) in the event Tenant has not, within 30 days prior to the expiration of the then term of the Lease Bond, delivered to Landlord a renewed or replacement Lease Bond complying with all of the requirements of the Lease.

16.4.4. Landlord shall draw only such amount as Landlord is entitled to retain pursuant to this section.

16.4.5. In no event shall the proceeds of any Lease Bond be deemed to be a prepayment of Rent nor shall it be considered as a measure of liquidated damages. 

16.4.6. If it is determined following any drawing by Landlord upon the Lease Bond that such drawing was not permitted or exceeded the amount permitted to be drawn pursuant to this section, then Landlord shall promptly repay to Tenant the unpermitted amount of such drawing without interest.

16.4.7. The proceeds of the Lease Bond paid to Landlord upon presentment thereof shall be a part of the Security Deposit for use in the manner set forth in Section 16.7.

16.5. Successors and Assigns. The Lease Bond shall inure to the benefit of Landlord and its successors and assigns.

16.6. Cooperation by Tenant. Tenant agrees to cooperate with Landlord to promptly execute and deliver to Landlord any and all modifications, amendments, and replacements of the Lease Bond, as Landlord may reasonably request to carry out the terms and conditions of this section.  Upon request of Landlord or any purchaser or mortgagee of the Building, Tenant shall, at its expense, cooperate with Landlord in obtaining an amendment to or replacement of any Lease Bond that Landlord is then holding so that the amended or new Lease Bond reflects the name of the new owner of the Building or mortgagee, as the case may be.

16.7. Cash Security Deposit.  As of the Effective Date, there is no cash Security Deposit.  However, if the Lease Bond is drawn and proceeds are being held as a Security Deposit or if a cash Security Deposit is otherwise delivered to Landlord, the Security Deposit shall be held by Landlord as security for Tenant’s full and faithful performance of the Lease including the payment of Rent.  Landlord may apply the Security Deposit to the extent required to cure any default by Tenant.  If Landlord so applies the Security Deposit (or Lease Bond, as applicable), Tenant shall deliver to Landlord the amount necessary to replenish the Security Deposit (or Lease Bond, as applicable) to its original sum of $[*] within 10 days after notice from Landlord.  The Security Deposit shall not be deemed an advance payment of Rent or a measure of damages for any default by Tenant, nor shall it be a defense to any action that Landlord may bring against Tenant.  The Security Deposit may be commingled with other funds of Landlord and Landlord shall have no liability for payment of any interest on the Security Deposit.  Tenant grants Landlord a security interest in the Security Deposit.

17. Amendment to Section 3.1 of Lease.  Section 3. 1 of the Lease (“Services”) is hereby amended to add a new subsection (j) immediately after subsection (i):

“(j)  Security services provided twenty-four hours per day, seven days per week, in material conformance with the security specifications attached hereto as EXHIBIT “H”, the cost of which shall be part of Operating Expenses for the Project.  Notwithstanding the foregoing and except for Landlord’s or Landlord’s agent(s) gross negligence or willful misconduct, (a) Landlord shall not be deemed to assume any responsibility or liability whatsoever by the furnishing of such security services; and (b) Landlord shall not be liable to Tenant or to any other person for personal injuries, loss of life, or loss of or damage to property or business caused or alleged to have been caused by any supplying, failure to supply, or misfeasance, nonfeasance, or malfeasance of any security services, including negligence by Landlord or its management agent in respect to the hiring or supervision of such security guard or security services or systems, whether

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Landlord employs an independent contractor to supply such security guard and security services or systems or does so by use of Landlord’s own employees or Landlord’s management agent’s own employees.”

18. Amendment to Article VII of Lease.  Article VII of the Lease is hereby amended by adding the following new Section 7.10:

“7.10.    Landlord Default.  If Landlord shall fail to comply with its repair and maintenance obligations with respect to the Premises (a “Self-Help Item”), and such failure materially interferes with Tenant’s ability to use the Premises, then Tenant may give Landlord a written notice (a “Self-Help Notice”) of Tenant’s intention to perform Landlord’s obligations with respect to such Self-Help Item on Landlord’s behalf, which notice shall contain a statement in bold type and capital letters stating “THIS IS A SELF-HELP NOTICE” as a condition to the effectiveness thereof.  If, within five (5) calendar days after receipt of a Self-Help Notice, Landlord fails to respond to the Self-Help Notice or commence the performance of the applicable repair and maintenance obligation, then Tenant may, at its option, but shall not be obligated to, remedy such default.  All actual and reasonable sums expended or obligations incurred by Tenant in connection therewith shall be paid by Landlord to Tenant upon demand, and if Landlord fails to reimburse Tenant within 30 days after receipt of an invoice, Tenant may, in addition to any other right or remedy that Tenant may have, deduct such amount from subsequent installments of Rent and/or other amounts which from time to time become due to Landlord until such amount is fully recovered by Tenant.  All work performed by Tenant under this section must be performed at a commercially reasonable cost.  If any proposed actions by Tenant will affect the electrical, plumbing, HVAC, mechanical, or other systems of the Building, or the roof or structural integrity of the Building, Tenant shall use only those contractors used by Landlord in the Building to work on the Building’s systems or structure, unless those contractors are unwilling or unable to perform the work, in which event Tenant may utilize the services of another qualified, licensed, and insured contractor subject to Landlord’s prior approval.  On an annual basis, at Tenant’s request, Landlord shall provide Tenant with a list of its approved contractors for the Building.  In exercising any rights under this section, Tenant shall use commercially reasonable efforts to minimize interference with the rights of other tenants to use their respective premises in the Building.  Any dispute as to Tenant’s exercise of any rights under this section shall be settled by arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules, with the following exceptions.  The arbitration shall be held in Miami, Florida.  There shall be a single arbitrator selected by the American Arbitration Association.  The arbitrator shall be independent of the parties and have at least ten years’ experience in the supervision of the operation and management of major office buildings in the area in which the Building is located.  The scope of the arbitrator's inquiry and determination shall be limited to whether Landlord is in compliance with its obligations under this Lease in accordance with the express provisions of this Lease and the arbitrator shall not apply principles of good faith and fair dealing, unconscionability, or any other equitable principles in reaching his decision.  The arbitrator will have no authority to award punitive or other damages not measured by the prevailing party’s actual damages including the award of reasonable attorneys’ fees and costs to the prevailing party.  The arbitrator must set forth in any award findings of fact and conclusions of law supporting the decision.  Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction.

19. Miscellaneous Provisions.  Submission of this Amendment by Landlord is not an offer to enter into this Amendment but rather a solicitation for such an offer by Tenant.  Landlord shall not be bound by this Amendment until Landlord has executed it and delivered it to Tenant.  This Amendment constitutes the final agreement between the parties.  It is the complete and exclusive expression of the parties’ agreement on the matters contained in this Amendment.  All prior and contemporaneous negotiations and agreements between the parties on the matters contained in this Amendment are expressly merged into and superseded by this Amendment.  The provisions of this Amendment may not be explained, supplemented, or qualified through evidence of trade usage or a prior course of dealings.  The parties may amend this Amendment only by a written agreement of the parties that identifies itself as an amendment to this Amendment or the Lease.  The parties may execute this Amendment in multiple counterparts, each of which constitutes an original, and all of which, collectively, constitute only one agreement.  Landlord and Tenant intend that faxed or PDF format signatures constitute original signatures binding on the parties.  This Amendment is effective upon delivery of one executed counterpart from each party to the other party.  In proving this Amendment, a party must produce or account only for the executed counterpart of the party to be charged.  Whenever placed before one or more items, the words “include,” “includes,” and “including” shall mean considered as part of a larger group, and not limited to the item(s) recited.  The word “or” is used in the inclusive sense of “and/or”; the word “any” means “any and all”; and the words “will” and “shall” are intended to express mandatory actions and may be used interchangeably with no difference of meaning or intent for purposes of this Amendment. Each party has reviewed this Amendment and all of its terms with legal counsel, or had an opportunity to review this Amendment with legal counsel, and is not relying on any representations made to him by any other person concerning the effect of this Amendment.  This Amendment shall be interpreted without regard to any

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presumption or rule requiring construction against the party causing this Amendment to be drafted.  No inference shall be drawn from the modification or deletion of versions of the provisions of this Amendment contained in any drafts exchanged between the parties before execution of the final version of this Amendment that would be inconsistent in any way with the construction or interpretation that would be appropriate if the prior drafts had never existed.

20. No Reliance.  Each party agrees it has not relied upon any statement, representation, warranty, or agreement of the other party except for those expressly contained in this Amendment.

[SIGNATURES ON NEXT PAGE]

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IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Amendment as of the Effective Date.

____________ _______________ int name of Witness 1 _______________ _________________	/s/Brian T. Kelly_____________________ Brian T. Kelly_____________________ Vice President______________________ 11-15-19___________________
WITNESSES: /s/Elaine Borowski____________ Signature of Witness 1 Elaine Borowski _______________ Print name of Witness 1 /s/Trenae Bryant _______________ Signature of Witness 2 Trenae Bryant _________________ Print name of Witness 2	LANDLORD: W­CROCKER LAM OFFICE OWNER VIII, L.L.C., a Delaware limited liability company By: _/s/Brian T. Kelly_____________________ Name:  Brian T. Kelly_____________________ Title:  Vice President______________________ Date Executed:  11-15-19___________________
/s/Fiona Applebaum____________________ Signature of Witness 1 Fiona Applebaum______________________ Print name of Witness 1 /s/Lincoln M. Vidal____________________ Signature of Witness 2 Lincoln M. Vidal______________________ Print name of Witness 2	TENANT: NCL (BAHAMAS) LTD., a Bermuda company By: _/s/Frank J. Del Rio____________________ Name:  Frank J. Del Rio____________________ Title:  Chairman___________________________ Date Executed:  11/8/19_____________________ [COMPANY SEAL]

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EX-10.64

Exhibit 10.64

As of May 7, 2019

Robert J. Binder

President and Chief Executive Officer, Oceania Cruises

Vice Chairman, Oceania Cruises and Regent

7665 Corporate Center Drive

Miami, Florida 33126

Re:Amendment to Employment Agreement

Dear Robert:

You are a party to an Employment Agreement dated as of September 16, 2016 by and among you and Prestige Cruise Services LLC  (the “Company”) (the “Employment Agreement”),  This letter agreement (this “Agreement”), effective as of the date hereof, constitutes an amendment of the Employment Agreement. Unless otherwise stated, all capitalized terms used in this Agreement shall be as defined in the Employment Agreement.

1. Continuation of Employment

The Period of Employment is extended through and, unless otherwise agreed by the parties and subject to earlier termination pursuant to Section 5  of the Employment Agreement, will end on March 31, 2021 or such extended date as provided below (the “Termination Date”); provided, however, that the Employment Agreement shall be automatically renewed, and the Period of Employment shall be automatically extended through the next December 31st on the Termination Date and each anniversary of December 31st thereafter, unless either party gives written notice at least sixty (60) days prior to the expiration of the Period of Employment (including any renewal thereof) of such party’s desire to terminate the Period of Employment (such notice to be delivered in accordance with Section 18 of the Employment Agreement). The term “Period of Employment” shall include any extension thereof pursuant to the preceding sentence. Notwithstanding the foregoing, the Period of Employment is subject to earlier termination as provided in the Employment Agreement.

2. Equity Awards

In consideration for the extension of the Period of Employment through March 31, 2021, upon a termination of your employment with the Company by the Company without Cause or by you for Good Reason, or by the Company due to your death or Disability, or in the event that your employment terminates on March 31, 2021 (or such other date as may be agreed to by both parties) as a result of the expiration of the Period of Employment, all Norwegian Cruise Line Holdings Ltd. (“NCLH”) restricted share units (“RSUs”) that are then outstanding and unvested shall in the case of such RSUs that are subject to time-based vesting (including any RSUs that were subject to performance-based vesting as to which the applicable performance conditions have been satisfied and remain outstanding subject to only time-based vesting conditions),  vest. Following the date of this Agreement, any equity awarded to you by the Compensation Committee of NCLH will only be subject to time-based vesting requirements or performance-based vesting requirements that do not extend beyond the Termination Date. Any acceleration of vesting pursuant to this paragraph (other than as a result of your death) shall be subject to the condition that you sign a general release

agreement in substantially the form of Exhibit A attached to the Employment Agreement (with such amendments that may be necessary to ensure the release is enforceable to the fullest extent permissible under then applicable law) within twenty-one days following the termination of your employment with the Company and you not revoking such release. The accelerated vesting provided for pursuant to this paragraph shall be in addition to your rights to receive accelerated vesting pursuant to Section 5.3(c) of the Employment Agreement for a qualifying termination of employment in connection with a Change in Control.

Other than as explicitly set forth herein, unvested RSUs and options shall be forfeited upon your employment termination.

3. Legal Updates

To the extent possible, this Agreement is to be construed and interpreted in accordance with, and to avoid any tax, penalty, or interest under, Section 409A of the Code.

The addresses for notices pursuant to Section 18 of the Employment Agreement are amended to be as follows (subject to future updates in accordance with such section):

If to the Executive:to the Executive’s last address most recently on file in the payroll records of the Company

If to the Company:

Prestige Cruise Services LLC

7665 Corporate Center Drive

Miami, FL 33126

Facsimile: (305) 436-4111

Attn: Executive Vice President and Chief Talent Officer

and to:

Prestige Cruise Services LLC

7665 Corporate Center Drive

Miami, FL 33126

Facsimile: (305) 436-4101

Attn: Executive Vice President and General Counsel

4. Effect on the Employment Agreement

Except as modified pursuant to this Agreement, the Employment Agreement shall remain in full force and effect. On and after the date hereof, each reference in the Employment Agreement to “this Agreement,” “herein,” “hereof,” “hereunder” or words of similar import shall mean and be a reference to  the Employment Agreement as amended hereby. To the extent that a provision of this Agreement conflicts with or differs from a provision of the Employment Agreement, such provision of this Agreement shall prevail and govern for all purposes and in all respects.

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5. Counterparts

This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories. Photographic copies of such signed counterparts may be used in lieu of the originals for any purpose.

[The remainder of this page has intentionally been left blank.]

Sincerely,

Prestige Cruise Services LLC

By:/s/Frank J. Del Rio

Frank J. Del Rio

AGREED AND ACCEPTED:

/s/Robert J. Binder

Robert J. Binder

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EX-10.70

Exhibit 10.70

NORWEGIAN CRUISE LINE HOLDINGS LTD.

DIRECTORS’ COMPENSATION POLICY

(Effective January 1, 2020)

Directors of Norwegian Cruise Line Holdings Ltd., a company organized under the laws of Bermuda (the “Company”), who are not employed by the Company or one of its subsidiaries (“non-employee directors”) are entitled to the compensation set forth below, effective as of January 1, 2020, for their service as a member of the Board of Directors (the “Board”) of the Company.  The Board has the right to amend this policy from time to time.

Cash Compensation
Annual Cash Retainer	$100,000
Annual Chairperson Retainer	$125,000
Annual Audit Committee Chairperson Retainer	$35,000
Annual Compensation Committee Chairperson Retainer	$25,000
Annual Nominating and Governance Committee Chairperson Retainer	$20,000
Annual Technology, Environmental, Safety and Security (“TESS”) Chairperson Retainer	$20,000
Annual Audit Committee Member Retainer	$15,000
Out-of-Country Meeting Attendance Fee	$10,000
Equity Compensation
Annual Equity Award	$155,000

Cash Compensation

Each non-employee director will be entitled to an annual cash retainer while serving on the Board in the amount set forth above (the “Annual Cash Retainer”).  A non-employee director who serves as the Chairperson of the Board will be entitled to an additional annual cash retainer while serving in that position in the amount set forth above (the “Annual Chairperson Retainer”).  A non-employee director who serves as the Chairperson of the Audit Committee will be entitled to an additional annual cash retainer while serving in that position in the amount set forth above (the “Annual Audit Committee Chairperson Retainer”).  A non-employee director who serves as the Chairperson of the Compensation Committee will be entitled to an additional annual cash retainer while serving in that position in the amount set forth above (the “Annual Compensation Committee Chairperson Retainer”).    A non-employee director who serves as the Chairperson of the Nominating and Governance Committee will be entitled to an additional annual cash retainer while serving in that position in the amount set forth above (the “Annual Nominating and Governance Committee Chairperson Retainer”).    A non-employee director who serves as the Chairperson of the TESS Committee will be entitled to an additional annual cash retainer while serving in that position in the amount set forth above (the “Annual TESS Committee Chairperson Retainer”).  A non-employee director who serves as a member of the Audit Committee (other than the Chairperson of the Audit Committee) will be entitled to an additional annual cash retainer while serving in that position in the amount set forth above (the “Annual Audit Committee Member Retainer”).  A non-employee director who attends in person a Board or committee meeting located outside of their country of residence will be entitled to a fee for attendance at the meeting in the amount set forth above  (an “Out-of-Country Meeting Attendance Fee”), provided that the director will only be entitled to one Out-of-Country Meeting Attendance Fee if multiple Board or committee meetings are held on the same day or over consecutive days.    Except for the Out-of-Country Meeting Attendance Fee, no non-employee director will be entitled to a meeting fee for attending in-person or telephonically any other Board or committee meetings.

The amounts of the Annual Cash Retainer,  Annual Chairperson Retainer, Annual Audit Committee Chairperson Retainer, Annual Compensation Committee Chairperson Retainer, Annual Nominating and Governance Committee Chairperson Retainer, Annual TESS Committee Chairperson Retainer and Annual Audit Committee Member Retainer are expressed as annualized amounts.  These retainers will be paid on a quarterly basis, at the end of each quarter in arrears, and will be pro-rated if a non-employee director serves (or serves in the corresponding position, as the case may be) for only a portion of the quarter (with the proration based on the number of calendar

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days in the quarter that the director served as a non-employee director or held the particular position, as the case may be).  Out-of-Country Meeting Attendance Fees for attendance at meetings that occur in a particular quarter will be paid at the end of the quarter.

Equity Awards

Annual Equity Awards for Continuing Board Members

On the first business day of each calendar year, each non-employee director then in office will automatically be granted an award of restricted share units of the Company (an “Annual Restricted Share Unit Award”) determined by dividing (1) the Annual Equity Award grant value set forth above by (2) the per-share closing price of an Ordinary Share on the first business day of that year (rounded down to the nearest whole share).  Subject to the non-employee director’s continued service, each Annual Restricted Share Unit Award will vest in one installment on the first business day of the calendar year following the calendar year of the grant.

For each new non-employee director appointed or elected to the Board after the first business day of the calendar year, on the date that the new non-employee director first becomes a member of the Board, the new non-employee director will automatically be entitled to a pro-rata portion of the Annual Restricted Share Unit Award (a “Pro-Rata Annual Restricted Share Unit Award”) determined by dividing (1) a pro-rata portion of the Annual Equity Award grant value set forth above by (2) the per-share closing price of an Ordinary Share on the date the new non-employee director first became a member of the Board (rounded down to the nearest whole share).  The pro-rata portion of the Annual Equity Award grant value for purposes of a Pro-Rata Annual Restricted Share Unit Award will equal the Annual Equity Award grant value set forth above multiplied by a fraction (not greater than one), the numerator of which is 12 minus the number of whole months that as of the particular grant date had elapsed since the first business day of the year, and the denominator of which is 12.  Subject to the non-employee director’s continued service, each Pro-Rata Annual Restricted Share Unit Award will vest in one installment on the first business day of the calendar year following the year the award was granted.

Elective Grants of Equity Awards

Non-employee directors may elect, prior to the start of each applicable calendar year, to convert all or a portion of their Annual Cash Retainer (but not any Annual Chairperson Retainer, Annual Audit Committee Chairperson Retainer,  Annual Compensation Committee Chairperson Retainer, Annual Nominating and Governance Committee Chairperson Retainer, Annual TESS Committee Retainer, Annual Audit Committee Member Retainer or Out-of-Country Meeting Attendance Fees) payable with respect to the particular calendar year into the right to receive an award of restricted share units of the Company (an “Elective Restricted Share Unit Award”). The Elective Restricted Share Unit Award shall automatically be granted on the first business day of each calendar year in an amount determined by dividing (1) the amount of the Annual Cash Retainer elected to be so converted by (2) the per-share closing price of an Ordinary Share on the first business day of the year (rounded down to the nearest whole share).  Subject to the non-employee director’s continued service,  each Elective Restricted Share Unit Award will vest in one installment on the first business day of the calendar year following the year the award was granted.

In order to elect to receive an Elective Restricted Share Unit Award, non-employee directors must complete an election form in such form as the Board may prescribe from time to time (an “Election Form”), and file such completed form with the Company prior to the start of the applicable calendar year (i.e. if a director wants to convert his or her Annual Cash Retainer payable for the 2020 calendar year, the Election Form must be filed prior to December 31, 2019).  Once an Election Form is validly filed with the Company, it shall automatically continue in effect for future calendar years unless the non-employee director changes or revokes his or her Election Form prior to the beginning of any such future calendar years.

Provisions Applicable to All Equity Awards

Each award of restricted share units will be made under and subject to the terms and conditions of the Company’s Amended and Restated 2013 Performance Incentive Plan (the “2013 Plan”) or any successor equity compensation plan approved by the Company’s stockholders and in effect at the time of grant, and will be evidenced

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by, and subject to the terms and conditions of, an award agreement in the form approved by the Board to evidence such type of grant pursuant to this policy.

Expense Reimbursement 

All directors will be entitled to reimbursement from the Company for their reasonable travel (including airfare and ground transportation), lodging and meal expenses incident to meetings of the Board or committees thereof or in connection with other Board related business. 

Product Familiarization

It being in the interest of the Company for non-employee directors of its Board to review and assess the Company’s products, the non-employee directors of the Board are encouraged to take one cruise with one of the Company’s brands annually.  Accordingly, the Company will annually provide to each non-employee director one cabin for an up to 14-night cruise with the Company brand of their choice.  Non-employee directors and a guest of their choice will be accommodated in a penthouse level (or Haven equivalent) cabin with such accommodation to be assigned by the Company’s revenue management department.  The non-employee director will be responsible for taxes, port fees and fuel supplements as well as all onboard spending and transportation to and from the ship (other than any transportation that would otherwise be included in the ticket price of the cruise).

If a Board meeting is held on a cruise, the Company will absorb the cost of the cruise fare for each non-employee director and any guests traveling with such non-employee director in his or her stateroom.  The non-employee director will be responsible for all onboard spending during such cruise.

In addition, non-employee directors and their immediate families are entitled to participate in any Company discount program in effect that is generally available to all Company employees for any additional cruises they may wish to take.

The Chairperson of the Compensation Committee of the Board may approve certain exceptions to the “Product Familiarization” section of this policy.

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EX-10.77

Exhibit 10.77

FORM OF NORWEGIAN CRUISE LINE HOLDINGS LTD.

AMENDED AND RESTATED 2013 PERFORMANCE INCENTIVE PLAN

RESTRICTED SHARE UNIT AWARD AGREEMENT

THIS RESTRICTED SHARE UNIT AWARD AGREEMENT (this “Agreement”) is dated as of [_____________] by and between Norwegian Cruise Line Holdings Ltd., a company organized under the laws of Bermuda (the “Company”), and [Name] (the “Participant”).

W I T N E S S E T H

WHEREAS, pursuant to the Norwegian Cruise Line Holdings Ltd. Amended and Restated 2013 Performance Incentive Plan (the “Plan”), the Company has granted to the Participant effective as of the date hereof (the “Award Date”), a credit of restricted  share units under the Plan (the “Award”), upon the terms and conditions set forth herein and in the Plan.

NOW THEREFORE, in consideration of services rendered and to be rendered by the Participant, and the mutual promises made herein and the mutual benefits to be derived therefrom, the parties agree as follows:

1. Defined Terms.  Capitalized terms used herein and not otherwise defined herein shall have the meaning assigned to such terms in the Plan.

2. Grant.  Subject to the terms of this Agreement, the Company hereby grants to the Participant  an  Award with respect to an aggregate of [__________] restricted share units (subject to adjustment as provided in Section 7.1 of the Plan) (the “Share Units”).  As used herein, the term “share unit” shall mean a non-voting unit of measurement which is deemed for bookkeeping purposes to be equivalent to one outstanding Ordinary Share of the Company (subject to adjustment as provided in Section 7.1 of the Plan) solely for purposes of the Plan and this Agreement.  The Share Units shall be used solely as a device for the determination of the payment to eventually be made to the Participant if such Share Units vest pursuant to Section 3.  The Share Units shall not be treated as property or as a trust fund of any kind.

3. Vesting.  Subject to Section 8 and the paragraphs in this Section below, the Award shall vest and become nonforfeitable with respect to [one-third of the total number of Share Units (subject to adjustment under Section 7.1 of the Plan) on each of March 1, 2021, March 1, 2022 and March 1, 2023].  If the Participant is a party to an employment or similar agreement with the Company or any Subsidiary that includes provisions addressing the vesting of equity awards, the Award shall also become vested as provided in such agreement (including, without limitation, in connection with certain qualifying terminations of the Participant’s employment and/or qualifying change in control transactions). 

Upon a termination of the Participant’s employment with the Company by the Company due to Participant’s death or disability, the number of Share Units specified in Section 2 that are then outstanding and unvested shall vest. Disability as used in this paragraph shall mean a physical or mental impairment which, as reasonably determined by the Company, renders Participant unable to perform the essential functions of Participant’s employment with the Company, even with a reasonable accommodation that does not impose an undue hardship on the

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Company, for more than 90 days in any 180-day period, unless a longer period is required by federal, state or local law, in which case that longer period would apply.

4. Continuance of Employment/Service.  Except as provided in Section 3, the vesting schedule requires continued employment or service through each applicable vesting date as a condition to the vesting of the applicable installment of the Award and the rights and benefits under this Agreement.  Except as provided in Section 3, employment or service for only a portion of the vesting period, even if a substantial portion, will not entitle the Participant to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a termination of employment or services as provided in Section 8 below or under the Plan.

Nothing contained in this Agreement or the Plan constitutes an employment or service commitment by the Company, affects the Participant’s status as an employee at will who is subject to termination without cause, confers upon the Participant any right to remain employed by or in service to the Company or any Subsidiary, interferes in any way with the right of the Company or any Subsidiary at any time to terminate such employment or services, or affects the right of the Company or any Subsidiary to increase or decrease the Participant’s other compensation or benefits.  Nothing in this Agreement, however, is intended to adversely affect any independent contractual right of the Participant without his or her consent thereto.

5. Dividend and Voting Rights.

(a) Limitations on Rights Associated with Units.  The Participant shall have no rights as a shareholder of the Company, no dividend rights (except as expressly provided in Section 5(b) with respect to Dividend Equivalent Rights) and no voting rights, with respect to the Share Units and any Ordinary Shares underlying or issuable in respect of such Share Units until such Ordinary Shares are actually issued to and held of record by the Participant.  No adjustments will be made for dividends or other rights of a holder for which the record date is prior to the date of issuance of such Ordinary Shares underlying or issuable in respect of such Share Units.

(b) Dividend Equivalent Rights Distributions.  As of any date that the Company pays an ordinary cash dividend on its Ordinary Shares, the Company shall credit the Participant with an additional number of Share Units equal to (i) the per share cash dividend paid by the Company on its Ordinary Shares on such date, multiplied by (ii) the total number of Share Units (including any dividend equivalents previously credited hereunder) (with such total number adjusted pursuant to Section 7.1 of the Plan) subject to the Award as of the related dividend payment record date, divided by (iii) the fair market value of an Ordinary Share on the date of payment of such dividend.  Any Share Units credited pursuant to the foregoing provisions of this Section 5(b) shall be subject to the same vesting, payment and other terms, conditions and restrictions as the original Share Units to which they relate.  No crediting of Share Units shall be made pursuant to this Section 5(b) with respect to any Share Units which, as of such record date, have either been paid pursuant to Section 7 or terminated pursuant to Section 8.

6. Restrictions on Transfer.  Neither the Award, nor any interest therein or amount or shares payable in respect thereof (until such shares underlying the Award have been issued) may be sold, assigned, transferred, pledged or otherwise disposed of, alienated or encumbered, either

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voluntarily or involuntarily.  The transfer restrictions in the preceding sentence shall not apply to (a) transfers to the Company, or (b) transfers by will or the laws of descent and distribution.

7. Timing and Manner of Payment of Share Units.  On or as soon as administratively practical following each vesting of the applicable portion of the total Award pursuant to Section 3 hereof or Section 7 of the Plan (and in all events not later than two and one-half months after the applicable vesting date), the Company shall deliver to the Participant a number of whole Ordinary Shares (with any fractional shares rounded down), either by delivering one or more certificates for such shares or by entering such shares in book entry form, as determined by the Company in its discretion, equal to the number of Share Units subject to this Award that vest on the applicable vesting date, unless such Share Units terminate prior to the given vesting date pursuant to Section 8.  The Company’s obligation to deliver Ordinary Shares or otherwise make payment with respect to vested Share Units is subject to the condition precedent that the Participant or other person entitled under the Plan to receive any shares with respect to the vested Share Units deliver to the Company any representations or other documents or assurances required pursuant to Section 8.1 of the Plan.  The Participant shall have no further rights with respect to any Share Units that are paid or that terminate pursuant to Section 8.

8. Effect of Termination of Employment or Service.    Except as provided in Section 3, the Participant’s Share Units shall terminate and be forfeited to the extent such units have not become vested prior to the first date the Participant is no longer employed by or in service to the Company or one of its Subsidiaries, regardless of the reason for the termination of the Participant’s employment or service with the Company or a Subsidiary, whether voluntarily or involuntarily.  If any unvested Share Units are terminated hereunder, such Share Units shall automatically terminate and be forfeited as of the applicable termination date without payment of any consideration by the Company and without any other action by the Participant, or the Participant’s beneficiary or personal representative, as the case may be.

9. Adjustments Upon Specified Events.  Upon the occurrence of certain events relating to the Company’s shares contemplated by Section 7.1 of the Plan (including, without limitation, an extraordinary cash dividend on such Ordinary Share), the Administrator shall make adjustments in accordance with such section in the number of Share Units then outstanding and the number and kind of securities that may be issued in respect of the Award.  No such adjustment shall be made with respect to any ordinary cash dividend for which dividend equivalents are credited pursuant to Section 5(b).

10. Tax Withholding.  Subject to Section 8.1 of the Plan, upon any distribution of Ordinary Shares in respect of the Share Units, the Company shall automatically reduce the number of shares to be delivered by (or otherwise reacquire) the appropriate number of whole shares, valued at their then fair market value (with the “fair market value” of such shares determined in accordance with the applicable provisions of the Plan), to satisfy any applicable withholding obligations of the Company or its Subsidiaries with respect to such distribution of shares at any applicable withholding rates.  In the event that the Company cannot legally satisfy such withholding obligations by such reduction of shares, or in the event of a cash payment or any other withholding event in respect of the Share Units, the Company (or a  Subsidiary) shall be entitled to require a cash payment by or on behalf of the Participant and/or to deduct from

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other compensation payable to the Participant any sums required by federal, state or local tax law to be withheld with respect to such distribution or payment.

11. Notices.  Any notice to be given under the terms of this Agreement shall be in writing or any electronic form approved by the General Counsel and addressed to the Company at its principal office to the attention of the General Counsel or to any designee approved by the General Counsel, and to the Participant at the Participant’s last address reflected on the Company’s records, or at such other address as either party may hereafter properly designate to the other.  Any such notice shall be given only when received, but if the Participant is no longer an employee of or in service to the Company, shall be deemed to have been duly given by the Company when sent to the last physical or email address reflected on the Company’s records.

12. Plan.  The Award and all rights of the Participant under this Agreement are subject to the terms and conditions of the provisions of the Plan, incorporated herein by reference.  The Participant agrees to be bound by the terms of the Plan and this Agreement.  The Participant acknowledges having read and understanding the Plan, the Prospectus for the Plan, and this Agreement.  Unless otherwise expressly provided in other sections of this Agreement, provisions of the Plan that confer discretionary authority on the Board or the Administrator do not (and shall not be deemed to) create any rights in the Participant unless such rights are expressly set forth herein or are otherwise in the sole discretion of the Board or the Administrator so conferred by appropriate action of the Board or the Administrator under the Plan after the date hereof.

13. Entire Agreement.  This Agreement and the Plan together constitute the entire agreement and supersede all prior understandings and agreements, written or oral, of the parties hereto with respect to the subject matter hereof.  The Plan and this Agreement may be amended pursuant to Section 8.6 of the Plan.  Such amendment must be in writing and signed by the Company.  The Company may, however, unilaterally waive any provision hereof in writing to the extent such waiver does not adversely affect the interests of the Participant hereunder, but no such waiver shall operate as or be construed to be a subsequent waiver of the same provision or a waiver of any other provision hereof.

14. Limitation on Participant’s Rights.  Participation in the Planconfers norights or interests other than as herein provided.  This Agreement creates only a contractual obligation on the part of the Company as to amounts payable and shall not be construed as creating a trust.  Neither the Plan nor any underlying program, in and of itself, has any assets.  The Participant shall have only the rights of a general unsecured creditor of the Company with respect to amounts credited and benefits payable, if any, with respect to the Share Units, and rights no greater than the right to receive the Ordinary Shares as a general unsecured creditor with respect to Share Units, as and when payable hereunder. 

15. Counterparts.  This Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 

16. Section Headings.  The section headings of this Agreement are for convenience of reference only and shall not be deemed to alter or affect any provision hereof.

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17. Governing Law.  This Agreement shall be governed by and construed and enforced in accordance with the laws of Bermuda without regard to conflict of law principles thereunder.

18. Section 409A and 457A.  It is intended that the terms of the Award will not result in the imposition of any tax liability pursuant to Section 409A or 457A of the Code.  This Agreement shall be construed and interpreted consistent with that intent.  If the Participant is a “specified employee” within the meaning of Treasury Regulation Section 1.409A-1(i) as of the date of the Participant’s “separation from service” (within the meaning of Section 409A of the Code), the Participant shall not be entitled to any payment pursuant to Section 7 until the earlier of (i) the date which is six (6) months after the Participant’s separation from service for any reason other than death, or (ii) the date of the Participant’s death. The provisions of this Section shall only apply if, and to the extent, required to avoid the imputation of any tax, penalty or interest pursuant to Section 409A of the Code.

19. Clawback Policy.  The Share Units are subject to the terms of the Company’s recoupment, clawback or similar policy as it may be in effect from time to time, as well as any similar provisions of applicable law, any of which could in certain circumstances require repayment or forfeiture of the Share Units or any Ordinary Shares or other cash or property received with respect to the Share Units (including any value received from a disposition of the shares acquired upon payment of the Share Units).

20. No Advice Regarding Grant.  The Participant is hereby advised to consult with his or her own tax, legal and/or investment advisors with respect to any advice the Participant may determine is needed or appropriate with respect to the Share Units (including, without limitation, to determine the foreign, state, local, estate and/or gift tax consequences with respect to the Award).  Neither the Company nor any of its officers, directors, affiliates or advisors makes any representation (except for the terms and conditions expressly set forth in this Award Agreement) or recommendation with respect to the Award.  Except for the withholding rights set forth in Section 10 above, the Participant is solely responsible for any and all tax liability that may arise with respect to the Award. 

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its behalf by a duly authorized officer and the Participant has hereunto set his or her hand as of the date and year first above written.

NORWEGIAN CRUISE LINE HOLDINGS LTD., a  Bermuda Company By:__________________________________ Print Name:___________________________ Its:__________________________________ PARTICIPANT ___________________________________ Signature ____________________________________ Print Name

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EX-10.78

Exhibit 10.78

FORM OF NORWEGIAN CRUISE LINE HOLDINGS LTD.

AMENDED AND RESTATED 2013 PERFORMANCE INCENTIVE PLAN

RESTRICTED SHARE UNIT AWARD AGREEMENT

THIS RESTRICTED SHARE UNIT AWARD AGREEMENT (this “Agreement”) is dated as of [_____________] by and between Norwegian Cruise Line Holdings Ltd., a company organized under the laws of Bermuda (the “Company”), and [Name] (the “Participant”).

W I T N E S S E T H

WHEREAS, pursuant to the Norwegian Cruise Line Holdings Ltd. Amended and Restated 2013 Performance Incentive Plan (the “Plan”), the Company has granted to the Participant effective as of the date hereof (the “Award Date”), a credit of restricted  share units under the Plan (the “Award”), upon the terms and conditions set forth herein and in the Plan.

NOW THEREFORE, in consideration of services rendered and to be rendered by the Participant, and the mutual promises made herein and the mutual benefits to be derived therefrom, the parties agree as follows:

1. Defined Terms.  Capitalized terms used herein and not otherwise defined herein shall have the meaning assigned to such terms in the Plan.

2. Grant.  Subject to the terms of this Agreement, the Company hereby grants to the Participant  an  Award with respect to an aggregate target number of [__________] restricted share units (subject to adjustment as provided in Section 7.1 of the Plan) (the “Share Units”).  As used herein, the term “share unit” shall mean a non-voting unit of measurement which is deemed for bookkeeping purposes to be equivalent to one outstanding Ordinary Share of the Company (subject to adjustment as provided in Section 7.1 of the Plan) solely for purposes of the Plan and this Agreement.  The Share Units shall be used solely as a device for the determination of the payment to eventually be made to the Participant if such Share Units vest pursuant to Section 3.  The Share Units shall not be treated as property or as a trust fund of any kind.

3. Vesting.  Subject to Section 8 and the paragraphs in this Section below, the Award shall vest and become nonforfeitable upon, and subject to, the achievement of the performance hurdles and applicable time-based vesting requirements described in Annex A.  The Administrator shall determine whether the applicable performance hurdles have been achieved, and the vesting of the Share Units is subject to the Administrator’s determination.    If the Participant is a party to an employment or similar agreement with the Company or any Subsidiary that includes provisions addressing the vesting of equity awards, the Award shall also become vested as provided in such agreement (including, without limitation, in connection with certain qualifying terminations of the Participant’s employment and/or qualifying change in control transactions). Any portion of the Award that is not considered eligible to vest following the end of the applicable Performance Period as a result of performance results for the Performance Period, all as determined in accordance with Annex A, shall terminate and be forfeited effective as of the end of the Performance Period.

Upon a termination of the Participant’s employment with the Company by the Company due to Participant’s death or disability, Participant will vest in a pro-rata portion of the target

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number of Share Units specified in Section 2 (“Target Shares”) that are then outstanding and unvested. The pro-rata portion will be calculated as follows: (Target Shares ÷ number of days from Award Date to original vesting date specified in Annex A (including both beginning and end date)) x number of days from the Award Date to the date of termination due to death or disability. Any partial shares will be rounded down to the nearest whole share. Disability as used in this paragraph shall mean a physical or mental impairment which, as reasonably determined by the Company, renders Participant unable to perform the essential functions of Participant’s employment with the Company, even with a reasonable accommodation that does not impose an undue hardship on the Company, for more than 90 days in any 180-day period, unless a longer period is required by federal, state or local law, in which case that longer period would apply. 

4. Continuance of Employment/Service.  Except as provided in Section 3, the vesting schedule requires continued employment or service through each applicable vesting date as a condition to the vesting of the applicable installment of the Award and the rights and benefits under this Agreement.  Except as provided in Section 3, employment or service for only a portion of the vesting period, even if a substantial portion, will not entitle the Participant to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a termination of employment or services as provided in Section 8 below or under the Plan.

Nothing contained in this Agreement or the Plan constitutes an employment or service commitment by the Company, affects the Participant’s status as an employee at will who is subject to termination without cause, confers upon the Participant any right to remain employed by or in service to the Company or any Subsidiary, interferes in any way with the right of the Company or any Subsidiary at any time to terminate such employment or services, or affects the right of the Company or any Subsidiary to increase or decrease the Participant’s other compensation or benefits.  Nothing in this Agreement, however, is intended to adversely affect any independent contractual right of the Participant without his or her consent thereto.

5. Dividend and Voting Rights.

(a) Limitations on Rights Associated with Units.  The Participant shall have no rights as a shareholder of the Company, no dividend rights (except as expressly provided in Section 5(b) with respect to Dividend Equivalent Rights) and no voting rights, with respect to the Share Units and any Ordinary Shares underlying or issuable in respect of such Share Units until such Ordinary Shares are actually issued to and held of record by the Participant.  No adjustments will be made for dividends or other rights of a holder for which the record date is prior to the date of issuance of such Ordinary Shares underlying or issuable in respect of such Share Units.

(b) Dividend Equivalent Rights Distributions.  As of any date that the Company pays an ordinary cash dividend on its Ordinary Shares, the Company shall credit the Participant with an additional number of Share Units equal to (i) the per share cash dividend paid by the Company on its Ordinary Shares on such date, multiplied by (ii) the total number of Share Units (including any dividend equivalents previously credited hereunder) (with such total number adjusted pursuant to Section 7.1 of the Plan) subject to the Award as of the related dividend payment record date, divided by (iii) the fair market value of an Ordinary Share on the date of payment of such dividend.  Any Share Units credited pursuant to the foregoing provisions

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of this Section 5(b) shall be subject to the same vesting, payment and other terms, conditions and restrictions as the original Share Units to which they relate.  No crediting of Share Units shall be made pursuant to this Section 5(b) with respect to any Share Units which, as of such record date, have either been paid pursuant to Section 7 or terminated pursuant to Section 3 or Section 8.

6. Restrictions on Transfer.  Neither the Award, nor any interest therein or amount or shares payable in respect thereof (until such shares underlying the Award have been issued) may be sold, assigned, transferred, pledged or otherwise disposed of, alienated or encumbered, either voluntarily or involuntarily.  The transfer restrictions in the preceding sentence shall not apply to (a) transfers to the Company, or (b) transfers by will or the laws of descent and distribution.

7. Timing and Manner of Payment of Share Units.  On or as soon as administratively practical following each vesting of the applicable portion of the total Award pursuant to Section 3 hereof or Section 7 of the Plan (and in all events not later than two and one-half months after the applicable vesting date), the Company shall deliver to the Participant a number of whole Ordinary Shares (with any fractional shares rounded down), either by delivering one or more certificates for such shares or by entering such shares in book entry form, as determined by the Company in its discretion, equal to the number of Share Units subject to this Award that vest on the applicable vesting date, unless such Share Units terminate prior to the given vesting date pursuant to Section 3 or Section 8. To the extent required to comply with the short-term deferral exception under Section 457A of the Code, in the event the Participant becomes entitled to vest in any Share Units pursuant to an employment or similar agreement with the Company or any Subsidiary that includes provisions permitting performance-based equity awards to remain outstanding and eligible to vest following a qualifying termination of employment that occurs in the [2020 calendar year, the Company shall deliver a number of Ordinary Shares equal to its best estimate of the number of vested Share Units prior to the end of the 2021 calendar year].  The  Company’s obligation to deliver Ordinary Shares or otherwise make payment with respect to vested Share Units is subject to the condition precedent that the Participant or other person entitled under the Plan to receive any shares with respect to the vested Share Units deliver to the Company any representations or other documents or assurances required pursuant to Section 8.1 of the Plan.  The Participant shall have no further rights with respect to any Share Units that are paid or that terminate pursuant to Section 3 or Section 8.

8. Effect of Termination of Employment or Service.    Except as provided in Section 3, the Participant’s Share Units shall terminate and be forfeited to the extent such units have not become vested prior to the first date the Participant is no longer employed by or in service to the Company or one of its Subsidiaries, regardless of the reason for the termination of the Participant’s employment or service with the Company or a Subsidiary, whether voluntarily or involuntarily.  If any unvested Share Units are terminated hereunder, such Share Units shall automatically terminate and be forfeited as of the applicable termination date without payment of any consideration by the Company and without any other action by the Participant, or the Participant’s beneficiary or personal representative, as the case may be.

9. Adjustments Upon Specified Events.  Upon the occurrence of certain events relating to the Company’s shares contemplated by Section 7.1 of the Plan (including, without limitation, an extraordinary cash dividend on such Ordinary Share), the Administrator shall make adjustments in accordance with such section in the number of Share Units then outstanding and

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the number and kind of securities that may be issued in respect of the Award.  No such adjustment shall be made with respect to any ordinary cash dividend for which dividend equivalents are credited pursuant to Section 5(b).  Each of the performance hurdles referred to in Section 3 shall also be subject to equitable and proportionate adjustment under Section 7.1 of the Plan.

10. Tax Withholding.  Subject to Section 8.1 of the Plan, upon any distribution of Ordinary Shares in respect of the Share Units, the Company shall automatically reduce the number of shares to be delivered by (or otherwise reacquire) the appropriate number of whole shares, valued at their then fair market value (with the “fair market value” of such shares determined in accordance with the applicable provisions of the Plan), to satisfy any applicable withholding obligations of the Company or its Subsidiaries with respect to such distribution of shares at any applicable withholding rates.  In the event that the Company cannot legally satisfy such withholding obligations by such reduction of shares, or in the event of a cash payment or any other withholding event in respect of the Share Units, the Company (or a  Subsidiary) shall be entitled to require a cash payment by or on behalf of the Participant and/or to deduct from other compensation payable to the Participant any sums required by federal, state or local tax law to be withheld with respect to such distribution or payment.

11. Notices.  Any notice to be given under the terms of this Agreement shall be in writing or any electronic form approved by the General Counsel and addressed to the Company at its principal office to the attention of the General Counsel or to any designee approved by the General Counsel, and to the Participant at the Participant’s last address reflected on the Company’s records, or at such other address as either party may hereafter properly designate to the other.  Any such notice shall be given only when received, but if the Participant is no longer an employee of or in service to the Company, shall be deemed to have been duly given by the Company when sent to the last physical or email address reflected on the Company’s records.

12. Plan.  The Award and all rights of the Participant under this Agreement are subject to the terms and conditions of the provisions of the Plan, incorporated herein by reference.  The Participant agrees to be bound by the terms of the Plan and this Agreement.  The Participant acknowledges having read and understanding the Plan, the Prospectus for the Plan, and this Agreement.  Unless otherwise expressly provided in other sections of this Agreement, provisions of the Plan that confer discretionary authority on the Board or the Administrator do not (and shall not be deemed to) create any rights in the Participant unless such rights are expressly set forth herein or are otherwise in the sole discretion of the Board or the Administrator so conferred by appropriate action of the Board or the Administrator under the Plan after the date hereof.

13. Entire Agreement.  This Agreement and the Plan together constitute the entire agreement and supersede all prior understandings and agreements, written or oral, of the parties hereto with respect to the subject matter hereof.  The Plan and this Agreement may be amended pursuant to Section 8.6 of the Plan.  Such amendment must be in writing and signed by the Company.  The Company may, however, unilaterally waive any provision hereof in writing to the extent such waiver does not adversely affect the interests of the Participant hereunder, but no such waiver shall operate as or be construed to be a subsequent waiver of the same provision or a waiver of any other provision hereof.

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14. Limitation on Participant’s Rights.  Participation in the Planconfers norights or interests other than as herein provided.  This Agreement creates only a contractual obligation on the part of the Company as to amounts payable and shall not be construed as creating a trust.  Neither the Plan nor any underlying program, in and of itself, has any assets.  The Participant shall have only the rights of a general unsecured creditor of the Company with respect to amounts credited and benefits payable, if any, with respect to the Share Units, and rights no greater than the right to receive the Ordinary Shares as a general unsecured creditor with respect to Share Units, as and when payable hereunder. 

15. Counterparts.  This Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 

16. Section Headings.  The section headings of this Agreement are for convenience of reference only and shall not be deemed to alter or affect any provision hereof.

17. Governing Law.  This Agreement shall be governed by and construed and enforced in accordance with the laws of Bermuda without regard to conflict of law principles thereunder.

18. Section 409A and 457A.  It is intended that the terms of the Award will not result in the imposition of any tax liability pursuant to Section 409A or 457A of the Code.  This Agreement shall be construed and interpreted consistent with that intent.  If the Participant is a “specified employee” within the meaning of Treasury Regulation Section 1.409A-1(i) as of the date of the Participant’s “separation from service” (within the meaning of Section 409A of the Code), the Participant shall not be entitled to any payment pursuant to Section 7 until the earlier of (i) the date which is six (6) months after the Participant’s separation from service for any reason other than death, or (ii) the date of the Participant’s death. The provisions of this Section shall only apply if, and to the extent, required to avoid the imputation of any tax, penalty or interest pursuant to Section 409A of the Code.

19. Clawback Policy.  The Share Units are subject to the terms of the Company’s recoupment, clawback or similar policy as it may be in effect from time to time, as well as any similar provisions of applicable law, any of which could in certain circumstances require repayment or forfeiture of the Share Units or any Ordinary Shares or other cash or property received with respect to the Share Units (including any value received from a disposition of the shares acquired upon payment of the Share Units).

20. No Advice Regarding Grant.  The Participant is hereby advised to consult with his or her own tax, legal and/or investment advisors with respect to any advice the Participant may determine is needed or appropriate with respect to the Share Units (including, without limitation, to determine the foreign, state, local, estate and/or gift tax consequences with respect to the Award).  Neither the Company nor any of its officers, directors, affiliates or advisors makes any representation (except for the terms and conditions expressly set forth in this Award Agreement) or recommendation with respect to the Award.  Except for the withholding rights set forth in Section 10 above, the Participant is solely responsible for any and all tax liability that may arise with respect to the Award. 

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its behalf by a duly authorized officer and the Participant has hereunto set his or her hand as of the date and year first above written.

NORWEGIAN CRUISE LINE HOLDINGS LTD., a  Bermuda Company By:__________________________________ Print Name:___________________________ Its:__________________________________ PARTICIPANT ___________________________________ Signature ____________________________________ Print Name

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Annex A

Performance Hurdles

[Insert Performance Vesting Terms.]

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EX-21.1

Exhibit 21.1

List of Subsidiaries of Norwegian Cruise Line Holdings Ltd.

Name of Subsidiary	Jurisdiction of Incorporation or Organization
Arrasas Limited	Isle of Man
Belize Island Holdings Ltd.	Belize
Breakaway Four, Ltd.	Bermuda
Breakaway One, Ltd.	Bermuda
Breakaway Three, Ltd.	Bermuda
Breakaway Two, Ltd.	Bermuda
Classic Cruises II, LLC	Delaware
Classic Cruises, LLC	Delaware
Eurosoft Corporation Limited	United Kingdom
Eurosoft Cruise Line (Shanghai) Co., Ltd.	China
Explorer II New Build, LLC	Delaware
Explorer III New Build, LLC	Delaware
Explorer New Build, LLC	Delaware
Insignia Vessel Acquisition, LLC	Delaware
Leonardo Five, Ltd.	Bermuda
Leonardo Four, Ltd.	Bermuda
Leonardo One, Ltd.	Bermuda
Leonardo Six, Ltd.	Bermuda
Leonardo Three, Ltd.	Bermuda
Leonardo Two, Ltd.	Bermuda
Marina New Build, LLC	Republic of the Marshall Islands
Mariner, LLC	Republic of the Marshall Islands
Nautica Acquisition, LLC	Delaware
Navigator Vessel Company, LLC	Delaware
NCL (Bahamas) Ltd. d/b/a Norwegian Cruise Line	Bermuda
NCL America Holdings, LLC	Delaware
NCL America LLC	Delaware
NCL Australia Pty Ltd.	Australia
NCL Corporation Ltd.	Bermuda
NCL Emerald Corporation, Limited	Ireland
NCL International, Ltd.	Bermuda
Norwegian Compass Ltd.	United Kingdom
Norwegian Cruise Co. Inc.	Delaware
Norwegian Cruise Line Group UK Limited (formerly Prestige Cruise Services (Europe) Limited)	United Kingdom
Norwegian Dawn Limited	Isle of Man
Norwegian Epic, Ltd.	Bermuda
Norwegian Gem, Ltd.	Bermuda
Norwegian Jewel Limited	Isle of Man
Norwegian Pearl, Ltd.	Bermuda
Norwegian Sextant Ltd.	United Kingdom
Norwegian Sky, Ltd.	Bermuda
Norwegian Spirit, Ltd.	Bermuda
Norwegian Star Limited	Isle of Man
Norwegian Sun Limited	Bermuda

O Class Plus One, LLC	Delaware
O Class Plus Two, LLC	Delaware
Oceania Cruises S. de R.L. (formerly Oceania Cruises, Inc.)	Panama
OCI Finance Corp.	Delaware
Prestige Cruise Holdings S. de R.L. (formerly Prestige Cruise Holdings, Inc.)	Panama
Prestige Cruise Services LLC	Delaware
Prestige Cruises Air Services, Inc.	Florida
Prestige Cruises International S. de R.L. (formerly Prestige Cruises International, Inc.)	Panama
Pride of America Ship Holding, LLC	Delaware
Pride of Hawaii, LLC	Delaware
Regatta Acquisition, LLC	Delaware
Riviera New Build, LLC	Republic of the Marshall Islands
Seahawk One, Ltd.	Bermuda
Seahawk Two, Ltd.	Bermuda
Seven Seas Cruises S. de R.L.	Panama
Sirena Acquisition	Cayman Islands
Sixthman Ltd.	Bermuda
SSC Finance Corp.	Delaware
Voyager Vessel Company, LLC	Delaware

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-216441) and Form S-8 (Nos. 333-212352, 333-196538, 333-190716, 333-186184) of Norwegian Cruise Line Holdings Ltd. of our report dated February 27, 2020 relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

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/s/ PricewaterhouseCoopers LLP

Miami, Florida

February 27, 2020

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Frank J. Del Rio, certify that:

1.I have reviewed this annual report on Form 10-K of Norwegian Cruise Line Holdings Ltd.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	/s/Frank J. Del Rio
Dated: February 27, 2020	Name:	Frank J. Del Rio
	Title:	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Mark A. Kempa, certify that:

1.I have reviewed this annual report on Form 10-K of Norwegian Cruise Line Holdings Ltd.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	/s/Mark A. Kempa
Dated: February 27, 2020	Name:	Mark A. Kempa
	Title:	Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C.
SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of Frank J. Del Rio, the President and Chief Executive Officer, and Mark A. Kempa, the Executive Vice President and Chief Financial Officer, of Norwegian Cruise Line Holdings Ltd. (the "Company"), does hereby certify, that, to such officer’s knowledge:

The Annual Report on Form 10-K of the Company, for the year ended December 31, 2019 (the “Form 10-K”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: February 27, 2020

By:	/s/Frank J. Del Rio
Name:	Frank J. Del Rio
Title:	President and Chief Executive Officer
By:	/s/Mark A. Kempa
Name:	Mark A. Kempa
Title:	Executive Vice President and Chief Financial Officer

XML

Revenue and Expense from Contracts with Customers

12 Months Ended

Dec. 31, 2019

Revenue from Contract with Customer [Abstract]

Revenue and Expense from Contracts with Customers

3. Revenue and Expense from Contracts with Customers

Nature of Goods and Services

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

During the voyage, we generate onboard and other revenue for additional products and services which are not included in the cruise fare, including casino operations, certain food and beverage, gift shop purchases, spa services, photo services, Wi-Fi services and other similar items. Food and beverage, casino operations, photo services and shore excursions are generally managed directly by us while retail shops, spa services, art auctions and internet services may

be managed through contracts with third-party concessionaires. These contracts generally entitle us to a percentage of the gross sales derived from these concessions, which is recognized on a net basis. While some onboard goods and services may be prepaid prior to the voyage, we utilize point-of-sale systems for discrete purchases made onboard. Certain of our product offerings are bundled and we allocate the value of the bundled goods and services between passenger ticket revenue and onboard and other revenue based upon the relative standalone selling prices of those goods and services.

Timing of Satisfaction of Performance Obligations and Significant Payment Terms

The payment terms and cancellation policies vary by brand, stateroom category, length of voyage, and country of purchase. A deposit for a future booking is required at or soon after the time of booking. Final payment is generally due between 120 days and 180 days before the voyage. Deposits on advance ticket sales are deferred when received and include amounts that are refundable. Deferred amounts are subsequently recognized as revenue ratably during the voyage sailing days as services are rendered over time on the ship. Deposits are generally cancellable and refundable prior to sailing, but may be subject to penalties, depending on the timing of cancellation. The inception of substantive cancellation penalties generally coincides with the dates that final payment is due, and penalties generally increase as the voyage sail date approaches. Cancellation fees are recognized in passenger ticket revenue in the month of the cancellation.

Goods and services associated with onboard revenue are generally provided at a point in time and revenue is recognized when the performance obligation is satisfied. Onboard goods and services rendered may be paid at disembarkation. A receivable is recognized for onboard goods and services rendered when the voyage is not completed before the end of the period.

Cruises that are reserved under full ship charter agreements are subject to the payment terms of the specific agreement and may be either cancelable or non-cancelable. Deposits received on charter voyages are deferred when received and included in advance ticket sales. Deferred amounts are subsequently recognized as revenue ratably over the voyage sailing dates.

Contract Balances

Receivables from customers are included within accounts receivables, net. As of December 31, 2019 and December 31, 2018, our receivables from customers were $15.3 million and $17.3 million, respectively.

Contract liabilities represent the Company’s obligation to transfer goods and services to a customer. A customer deposit held for a future cruise is generally considered a contract liability only when final payment is both due and paid by the customer and is usually recognized in earnings within 180 days of becoming a contract. Other deposits held and included within advance ticket sales or other long-term liabilities are not considered contract liabilities as they are largely cancelable and refundable. Our contract liabilities are included within advance ticket sales. As of December 31, 2019 and December 31, 2018, our contract liabilities were $1.4 billion and $1.2 billion, respectively. Of the amounts included within contract liabilities, approximately 55% were refundable in accordance with our cancellation policies. Approximately $1.2 billion of the December 31, 2018 contract liability balance has been recognized in revenue for the year ended December 31, 2019.

Our revenue is seasonal and based on the demand for cruises. Historically, the seasonality of the North American cruise industry generally results in the greatest demand for cruises during the Northern Hemisphere’s summer months. This predictable seasonality in demand has resulted in fluctuations by quarter in our revenue and results of operations. The seasonality of our results is increased due to ships being taken out of service for regularly scheduled Dry-docks, which we typically schedule during non-peak demand periods. This seasonality will result in higher contract liability balances as a result of an increased number of reservations preceding these peak demand periods. The addition of new ships also increases the contract liability balances prior to a new ship’s delivery, as staterooms are made available for reservation prior to the inaugural cruise. Norwegian Encore, with approximately 4,000 Berths, was delivered on October 30, 2019 and added 7% capacity to our fleet.

Practical Expedients and Exemptions

We do not disclose information about remaining performance obligations that have original expected durations of one year or less. We recognize revenue in an amount that corresponds directly with the value to the customer of our performance completed to date. Variable consideration, which will be determined based on a future rate and passenger count, is excluded from the disclosure and these amounts are not material. These variable non-disclosed contractual amounts relate to our non-cancelable charter agreements and a leasing arrangement with a certain port, both of which are long-term in nature. Amounts that are fixed in nature due to the application of minimum guarantees are also not material and are not disclosed.

Contract Costs

Management expects that incremental commissions and credit card fees paid as a result of obtaining ticket contracts are recoverable; therefore, we recognize these amounts as assets when they are paid prior to the voyage. Costs of air tickets, port taxes and other fees that fulfill future performance obligations are also considered recoverable and are recorded as assets. Costs incurred to obtain customers were $143.5 million and $116.3 million as of December 31, 2019 and 2018, respectively. Costs to fulfill contracts with customers were $49.7 million and $32.5 million as of December 31, 2019 and 2018, respectively. Both costs to obtain and fulfill contracts with customers are recognized within prepaid expenses and other assets. Incremental commissions, credit card fees, air ticket costs, and port taxes and fees are recognized ratably over the voyage sailing dates, concurrent with associated revenue, and are primarily in commissions, transportation and other expense.

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Property and Equipment, Net

12 Months Ended

Dec. 31, 2019

Property Plant And Equipment [Abstract]

Property and Equipment, Net

7. Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

	December 31,
	2019		2018
Ships	$	14,154,578	$	13,032,555
Ships improvements		1,865,272		1,407,989
Ships under construction		387,749		491,632
Land and land improvements		38,375		34,936
Other		672,975		558,052
		17,118,949		15,525,164
Less: accumulated depreciation		(3,983,612)		(3,405,911)
Property and equipment, net	$	13,135,337	$	12,119,253

The increase in ships was primarily due to the addition of Norwegian Encore. The Company capitalized approximately $458.9 million of costs associated with ship improvements. Depreciation expense for the years ended December 31, 2019, 2018 and 2017 was $627.7 million, $534.9 million and $478.7 million, respectively. Repairs and maintenance expenses including Dry-dock expenses were $199.7 million, $199.5 million and $157.2 million for the years ended December 31, 2019, 2018 and 2017, respectively, and were recorded within other cruise operating expense.

Ships under construction include progress payments to the shipyard, planning and design fees and other associated costs. Capitalized interest costs which were primarily associated with the construction or revitalization of ships amounted to $32.9 million, $30.4 million and $29.0 million for the years ended December 31, 2019, 2018 and 2017, respectively.

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Employee Benefits and Share-Based Compensation

12 Months Ended

Dec. 31, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Employee Benefits and Share-Based Compensation

11. Employee Benefits and Share-Based Compensation

Amended and Restated 2013 Performance Incentive Plan

In January 2013, NCLH adopted the 2013 Performance Incentive Plan, which provided for the issuance of up to 15,035,106 of NCLH’s ordinary shares pursuant to awards granted under the plan, with no more than 5,000,000 shares being granted to one individual in any calendar year. In May 2016, the plan was amended and restated (“Restated 2013 Plan”) pursuant to approval from the Board of Directors and NCLH’s shareholders. Among other things, under the Restated 2013 Plan, the number of NCLH’s ordinary shares that may be delivered pursuant to all awards granted under the plan was increased by an additional 12,430,000 shares to a new maximum aggregate limit of 27,465,106 shares. Additionally, the expiration date of the Restated 2013 Plan was extended to March 30, 2026. Share options under the plan are granted with an exercise price equal to the closing market price of NCLH shares at the date of grant. The vesting period for time-based options is typically set at three, four or five years with a contractual life ranging from seven to 10 years. The vesting period for time-based and performance-based restricted share units is generally three years. Forfeited awards will be available for subsequent awards under the Restated 2013 Plan.

Share Option Awards

There were no time-based share option awards granted for the years ended December 31, 2019, 2018 and 2017 or performance-based share option awards granted for the year ended December 31, 2019. The performance-based options awarded to our President and Chief Executive Officer in August 2015 were subject to performance conditions such that the number of awards that ultimately vested depended on the adjusted earnings per share (“Adjusted EPS”) and adjusted return on invested capital (“Adjusted ROIC”) achieved by the Company during the performance period compared to targets established at the award date. Although the terms of the performance-based awards provide the compensation committee with the discretion to make certain adjustments to the performance calculation, it was determined that a mutual understanding of the key terms and conditions of the awards had been ascertained. In 2018, the grant date was therefore established for performance-based awards granted in prior years. The fair value of each performance-based option award is estimated on the date of grant using the Black-Scholes option-pricing model. The estimated fair value of the share options is amortized over the requisite service period using the straight-line method. The assumptions used within the option-pricing model for the performance-based awards are as follows:

	2018	2017
Dividend yield	—%	—%
Expected share price volatility	31.50% - 32.20%	25.97%
Risk-free interest rate	2.48% - 2.58%	1.81%
Expected term	3.72 - 4.22 years	4.20 years

Expected volatility was determined based on the historical share prices in our industry. The risk-free rate was based on U.S. Treasury zero coupon issues with a remaining term equal to the expected option term at grant date. The expected term was calculated under the simplified method.

The following table sets forth a summary of option activity under NCLH’s Restated 2013 Plan for the period presented:

										Weighted-
	Number of Share Option Awards			Weighted-Average Exercise Price						Average	Aggregate
	Time-	Performance-	Market-	Time-		Performance-		Market-		Contractual	Intrinsic
	Based	Based	Based	Based		Based		Based		Term	Value
	Awards	Awards	Awards	Awards		Awards		Awards		(years)	(in thousands)
Outstanding as of January 1, 2019	5,686,793	410,499	208,333	$	50.65	$	45.67	$	59.43	6.22	$	13,946
Exercised	(636,073)	(138,759)	—		40.30		19.00		—
Forfeited and cancelled	(132,166)	(156,251)	—		56.13		59.43		—
Outstanding as of December 31, 2019	4,918,554	115,489	208,333	$	51.84	$	59.11	$	59.43	5.42	$	33,413
Vested and expected to vest as of December 31, 2019	4,918,554	115,489	—	$	51.84	$	59.11	$	—	5.41	$	33,413
Exercisable as of December 31, 2019	4,917,721	115,489	—	$	51.84	$	59.11	$	—	5.41	$	33,411

The weighted-average grant-date fair value of performance-based options granted (or where a grant date had not been previously established, the fair value recognized) during the years ended December 31, 2018 and 2017 was $15.20 and $8.55, respectively. The total intrinsic value of share options exercised during 2019, 2018 and 2017 was $13.3 million, $16.7 million and $18.9 million, respectively, and total cash received by the Company from exercises was $28.3 million, $25.8 million and $27.4 million, respectively. As of December 31, 2019, there was no unrecognized compensation cost, related to options granted under our share-based incentive plans.

Restricted Ordinary Share Awards

The following is a summary of NCLH’s restricted ordinary share activity for the period presented:

	Number of
	Time-	Weighted-
	Based	Average Grant
	Awards	Date Fair Value
Non-vested as of January 1, 2019	429	$	58.41
Vested	(429)		58.41
Non-vested as of December 31, 2019	—	$	—

Restricted Share Unit (“RSU”) Awards

On March 1, 2019, NCLH granted to certain employees 1.9 million time-based RSU awards which vest equally over three years. Also on March 1, 2019, NCLH granted to certain members of our management team 0.5 million performance-based RSU awards, which vest upon the achievement of certain pre-established performance targets and which amount assumes the maximum level of achievement.

The fair value of the time-based and performance-based RSUs is equal to the closing market price of NCLH shares at the date of grant. The performance-based RSUs awarded to certain members of our management team are subject to performance conditions such that the number of shares that ultimately vest depends on the Adjusted EPS and Adjusted ROIC achieved by the Company during the performance period compared to targets established at the award date. Although the terms of the performance-based RSU awards provide the compensation committee with the discretion to make certain adjustments to the performance calculation, it was determined that a mutual understanding of the key terms and conditions of the awards has been ascertained. In 2018, the grant date was therefore established for performance-based RSU awards granted in prior years. The Company remeasures the probability and the cumulative share-based compensation expense of the awards each reporting period until vesting or forfeiture occurs.

The following table sets forth a summary of RSU activity for the period presented:

	Number of	Weighted-		Number of		Weighted-		Number of	Weighted-
	Time-Based	Average Grant		Performance-		Average Grant		Market-	Average Grant
	Awards	Date Fair Value		Based Awards		Date Fair Value		Based Awards	Date Fair Value
Non-vested as of January 1, 2019	2,973,032	$	53.98	825,614		$	56.58	50,000	$	59.43
Granted	1,929,495		55.00	462,282	(1)		55.27	—		—
Vested	(1,430,291)		53.02	(121,000)			56.27	—		—
Forfeited or expired	(226,611)		55.04	(37,500)			56.27	—		—
Non-vested as of December 31, 2019	3,245,625	$	54.94	1,129,396		$	56.09	50,000	$	59.43
Non-vested and expected to vest as of December 31, 2019	3,245,625	$	54.94	483,976		$	56.61	—	$	—

(1) Number of performance-based restricted share units included assumes maximum achievement of performance targets.

As of December 31, 2019, there was total unrecognized compensation costs related to non-vested time-based, non-vested performance-based and market-based RSUs of $106.5 million, $9.2 million and $0, respectively. The costs are expected to be recognized over a weighted-average period of 1.8 years, 1.1 years and 0 years, respectively, for the time-based, performance-based and market-based RSUs. Taxes paid pursuant to net share settlements in 2019, 2018 and 2017 were $20.9 million, $13.9 million and $6.3 million, respectively.

Employee Stock Purchase Plan (“ESPP”)

In April 2014, NCLH’s shareholders approved the ESPP. The purpose of the ESPP is to provide eligible employees with an opportunity to purchase NCLH’s ordinary shares at a favorable price and upon favorable terms in consideration of the participating employees’ continued services. A maximum of 2,000,000 of NCLH’s ordinary shares may be purchased under the ESPP. To be eligible to participate in an offering period, on the grant date of that period, an individual must be customarily employed by the Company or a participating subsidiary for more than twenty hours per week and for more than five months per calendar year. Participation in the ESPP is also subject to certain limitations. The ESPP is considered to be compensatory based on: a) the 15% purchase price discount and b) the look-back purchase price feature. Since the plan is compensatory, compensation expense must be recorded in the consolidated statements of operations on a straight-line basis over the six-month withholding period. As of December 31, 2019 and 2018, we had a liability for payroll withholdings received of $2.1 million and $1.9 million, respectively.

The compensation expense recognized for share-based compensation for the periods presented include the following (in thousands):

	Year Ended December 31,
Classification of expense	2019		2018		2017
Payroll and related (1)	$	17,597	$	15,629	$	9,455
Marketing, general and administrative (2)		77,458		100,354		77,584
Total share-based compensation expense	$	95,055	$	115,983	$	87,039

(1) Amounts relate to equity granted to certain of our shipboard officers.

(2) Amounts relate to equity granted to certain of our corporate employees.

Employee Benefit Plans

We offer annual incentive bonuses pursuant to our Restated 2013 Plan for our executive officers and other key employees. Bonuses under the plan become earned and payable based on the Company’s performance during the applicable performance period and the individual’s continued employment. Company performance criteria include the attainment of certain financial targets and other strategic objectives.

Certain employees are employed pursuant to agreements that provide for severance payments. Severance is generally only payable upon an involuntary termination of the employment by us without cause or a termination by the employee

for good reason. Severance generally includes a series of cash payments based on the employee’s base salary (and in some cases, bonus), and our payment of the employee’s continued medical benefits for the applicable severance period.

We maintain a 401(k) Plan for our shoreside employees, including our executive officers. Participants may contribute up to 100% of eligible compensation each pay period, subject to certain limitations. We make matching contributions equal to 100% of the first 3% and 50% of amounts greater than 3% to and including 10% of each participant’s contributions subject to certain limitations. In addition, we may make discretionary supplemental contributions to the 401(k) Plan, which shall be allocated pro rata to each eligible participant based on the compensation of the participant relative to the total compensation of all participants. Our matching contributions are vested according to a five-year schedule. The 401(k) Plan is subject to the provisions of ERISA and is intended to be qualified under section 401(a) of the U.S. Internal Revenue Code (the “Code”).

Our matching contributions are reduced by amounts forfeited by those employees who leave the 401(k) Plan prior to vesting fully in the matching contributions. Forfeited contributions of $0.2 million, $0.3 million and $0.3 million were utilized in the years ended December 31, 2019, 2018 and 2017, respectively.

We recorded total expenses related to the above 401(k) Plan of $9.1 million, $9.3 million and $7.3 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Effective January 2009, we implemented the Shipboard Retirement Plan which computes benefits based on years of service, subject to eligibility requirements. The Shipboard Retirement Plan is unfunded with no plan assets. The current portion of the projected benefit obligation of $0.9 million and $1.0 million was included in accrued expenses and other liabilities as of December 31, 2019 and 2018, respectively, and $27.8 million and $23.3 million was included in other long-term liabilities in our consolidated balance sheets as of December 31, 2019 and 2018, respectively.

The amounts related to the Shipboard Retirement Plan were as follows (in thousands):

	As of or for the Year Ended December 31,
	2019		2018		2017
Pension expense:
Service cost	$	2,135	$	2,167	$	1,987
Interest cost		1,001		857		887
Amortization of prior service cost		378		378		378
Amortization of actuarial loss		—		51		40
Total pension expense	$	3,514	$	3,453	$	3,292
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	24,318	$	24,587	$	22,605
Service cost		2,135		2,167		1,987
Interest cost		1,001		857		887
Actuarial gain (loss)		2,308		(2,271)		458
Direct benefit payments		(1,067)		(1,022)		(1,350)
Projected benefit obligation at end of year	$	28,695	$	24,318	$	24,587
Amounts recognized in the consolidated balance sheets:
Projected benefit obligation	$	28,695	$	24,318	$	24,587

	For the Year Ended December 31,
	2019		2018		2017
Amounts recognized in accumulated other comprehensive income (loss):
Prior service cost	$	(3,781)	$	(4,159)	$	(4,537)
Accumulated actuarial loss		(3,413)		(1,105)		(3,426)
Accumulated other comprehensive income (loss)	$	(7,194)	$	(5,264)	$	(7,963)

The discount rates used in the net periodic benefit cost calculation for the years ended December 31, 2019, 2018 and 2017 were 4.2%, 3.6% and 4.0%, respectively, and the actuarial loss is amortized over 18.91 years. The discount rate is

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	Amount
2020	$	922
2021		949
2022		1,045
2023		1,208
2024		1,340
Next five years		10,585

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2019

Ship Construction Contracts

Schedule of minimum annual payments for contractual obligations

As of December 31, 2019, minimum annual payments for non-cancelable ship construction contracts with initial or remaining terms in excess of one year were as follows (in thousands):

Year	Amount
2020	$	556,784
2021		279,254
2022		1,595,262
2023		1,439,097
2024		888,790
Thereafter		829,303
Total minimum annual payments	$	5,588,490

Port Facility Commitments

Schedule of minimum annual payments for contractual obligations

As of December 31, 2019, future commitments to pay for usage of certain port facilities were as follows (in thousands):

Year	Amount
2020	$	79,418
2021		67,671
2022		68,049
2023		70,100
2024		75,112
Thereafter		1,726,575
Total port facility future commitments	$	2,086,925

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Long-Term Debt (Tables)

12 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Schedule of long-term debt

Long-term debt consisted of the following:

	Interest Rate					Balance
	December 31,				Maturities	December 31,
	2019		2018		Through	2019		2018
						(in thousands)
$875.0 million senior secured revolving credit facility	—		3.96	%	2024	$	—	$	130,000
$75.0 million revolving credit line	2.75	%	—		2020		75,000		—
Term Loan A	3.06	%	4.01	%	2024		1,565,512		1,256,167
$375.0 million Term Loan B (1)	—		4.26	%	2021		—		368,982
$700.0 million 4.750% senior unsecured notes	—		4.75	%	2021		—		561,021
$565.0 million 3.625% senior unsecured notes	3.63	%	—		2024		558,781		—
€662.9 million Norwegian Epic term loan (2)	—		4.58	%	2022		—		259,394
$260 million Norwegian Jewel term loan	2.54	%	—		2022		221,860		—
$230 million Pride of America term loan	2.81	%	—		2021		229,621		—
€529.8 million Breakaway one loan (2)	2.84	%	4.09	%	2025		305,969		360,680
€529.8 million Breakaway two loan (2)	4.10	%	4.50	%	2026		370,531		426,503
€590.5 million Breakaway three loan (2)	2.98	%	2.98	%	2027		478,665		537,223
€729.9 million Breakaway four loan (2)	2.98	%	2.98	%	2029		630,088		694,536
€710.8 million Seahawk 1 term loan (2)	3.92	%	3.92	%	2030		692,150		756,061
€748.7 million Seahawk 2 term loan (2)	3.92	%	3.92	%	2031		856,188		187,612
Leonardo newbuild one loan	2.68	%	2.68	%	2034		48,009		48,009
Leonardo newbuild two loan	2.77	%	2.77	%	2035		48,009		48,009
Leonardo newbuild three loan	1.22	%	1.22	%	2036		42,700		43,667
Leonardo newbuild four loan	1.31	%	1.31	%	2037		42,700		43,667
Sirena loan	—		2.75	%	2019		—		13,856
Explorer newbuild loan	3.43	%	3.43	%	2028		242,449		268,970
Marina newbuild loan (3)	2.75	%	3.07	%	2023		156,319		201,007
Riviera newbuild loan (4)	2.48	%	3.32	%	2024		202,233		247,203
Finance lease and license obligations	Various		Various		2028		34,909		39,524
Total debt							6,801,693		6,492,091
Less: current portion of long-term debt							(746,358)		(681,218)
Total long-term debt						$	6,055,335	$	5,810,873

(1) Includes original issue discount of $0.7 million as of December 31, 2018.

(2) Currently U.S. dollar-denominated.

(3) Includes premium of $0.1 million as of December 31, 2019 and 2018.

(4) Includes premium of $0.1 million and $0.2 million as of December 31, 2019 and 2018, respectively.

Schedule of principal repayments on long-term debt including finance lease obligations

The following are scheduled principal repayments on long-term debt including finance lease obligations as of December 31, 2019 for each of the next five years (in thousands):

Year	Amount
2020	$	746,358
2021		899,206
2022		667,456
2023		574,492
2024		2,260,295
Thereafter		1,778,870
Total	$	6,926,677

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Leases (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)
Leases [Abstract]
Operating lease expense	$ 31,596
Variable lease expense	14,284
Short-term lease expense	50,832
Finance lease cost:
Amortization of right-to-use assets	1,765
Interest on lease liabilities	1,239
Operating lease revenue	446
Sublease income	$ 1,615

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Leases 4 (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Leases [Abstract]
2019	$ 16,651
2020	16,105
2021	15,315
2022	14,391
2023	13,462
Thereafter	52,626
Total minimum annual rentals	$ 128,550

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Other Income (Expense), Net (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Other Income And Expenses [Abstract]
Other income (expense), net	$ 6,155	$ 20,653	$ (10,401)

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Employee Benefits and Share-Based Compensation - Pension Benefits Expected to be Paid (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
2020	$ 922
2021	949
2022	1,045
2023	1,208
2024	1,340
Next five years	$ 10,585

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Employee Benefits and Share-Based Compensation - Summary of Restricted Unit Activity (Details)	12 Months Ended
	Dec. 31, 2019 $ / shares shares
Time-Based RSU Awards
Number of Restricted Share Awards
Non-vested as of January 1, 2019 | shares	2,973,032
Granted | shares	1,929,495
Vested | shares	(1,430,291)
Forfeited or expired | shares	(226,611)
Non-vested as of December 31, 2019 | shares	3,245,625
Non-vested and expected to vest as of December 31, 2019 | shares	3,245,625
Weighted- Average Grant-Date Fair Value
Non-vested as of January 1, 2019 | $ / shares	$ 53.98
Granted | $ / shares	55.00
Vested | $ / shares	53.02
Forfeited or expired | $ / shares	55.04
Non-vested as of December 31, 2019 | $ / shares	54.94
Non-vested and expected to vest as of December 31, 2019 | $ / shares	$ 54.94
Performance-Based RSU Awards
Number of Restricted Share Awards
Non-vested as of January 1, 2019 | shares	825,614
Granted | shares	462,282
Vested | shares	(121,000)
Forfeited or expired | shares	(37,500)
Non-vested as of December 31, 2019 | shares	1,129,396
Non-vested and expected to vest as of December 31, 2019 | shares	483,976
Weighted- Average Grant-Date Fair Value
Non-vested as of January 1, 2019 | $ / shares	$ 56.58
Granted | $ / shares	55.27
Vested | $ / shares	56.27
Forfeited or expired | $ / shares	56.27
Non-vested as of December 31, 2019 | $ / shares	56.09
Non-vested and expected to vest as of December 31, 2019 | $ / shares	$ 56.61
Market-Based RSU Awards
Number of Restricted Share Awards
Non-vested as of January 1, 2019 | shares	50,000
Non-vested as of December 31, 2019 | shares	50,000
Weighted- Average Grant-Date Fair Value
Non-vested as of January 1, 2019 | $ / shares	$ 59.43
Non-vested as of December 31, 2019 | $ / shares	$ 59.43

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Income Taxes (Textuals) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2017	Dec. 31, 2018
Schedule Of Income Taxes [Line Items]
Unrecognized tax benefits	$ 732	$ 532	$ 532
Tax benefit connection with the reversal of substantially all of valuation allowance on net operating loss carryforwards	$ 35,700
Income tax expense due to reduction of deferred tax liabilities		$ 7,400
Tax Year 2017
Schedule Of Income Taxes [Line Items]
U.S. corporate income tax rate		35.00%
Tax Year 2018
Schedule Of Income Taxes [Line Items]
U.S. corporate income tax rate	21.00%
Prestige Cruises International Inc
Schedule Of Income Taxes [Line Items]
Net operating loss carryforwards	$ 145,000		177,500
U.S. net operating loss carryforwards, expiration year	2031
U.S.
Schedule Of Income Taxes [Line Items]
Net operating loss carryforwards	$ 238,800		278,300
U.S. net operating loss carryforwards, expiration year	2031
NORWAY
Schedule Of Income Taxes [Line Items]
Net operating loss carryforwards	$ 13,300		13,900
State and Local Jurisdiction
Schedule Of Income Taxes [Line Items]
Net operating loss carryforwards	$ 3,400		4,800
U.S. net operating loss carryforwards, expiration year	2025
U.K.
Schedule Of Income Taxes [Line Items]
Net operating loss carryforwards	$ 5,500		$ 7,500
Minimum | U.S.
Schedule Of Income Taxes [Line Items]
U.S. net operating loss carryforwards, expiration year	2025
Maximum | U.S.
Schedule Of Income Taxes [Line Items]
U.S. net operating loss carryforwards, expiration year	2035

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Income Taxes - Components of the Provision for Income Taxes Consisted of the Following Benefit (Expense) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Current:
United States	$ (975)	$ (7,409)	$ 1,828
Total current	(7,269)	(12,780)	(2,789)
Deferred:
United States	25,785	(1,912)	(8,439)
Total deferred:	26,132	(1,687)	(7,953)
Income tax benefit (expense)	(18,863)	14,467	10,742
Tax benefit connection with the reversal of substantially all of valuation allowance on net operating loss carryforwards	35,700
Bermuda
Current:
Foreign	0	0	0
Deferred:
Foreign	0	0	0
Foreign - Other
Current:
Foreign	(6,294)	(5,371)	(4,617)
Deferred:
Foreign	$ 347	$ 225	$ 486

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Fair Value Measurements and Derivatives (Textuals) (Details) T in Millions, $ in Millions, € in Billions	12 Months Ended
	Dec. 31, 2019 EUR (€) T	Dec. 31, 2019 USD ($) T	Dec. 31, 2018 USD ($)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of long-term debt		$ 6,957.8	$ 6,601.9
Fair value of long-term debt in excess of carrying value		$ 31.3	$ 8.4
Fuel swaps
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative maturing date	Dec. 31, 2022
Projected fuel purchases | T	1.1	1.1
Foreign currency contracts
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notional amount of derivatives	€ 1.8	$ 2,000.0
Interest rate contracts
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notional amount of derivatives		$ 1,700.0

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Revenue and Expense from Contracts with Customers 1 (Details)	Dec. 31, 2019
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-05-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	120 days
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-07-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	180 days

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Summary of Significant Accounting Policies - Estimated Useful Lives of Assets (Details)	12 Months Ended
	Dec. 31, 2019
Ships
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	30 years
Computer hardware and software | Minimum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	3 years
Computer hardware and software | Maximum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	10 years
Other property and equipment | Minimum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	3 years
Other property and equipment | Maximum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	40 years
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	Shorter of lease term or asset life
Ship improvements
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	Shorter of asset life or life of the ship

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Property and Equipment, Net (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Property Plant And Equipment [Line Items]
Property and equipment, gross	$ 17,118,949	$ 15,525,164
Less: accumulated depreciation	(3,983,612)	(3,405,911)
Property and equipment, net	13,135,337	12,119,253
Ships
Property Plant And Equipment [Line Items]
Property and equipment, gross	14,154,578	13,032,555
Ships improvements
Property Plant And Equipment [Line Items]
Property and equipment, gross	1,865,272	1,407,989
Ships under construction
Property Plant And Equipment [Line Items]
Property and equipment, gross	387,749	491,632
Land and land improvements
Property Plant And Equipment [Line Items]
Property and equipment, gross	38,375	34,936
Other property and equipment
Property Plant And Equipment [Line Items]
Property and equipment, gross	$ 672,975	$ 558,052

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Concentration Risk (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Supplier Concentration Risk
Concentration Risk [Line Items]
Expenses incurred on hotel and restaurant services	$ 153.6	$ 153.7	$ 152.3

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Schedule II Valuation and Qualifying Accounts (Details) - Valuation Allowance of Deferred Tax Assets [Member] - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Movement in Valuation Allowances and Reserves [Roll Forward]
Balance	$ 41,924	$ 42,154	$ 64,573
Additions Charged to other accounts		276
Deductions	(36,077)	(506)	(22,419)
Balance	$ 5,847	$ 41,924	$ 42,154

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Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 252,876	$ 163,851
Accounts receivable, net	75,109	55,249
Inventories	95,427	90,202
Prepaid expenses and other assets	306,733	241,011
Total current assets	730,145	550,313
Property and equipment, net	13,135,337	12,119,253
Goodwill	1,388,931	1,388,931
Tradenames	817,525	817,525
Other long-term assets	612,661	329,948
Total assets	16,684,599	15,205,970
Current liabilities:
Current portion of long-term debt	746,358	681,218
Accounts payable	100,777	159,564
Accrued expenses and other liabilities	782,275	716,499
Advance ticket sales	1,954,980	1,593,219
Total current liabilities	3,584,390	3,150,500
Long-term debt	6,055,335	5,810,873
Other long-term liabilities	529,295	281,596
Total liabilities	10,169,020	9,242,969
Commitments and contingencies (Note 13)
Shareholders' equity:
Ordinary shares, $0.001 par value; 490,000,000 shares authorized; 237,533,270 shares issued and 213,082,411 shares outstanding at December 31, 2019 and 235,484,613 shares issued and 217,650,644 shares outstanding at December 31, 2018	237	235
Additional paid-in capital	4,235,690	4,129,639
Accumulated other comprehensive income (loss)	(295,490)	(161,647)
Retained earnings	3,829,068	2,898,840
Treasury shares (24,450,859 and 17,833,969 ordinary shares at December 31, 2019 and December 31, 2018, respectively, at cost)	(1,253,926)	(904,066)
Total shareholders' equity	6,515,579	5,963,001
Total liabilities and shareholders' equity	$ 16,684,599	$ 15,205,970

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Long-Term Debt - Summary of Scheduled Principal Repayments on Long-Term Debt Including Finance Lease Obligations (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Debt Disclosure [Abstract]
2020	$ 746,358
2021	899,206
2022	667,456
2023	574,492
2024	2,260,295
Thereafter	1,778,870
Total	$ 6,926,677

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Fair Value Measurements and Derivatives - Amounts recognized within assets and liabilities based on right of offset (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Fair Value Disclosures [Abstract]
Gross Amounts, Assets	$ 277	$ 12,125
Gross Amounts Offset, Assets		(1,527)
Total Net Amounts, Assets	277	10,598
Gross Amounts Not Offset, Assets		(6,872)
Total Net Amounts, Assets	277	3,726
Gross Amounts, Liabilities	192,034	116,352
Gross Amounts Offset, Liabilities	(3,152)	(5,092)
Total Net Amounts, Liabilities	188,882	111,260
Gross Amounts Not Offset, Liabilities	(149,863)	(35,718)
Total Net Amounts, Liabilities	$ 39,019	$ 75,542

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Description of Business and Organization

12 Months Ended

Dec. 31, 2019

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Description of Business and Organization

1. Description of Business and Organization

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

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

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

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

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Concentration Risk

12 Months Ended

Dec. 31, 2019

Risks and Uncertainties [Abstract]

Concentration Risk

15. Concentration Risk

We contract with a single vendor to provide many of our hotel and restaurant services including both food and labor costs. We incurred expenses of $153.6 million, $153.7 million and $152.3 million for the years ended December 31, 2019, 2018 and 2017, respectively, which are recorded in payroll and related in our consolidated statements of operations.

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Schedule II Valuation and Qualifying Accounts

12 Months Ended

Dec. 31, 2019

SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract]

Schedule II Valuation and Qualifying Accounts

Norwegian Cruise Line Holdings Ltd.

Schedule II Valuation and Qualifying Accounts (in thousands)

			Additions
			Charged to
	Balance		costs and		Charged to				Balance
Description	12/31/16		expenses		other accounts		Deductions (a)		12/31/17
Valuation allowance on deferred tax assets	$	64,573	$	—	$	—	$	(22,419)	$	42,154

			Charged to
	Balance		costs and		Charged to				Balance
Description	12/31/17		expenses			other accounts	Deductions (a)		12/31/18
Valuation allowance on deferred tax assets	$	42,154	$	—	$	276	$	(506)	$	41,924

			Charged to
	Balance		costs and		Charged to				Balance
Description	12/31/18		expenses			other accounts	Deductions (a)		12/31/19
Valuation allowance on deferred tax assets	$	41,924	$	—	$	—	$	(36,077)	$	5,847

(a) Amount relates to (i) utilization of deferred tax assets, (ii) revaluation of deferred tax assets from their functional currency to U.S. dollars and (iii) reversal of valuation allowances.

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Revenue and Expense from Contracts with Customers (Textuals) (Details) $ in Millions		12 Months Ended
	Oct. 30, 2019 item	Dec. 31, 2019 USD ($) item	Dec. 31, 2018 USD ($)
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Receivables from customers included in accounts receivables, net		$ 15.3	$ 17.3
Contract with customer liability		$ 1,400.0	1,200.0
Percentage of refundable amounts included within contract liabilities		55.00%
Revenue recognized included in contract liability		$ 1,200.0
Capacity of ship, berths | item		58,400
Contract costs incurred to obtain customers		$ 143.5	116.3
Contract costs to fulfill contracts with customers		$ 49.7	$ 32.5
Norwegian Encore
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Capacity of ship, berths | item	4,000
Percentage of capacity to fleet	7.00%

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Summary of Significant Accounting Policies - Reconciliation between Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Earnings Per Share [Abstract]
Net income	$ 121,297	$ 450,584	$ 240,190	$ 118,157	$ 154,634	$ 470,378	$ 226,676	$ 103,155	$ 930,228	$ 954,843	$ 759,872
Basic weighted-average shares outstanding									214,929,977	223,001,739	228,040,825
Dilutive effect of share awards									1,545,099	1,417,466	1,377,501
Diluted weighted-average shares outstanding									216,475,076	224,419,205	229,418,326
Basic earnings per share (in dollars per share)	$ 0.57	$ 2.10	$ 1.11	$ 0.54	$ 0.70	$ 2.12	$ 1.02	$ 0.45	$ 4.33	$ 4.28	$ 3.33
Diluted earnings per share (in dollars per share)	$ 0.56	$ 2.09	$ 1.11	$ 0.54	$ 0.70	$ 2.11	$ 1.01	$ 0.45	$ 4.30	$ 4.25	$ 3.31

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Fair Value Measurements and Derivatives - Effects of derivatives designated as cash flow hedges (Details) - Cash Flow Hedging - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Other Comprehensive Income	$ (123,015)	$ (161,214)
Amount of Gain (Loss) Recognized in Other Comprehensive Income (before ASU adoption)			$ 304,684
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income	8,898	30,096
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (before ASU adoption)			(36,795)
Fuel
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income	14,093	34,410
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (before ASU adoption)			(29,721)
Depreciation and amortization
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income	(3,062)	(3,463)
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (before ASU adoption)			(4,077)
Interest expense, net
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income	(2,133)	(851)
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (before ASU adoption)			(2,997)
Fuel contracts
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Other Comprehensive Income	46,154	(52,949)
Amount of Gain (Loss) Recognized in Other Comprehensive Income (before ASU adoption)			50,263
Fuel contracts | Fuel
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income	14,093	34,410
Foreign currency contracts
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Other Comprehensive Income	(163,197)	(108,911)
Amount of Gain (Loss) Recognized in Other Comprehensive Income (before ASU adoption)			254,070
Foreign currency contracts | Depreciation and amortization
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income	(3,062)	(3,463)
Interest rate contracts
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Other Comprehensive Income	(5,972)	646
Amount of Gain (Loss) Recognized in Other Comprehensive Income (before ASU adoption)			$ 351
Interest rate contracts | Interest expense, net
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income	$ (2,133)	$ (851)

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation

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

Cash and Cash Equivalents

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

Accounts Receivable, Net

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

Inventories

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

Advertising Costs

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

Earnings Per Share

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

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

	Year Ended December 31,
	2019		2018		2017
Net income	$	930,228	$	954,843	$	759,872
Basic weighted-average shares outstanding		214,929,977		223,001,739		228,040,825
Dilutive effect of share awards		1,545,099		1,417,466		1,377,501
Diluted weighted-average shares outstanding		216,475,076		224,419,205		229,418,326
Basic earnings per share	$	4.33	$	4.28	$	3.33
Diluted earnings per share	$	4.30	$	4.25	$	3.31

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

Property and Equipment, Net

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

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

	Useful Life
Ships	30 years
Computer hardware and software	3‑10 years
Other property and equipment	3‑40 years
Leasehold improvements	Shorter of lease term or asset life
Ship improvements	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

evaluated at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets. We consider historical performance and future estimated results in our evaluation of potential impairment and then compare the carrying amount of the asset to the estimated future cash flows expected to result from the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, we measure the amount of the impairment by comparing the carrying amount of the asset to its fair value. We estimate fair value based on the best information available utilizing estimates, judgments and projections as necessary. Our estimate of fair value is generally measured by discounting expected future cash flows at discount rates commensurate with the associated risk.

Goodwill and Tradenames

Goodwill represents the excess of cost over the fair value of net assets acquired. Goodwill and other indefinite-lived assets, principally tradenames, are reviewed for impairment on an annual basis or earlier if there is an event or change in circumstances that would indicate that the carrying value of these assets may not be fully recoverable. We use the Step 0 Test which allows us to first assess qualitative factors to determine whether it is more likely than not (i.e., more than 50%) that the fair value of a reporting unit is less than its carrying value. For tradenames we also provide a qualitative assessment to determine if there is any indication of impairment.

In order to make this evaluation, we consider the following circumstances as well as others:

● Changes in general macroeconomic conditions such as a deterioration in general economic conditions; limitations on accessing capital; fluctuations in foreign exchange rates; or other developments in equity and credit markets;

● Changes in industry and market conditions such as a deterioration in the environment in which an entity operates; an increased competitive environment; a decline in market-dependent multiples or metrics (in both absolute terms and relative to peers); a change in the market for an entity’s products or services; or a regulatory or political development;

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

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

● Entity and reporting unit specific events such as changes in management, key personnel, strategy, or customers; litigation; or a change in the composition or carrying amount of net assets; and

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

We also may conduct a quantitative assessment comparing the fair value of each reporting unit to its carrying value, including goodwill. This is called the Step I Test which consists of a combined approach using discounted future cash flows and market multiples to determine the fair value of the reporting units. The market approach considers revenue and EBITDA multiples from an appropriate peer group. Our discounted cash flow valuation reflects our principal assumptions of 1) forecasted future operating results and growth rates, 2) forecasted capital expenditures for fleet growth and ship improvements and 3) a weighted average cost of capital of market participants, adjusted for an optimal capital structure.

We believe that the combined approach is the most representative method to assess fair value as it utilizes expectations of long-term growth as well as current market conditions. For the tradenames, we may also use a quantitative assessment, which utilizes the relief from royalty method and includes the same forecasts and discount rates from the discounted cash flow valuation in the goodwill assessment along with a tradename royalty rate assumption.

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

As of December 31, 2019, there was $523.0 million, $462.1 million and $403.8 million of goodwill for the Oceania Cruises, Regent Seven Seas and Norwegian reporting units, respectively. For our 2019 annual goodwill and tradename impairment evaluation, we elected to perform quantitative tests for the Oceania Cruises, Regent Seven Seas and Norwegian reporting units. Based on the results of the tests, we determined there was no impairment of goodwill or tradenames because the fair values exceeded the carrying values.

Revenue and Expense Recognition

Deposits on advance ticket sales are deferred when received and are subsequently recognized as revenue ratably during the voyage sailing days as services are rendered over time on the ship. Cancellation fees are recognized in passenger ticket revenue in the month of the cancellation. Goods and services associated with onboard revenue are generally provided at a point in time and revenue is recognized when the performance obligation is satisfied. A receivable is recognized for onboard goods and services rendered when the voyage is not completed before the end of the period. All associated direct costs of a voyage are recognized as incurred in cruise operating expenses.

Disaggregation of Revenue

Revenue and cash flows are affected by economic factors in various geographical regions.

Revenues by destination consisted of the following (in thousands):

	Year Ended December 31,
	2019		2018		2017
North America	$	3,807,576	$	3,543,282	$	3,285,903
Europe		1,666,751		1,462,698		1,347,381
Asia-Pacific		500,842		721,404		394,631
Other		487,207		327,742		368,260
Total revenue	$	6,462,376	$	6,055,126	$	5,396,175

Segment Reporting

We have concluded that our business has a single reportable segment. Each brand, Norwegian, Oceania Cruises and Regent, constitutes a business for which discrete financial information is available and management regularly reviews the brand level operating results and, therefore, each brand is considered an operating segment. Our operating segments have similar economic and qualitative characteristics, including similar long-term margins and similar products and services; therefore, we aggregate all of the operating segments into one reportable segment.

Although we sell cruises on an international basis, our passenger ticket revenue is primarily attributed to U.S.-sourced guests who make reservations in the U.S. Revenue attributable to U.S.-sourced guests was 81%, 77% and 77% for the years ended December 31, 2019, 2018 and 2017, respectively. No other individual country’s revenues exceeded 10% in any of our last three years.

Substantially all of our long-lived assets are located outside of the U.S. and consist primarily of our ships. We had 19 ships with Bahamas registry with a carrying value of $10.2 billion as of December 31, 2019 and 18 ships with Bahamas registry with a carrying value of $9.1 billion as of December 31, 2018. We had seven ships with Marshall Island registry with a carrying value of $1.9 billion as of December 31, 2019 and 2018. We also had one ship with U.S. registry with a carrying value of $0.3 billion as of December 31, 2019 and 2018.

Debt Issuance Costs

Debt issuance costs related to a recognized debt liability are presented in the consolidated balance sheets as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. For line of credit arrangements and for those debt facilities not fully drawn we defer and present debt issuance costs as an asset. These deferred issuance costs are amortized over the life of the loan. The amortization of deferred financing fees is included in depreciation and amortization expense in the consolidated statements of cash flows; however, for purposes of the consolidated statements of operations it is included in interest expense, net.

Foreign Currency

The majority of our transactions are settled in U.S. dollars. Gains or losses resulting from transactions denominated in other currencies are recognized in other income (expense), net at each balance sheet date. We recognized a loss of $7.0 million, a gain of $19.8 million and a loss of $14.2 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Derivative Instruments and Hedging Activity

We enter into derivative contracts to reduce our exposure to fluctuations in foreign currency exchange rates, interest rates and fuel prices. The criteria used to determine whether a transaction qualifies for hedge accounting treatment includes the correlation between fluctuations in the fair value of the hedged item and the fair value of the related derivative instrument and its effectiveness as a hedge. As the derivative is marked to fair value, we elected an accounting policy to net the fair value of our derivatives when a master netting arrangement exists with our counterparties.

A derivative instrument that hedges a forecasted transaction or the variability of cash flows related to a recognized asset or liability may be designated as a cash flow hedge. Changes in fair value of derivative instruments that are designated as cash flow hedges are recorded as a component of accumulated other comprehensive income (loss) until the underlying hedged transactions are recognized in earnings. To the extent that an instrument is not effective as a hedge, gains and losses are recognized in other income (expense), net in our consolidated statements of operations. Realized gains and losses related to our effective fuel hedges are recognized in fuel expense. For presentation in our consolidated statements of cash flows, we have elected to classify the cash flows from our cash flow hedges in the same category as the cash flows from the items being hedged.

Concentrations of Credit Risk

We monitor concentrations of credit risk associated with financial and other institutions with which we conduct significant business. Credit risk, including but not limited to counterparty non-performance under derivative instruments, our Revolving Loan Facility and new ship progress payment guarantees, is not considered significant, as we primarily conduct business with large, well-established financial institutions and insurance companies that we have well-established relationships with and that have credit risks acceptable to us or the credit risk is spread out among a large number of creditors. We do not anticipate non-performance by any of our significant counterparties.

Insurance

We use a combination of insurance and self-insurance for a number of risks including claims related to crew and guests, hull and machinery, war risk, workers’ compensation, property damage, employee healthcare and general liability. Liabilities associated with certain of these risks, including crew and passenger claims, are estimated actuarially based upon known facts, historical trends and a reasonable estimate of future expenses. While we believe these accruals are adequate, the ultimate losses incurred may differ from those recorded.

Income Taxes

Deferred tax assets and liabilities are calculated in accordance with the liability method. Deferred taxes are recorded using the currently enacted tax rates that apply in the periods that the differences are expected to reverse. Deferred taxes are not discounted.

We provide a valuation allowance on deferred tax assets when it is more likely than not that such assets will not be realized. With respect to acquired deferred tax assets, changes within the measurement period that result from new information about facts and circumstances that existed at the acquisition date shall be recognized through a corresponding adjustment to goodwill. Subsequent to the measurement period, all other changes shall be reported as a reduction or increase to income tax expense in our consolidated statements of operations.

Share-Based Compensation

We recognize expense for our share-based compensation awards using a fair-value-based method. Share-based compensation expense is recognized over the requisite service period for awards that are based on a service period and not contingent upon any future performance. We refer you to Note 11— “Employee Benefits and Share-Based Compensation.”

Recently Issued Accounting Guidance

In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-04, Intangibles—Goodwill and Other (Topic 350) — Simplifying the Test for Goodwill Impairment, which simplifies the test for goodwill impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. The guidance is effective for annual or any interim goodwill impairment tests in years beginning after December 15, 2019, with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company has not early adopted this guidance. The Company will evaluate, upon adoption of this guidance, the impact of this guidance on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which will require an entity to present the net amount expected to be collected for certain financial assets, including trade receivables. Under this update, on initial recognition and at each reporting period, an entity will be required to recognize an allowance that reflects the entity’s current estimate of credit losses expected to be incurred over the life of the financial instrument. The update will be applied prospectively with a cumulative-effect adjustment to retained earnings. This update will be effective for the Company for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. The adoption of this standard will not have a material impact on the Company’s consolidated financial statements.

XML

Property and Equipment, Net (Textuals) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Property Plant And Equipment [Line Items]
Depreciation expense	$ 627.7	$ 534.9	$ 478.7
Repairs and maintenance expenses including Dry-dock expenses	199.7	199.5	157.2
Interest costs capitalized	32.9	$ 30.4	$ 29.0
Ships improvements
Property Plant And Equipment [Line Items]
Costs associated with ship improvements	$ 458.9

XML

Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Supplemental Cash Flow Information [Abstract]
Non-cash investing activity in connection with property and equipment	$ 8,200	$ 39,700	$ 20,000
Net foreign currency adjustments	1,934	5,537
Non-cash investing activities in connection with capital leases			13,300
Income tax paid	13,400	10,000	11,700
Interest and related fees, net of capitalized interest	$ 291,200	$ 350,400	$ 284,900

XML

Document and Entity Information - USD ($) $ in Billions	12 Months Ended
	Dec. 31, 2019	Feb. 14, 2020	Jun. 28, 2019
Document And Entity Information
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2019
Document Transition Report	false
Entity File Number	001-35784
Entity Registrant Name	NORWEGIAN CRUISE LINE HOLDINGS LTD.
Entity Incorporation, State or Country Code	D0
Entity Tax Identification Number	98-0691007
Entity Address, Address Line One	7665 Corporate Center Drive
Entity Address, City or Town	Miami
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	33126
City Area Code	305
Local Phone Number	436-4000
Title of 12(b) Security	Ordinary shares
Trading Symbol	NCLH
Security Exchange Name	NYSE
Entity Well Known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock Shares Outstanding		213,202,541
Entity Public Float			$ 11.5
Entity Central Index Key	0001513761
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Amendment Flag	false

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2019	Dec. 31, 2018
Statement Of Financial Position [Abstract]
Ordinary shares, par value (in dollars per share)	$ 0.001	$ 0.001
Ordinary shares, authorized	490,000,000	490,000,000
Ordinary shares, issued	237,533,270	235,484,613
Ordinary shares, outstanding	213,082,411	217,650,644
Ordinary shares, treasury stock	24,450,859	17,833,969

XML

Long-Term Debt (Textuals) (Details) $ in Thousands, € in Millions							1 Months Ended	12 Months Ended
	Dec. 31, 2019 EUR (€)	Dec. 16, 2019 USD ($)	Oct. 30, 2019 USD ($)	May 15, 2019 USD ($)	Jan. 10, 2019 USD ($)	Jan. 02, 2019 USD ($)	Oct. 31, 2019 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 EUR (€)	Dec. 31, 2018 USD ($)
Debt Instrument [Line Items]
Interest expense, net								$ 272,900	$ 270,400	$ 267,800
Amortization of deferred financing costs								27,500	31,400	32,500
Accrued interest liability											$ 33,300		$ 37,200
Loss on extinguishment of debt								13,397	$ 6,346	22,211
Loss on extinguishment of and modification debt								$ 16,700		$ 23,900
Norwegian Encore
Debt Instrument [Line Items]
Contract price percentage			80.00%
Interest rate			3.92%
Principal amount			$ 882,900
Maturity date			Oct. 30, 2031
Term Loan A
Debt Instrument [Line Items]
Prior principal amount											1,565,512		1,256,167
$565.0 Million 3.625% Senior Unsecured Notes
Debt Instrument [Line Items]
Prior principal amount											558,781
Interest rate								3.625%	3.625%
Principal amount											565,000		565,000
$75.0 Million Revolving Credit Line
Debt Instrument [Line Items]
Prior principal amount											75,000
Revolving credit line amount											$ 75,000		75,000
EUR 662.9 Million Norwegian Epic Term Loan
Debt Instrument [Line Items]
Prior principal amount													$ 259,394
Principal amount | €	€ 662.9											€ 662.9
LIBOR | $75.0 Million Revolving Credit Line
Debt Instrument [Line Items]
Basis spread on variable rate							0.95%
Revolving credit line | $75.0 Million Revolving Credit Line
Debt Instrument [Line Items]
Revolving credit line amount							$ 75,000
Maturity date							October 2020
Line of credit facility, interest rate description							LIBOR plus a margin of 0.95%
Senior Notes due 2021 (the "Notes") [Member]
Debt Instrument [Line Items]
Interest rate		4.75%
Principal amount		$ 565,000
Percentage of principal amount of redeemed		100.00%
Write-off of financing fees		$ 2,700
Fourth Amended And Restated Credit Agreement | New Term A Loan Facility and New Revolving Loan Facility | Eurocurrency loans | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate						1.75%
Fourth Amended And Restated Credit Agreement | New Term A Loan Facility and New Revolving Loan Facility | Eurocurrency loans | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate						1.00%
Fourth Amended And Restated Credit Agreement | New Term A Loan Facility and New Revolving Loan Facility | Base rate loans | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate						0.75%
Fourth Amended And Restated Credit Agreement | New Term A Loan Facility and New Revolving Loan Facility | Base rate loans | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate						0.00%
NCLC | $565.0 Million 3.625% Senior Unsecured Notes
Debt Instrument [Line Items]
Interest rate		3.625%						3.625%
Principal amount		$ 565,000
Percentage of principal amount of redeemed								100.00%
Redemption price as a percentage of face amount								103.625%
Percentage of aggregate principal amount of the Notes issued remains outstanding								60.00%
NCLC | $565.0 Million 3.625% Senior Unsecured Notes | Maximum
Debt Instrument [Line Items]
Percentage of principal amount of redeemed								40.00%
NCLC | EUR 662.9 Million Norwegian Epic Term Loan
Debt Instrument [Line Items]
Loss on extinguishment of debt				$ (1,100)
NCLC | Term Loan A Facility | Nordea Bank ABP
Debt Instrument [Line Items]
Principal amount					$ 230,000
NCLC | Term Loan A Facility | Bank of America
Debt Instrument [Line Items]
Principal amount				$ 260,000
NCLC | Term Loan A Facility | LIBOR | Nordea Bank ABP
Debt Instrument [Line Items]
Maturity date					Jan. 10, 2021
Basis spread on variable rate					1.00%
Basis spread on variable rate after extension of maturity date					1.10%
NCLC | Term Loan A Facility | LIBOR | Bank of America
Debt Instrument [Line Items]
Description of variable rate basis				LIBOR
Maturity date				May 15, 2022
Basis spread on variable rate				0.80%
NCLC | Fourth Amended And Restated Credit Agreement
Debt Instrument [Line Items]
Loss on extinguishment of debt						$ (2,900)
NCLC | Fourth Amended And Restated Credit Agreement | Revolving credit line
Debt Instrument [Line Items]
Revolving credit line amount						$ 875,000
NCLC | Fourth Amended And Restated Credit Agreement | New Term A Loan Facility and New Revolving Loan Facility | Maximum
Debt Instrument [Line Items]
Commitment fee, percentage						0.30%
NCLC | Fourth Amended And Restated Credit Agreement | New Term A Loan Facility and New Revolving Loan Facility | Eurocurrency loans
Debt Instrument [Line Items]
Basis spread on variable rate	1.25%
NCLC | Fourth Amended And Restated Credit Agreement | Term Loan
Debt Instrument [Line Items]
Prior principal amount						$ 1,300
Principal amount						$ 1,600

XML

Supplemental Cash Flow Information

12 Months Ended

Dec. 31, 2019

Supplemental Cash Flow Information [Abstract]

Supplemental Cash Flow Information

16. Supplemental Cash Flow Information

For the year ended December 31, 2019, we had non-cash investing activities related to property and equipment of $8.2 million. For the year ended December 31, 2019, we paid income taxes of $13.4 million and interest and related fees, net of capitalized interest, of $291.2 million.

For the year ended December 31, 2018, we had non-cash investing activities related to property and equipment of $39.7 million and net foreign currency adjustments of $5.5 million related to euro-denominated debt related to the financing of two of our Project Leonardo ships. For the year ended December 31, 2018, we paid income taxes of $10.0 million and interest and related fees, net of capitalized interest, of $350.4 million.

For the year ended December 31, 2017, we had non-cash investing activities in connection with property and equipment of $20.0 million and non-cash investing activities related to capital leases of $13.3 million. For the year ended December 31, 2017, we paid income taxes of $11.7 million and interest and related fees, net of capitalized interest, of $284.9 million.

XML

Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Basis of Presentation

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

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

Accounts Receivable, Net

Accounts Receivable, Net

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

Inventories

Inventories

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

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

Earnings Per Share

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):

	Year Ended December 31,
	2019		2018		2017
Net income	$	930,228	$	954,843	$	759,872
Basic weighted-average shares outstanding		214,929,977		223,001,739		228,040,825
Dilutive effect of share awards		1,545,099		1,417,466		1,377,501
Diluted weighted-average shares outstanding		216,475,076		224,419,205		229,418,326
Basic earnings per share	$	4.33	$	4.28	$	3.33
Diluted earnings per share	$	4.30	$	4.25	$	3.31

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

Property and Equipment, Net

Property and Equipment, Net

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

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

	Useful Life
Ships	30 years
Computer hardware and software	3‑10 years
Other property and equipment	3‑40 years
Leasehold improvements	Shorter of lease term or asset life
Ship improvements	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

evaluated at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets. We consider historical performance and future estimated results in our evaluation of potential impairment and then compare the carrying amount of the asset to the estimated future cash flows expected to result from the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, we measure the amount of the impairment by comparing the carrying amount of the asset to its fair value. We estimate fair value based on the best information available utilizing estimates, judgments and projections as necessary. Our estimate of fair value is generally measured by discounting expected future cash flows at discount rates commensurate with the associated risk.

Goodwill and Tradenames

Goodwill and Tradenames

Goodwill represents the excess of cost over the fair value of net assets acquired. Goodwill and other indefinite-lived assets, principally tradenames, are reviewed for impairment on an annual basis or earlier if there is an event or change in circumstances that would indicate that the carrying value of these assets may not be fully recoverable. We use the Step 0 Test which allows us to first assess qualitative factors to determine whether it is more likely than not (i.e., more than 50%) that the fair value of a reporting unit is less than its carrying value. For tradenames we also provide a qualitative assessment to determine if there is any indication of impairment.

In order to make this evaluation, we consider the following circumstances as well as others:

● Changes in general macroeconomic conditions such as a deterioration in general economic conditions; limitations on accessing capital; fluctuations in foreign exchange rates; or other developments in equity and credit markets;

● Changes in industry and market conditions such as a deterioration in the environment in which an entity operates; an increased competitive environment; a decline in market-dependent multiples or metrics (in both absolute terms and relative to peers); a change in the market for an entity’s products or services; or a regulatory or political development;

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

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

● Entity and reporting unit specific events such as changes in management, key personnel, strategy, or customers; litigation; or a change in the composition or carrying amount of net assets; and

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

We also may conduct a quantitative assessment comparing the fair value of each reporting unit to its carrying value, including goodwill. This is called the Step I Test which consists of a combined approach using discounted future cash flows and market multiples to determine the fair value of the reporting units. The market approach considers revenue and EBITDA multiples from an appropriate peer group. Our discounted cash flow valuation reflects our principal assumptions of 1) forecasted future operating results and growth rates, 2) forecasted capital expenditures for fleet growth and ship improvements and 3) a weighted average cost of capital of market participants, adjusted for an optimal capital structure.

We believe that the combined approach is the most representative method to assess fair value as it utilizes expectations of long-term growth as well as current market conditions. For the tradenames, we may also use a quantitative assessment, which utilizes the relief from royalty method and includes the same forecasts and discount rates from the discounted cash flow valuation in the goodwill assessment along with a tradename royalty rate assumption.

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

As of December 31, 2019, there was $523.0 million, $462.1 million and $403.8 million of goodwill for the Oceania Cruises, Regent Seven Seas and Norwegian reporting units, respectively. For our 2019 annual goodwill and tradename impairment evaluation, we elected to perform quantitative tests for the Oceania Cruises, Regent Seven Seas and Norwegian reporting units. Based on the results of the tests, we determined there was no impairment of goodwill or tradenames because the fair values exceeded the carrying values.

Revenue and Expense Recognition

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

Disaggregation of Revenue

Revenue and cash flows are affected by economic factors in various geographical regions.

Revenues by destination consisted of the following (in thousands):

	Year Ended December 31,
	2019		2018		2017
North America	$	3,807,576	$	3,543,282	$	3,285,903
Europe		1,666,751		1,462,698		1,347,381
Asia-Pacific		500,842		721,404		394,631
Other		487,207		327,742		368,260
Total revenue	$	6,462,376	$	6,055,126	$	5,396,175

Segment Reporting

Segment Reporting

We have concluded that our business has a single reportable segment. Each brand, Norwegian, Oceania Cruises and Regent, constitutes a business for which discrete financial information is available and management regularly reviews the brand level operating results and, therefore, each brand is considered an operating segment. Our operating segments have similar economic and qualitative characteristics, including similar long-term margins and similar products and services; therefore, we aggregate all of the operating segments into one reportable segment.

Although we sell cruises on an international basis, our passenger ticket revenue is primarily attributed to U.S.-sourced guests who make reservations in the U.S. Revenue attributable to U.S.-sourced guests was 81%, 77% and 77% for the years ended December 31, 2019, 2018 and 2017, respectively. No other individual country’s revenues exceeded 10% in any of our last three years.

Substantially all of our long-lived assets are located outside of the U.S. and consist primarily of our ships. We had 19 ships with Bahamas registry with a carrying value of $10.2 billion as of December 31, 2019 and 18 ships with Bahamas registry with a carrying value of $9.1 billion as of December 31, 2018. We had seven ships with Marshall Island registry with a carrying value of $1.9 billion as of December 31, 2019 and 2018. We also had one ship with U.S. registry with a carrying value of $0.3 billion as of December 31, 2019 and 2018.

Debt Issuance Costs

Debt Issuance Costs

Debt issuance costs related to a recognized debt liability are presented in the consolidated balance sheets as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. For line of credit arrangements and for those debt facilities not fully drawn we defer and present debt issuance costs as an asset. These deferred issuance costs are amortized over the life of the loan. The amortization of deferred financing fees is included in depreciation and amortization expense in the consolidated statements of cash flows; however, for purposes of the consolidated statements of operations it is included in interest expense, net.

Foreign Currency

Foreign Currency

The majority of our transactions are settled in U.S. dollars. Gains or losses resulting from transactions denominated in other currencies are recognized in other income (expense), net at each balance sheet date. We recognized a loss of $7.0 million, a gain of $19.8 million and a loss of $14.2 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Derivative Instruments and Hedging Activity

Derivative Instruments and Hedging Activity

We enter into derivative contracts to reduce our exposure to fluctuations in foreign currency exchange rates, interest rates and fuel prices. The criteria used to determine whether a transaction qualifies for hedge accounting treatment includes the correlation between fluctuations in the fair value of the hedged item and the fair value of the related derivative instrument and its effectiveness as a hedge. As the derivative is marked to fair value, we elected an accounting policy to net the fair value of our derivatives when a master netting arrangement exists with our counterparties.

A derivative instrument that hedges a forecasted transaction or the variability of cash flows related to a recognized asset or liability may be designated as a cash flow hedge. Changes in fair value of derivative instruments that are designated as cash flow hedges are recorded as a component of accumulated other comprehensive income (loss) until the underlying hedged transactions are recognized in earnings. To the extent that an instrument is not effective as a hedge, gains and losses are recognized in other income (expense), net in our consolidated statements of operations. Realized gains and losses related to our effective fuel hedges are recognized in fuel expense. For presentation in our consolidated statements of cash flows, we have elected to classify the cash flows from our cash flow hedges in the same category as the cash flows from the items being hedged.

Concentrations of Credit Risk

Concentrations of Credit Risk

We monitor concentrations of credit risk associated with financial and other institutions with which we conduct significant business. Credit risk, including but not limited to counterparty non-performance under derivative instruments, our Revolving Loan Facility and new ship progress payment guarantees, is not considered significant, as we primarily conduct business with large, well-established financial institutions and insurance companies that we have well-established relationships with and that have credit risks acceptable to us or the credit risk is spread out among a large number of creditors. We do not anticipate non-performance by any of our significant counterparties.

Insurance

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

Income Taxes

Deferred tax assets and liabilities are calculated in accordance with the liability method. Deferred taxes are recorded using the currently enacted tax rates that apply in the periods that the differences are expected to reverse. Deferred taxes are not discounted.

We provide a valuation allowance on deferred tax assets when it is more likely than not that such assets will not be realized. With respect to acquired deferred tax assets, changes within the measurement period that result from new information about facts and circumstances that existed at the acquisition date shall be recognized through a corresponding adjustment to goodwill. Subsequent to the measurement period, all other changes shall be reported as a reduction or increase to income tax expense in our consolidated statements of operations.

Share-Based Compensation

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

Recently Issued Accounting Guidance

In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-04, Intangibles—Goodwill and Other (Topic 350) — Simplifying the Test for Goodwill Impairment, which simplifies the test for goodwill impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. The guidance is effective for annual or any interim goodwill impairment tests in years beginning after December 15, 2019, with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company has not early adopted this guidance. The Company will evaluate, upon adoption of this guidance, the impact of this guidance on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which will require an entity to present the net amount expected to be collected for certain financial assets, including trade receivables. Under this update, on initial recognition and at each reporting period, an entity will be required to recognize an allowance that reflects the entity’s current estimate of credit losses expected to be incurred over the life of the financial instrument. The update will be applied prospectively with a cumulative-effect adjustment to retained earnings. This update will be effective for the Company for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. The adoption of this standard will not have a material impact on the Company’s consolidated financial statements.

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Income Taxes

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes

12. Income Taxes

We are incorporated in Bermuda. Under current Bermuda law, we are not subject to tax on income and capital gains. We have received from the Minister of Finance under The Exempted Undertakings Tax Protection Act 1966, as amended, an assurance that, in the event that Bermuda enacts legislation imposing tax computed on profits, income, any capital asset, gain or appreciation, or any tax in the nature of estate duty or inheritance, then the imposition of any such tax shall not be applicable to us or to any of our operations or shares, debentures or other obligations, until March 31, 2035.

The components of net income before income taxes consist of the following (in thousands):

	Year Ended December 31,
	2019		2018		2017
Bermuda	$	—	$	—	$	—
Foreign - Other		911,365		969,310		770,614
Net income before income taxes	$	911,365	$	969,310	$	770,614

The components of the provision for income taxes consisted of the following benefit (expense) (in thousands):

	Year Ended December 31,
	2019		2018		2017
Current:
Bermuda	$	—	$	—	$	—
United States		(975)		(7,409)		1,828
Foreign - Other		(6,294)		(5,371)		(4,617)
Total current:		(7,269)		(12,780)		(2,789)
Deferred:
Bermuda		—		—		—
United States		25,785		(1,912)		(8,439)
Foreign - Other		347		225		486
Total deferred:		26,132		(1,687)		(7,953)
Income tax benefit (expense)	$	18,863	$	(14,467)	$	(10,742)

Our reconciliation of income tax expense computed by applying our Bermuda statutory rate and reported income tax benefit (expense) was as follows (in thousands):

	Year Ended December 31,
	2019		2018		2017
Tax at Bermuda statutory rate	$	—	$	—	$	—
Foreign income taxes at different rates		(18,630)		(17,540)		(28,188)
Tax contingencies		(206)		(5)		11,184
Return to provision adjustments		2,014		2,961		(1,397)
Benefit (expense) from change in tax rate		(14)		117		7,659
Valuation allowance		35,699		—		—
Income tax benefit (expense)	$	18,863	$	(14,467)	$	(10,742)

Deferred tax assets and liabilities were as follows (in thousands):

	As of December 31,
	2019		2018
Deferred tax assets:
Loss carryforwards	$	54,342	$	63,201
Other		3,573		2,535
Valuation allowance		(5,847)		(41,924)
Total net deferred assets		52,068		23,812
Deferred tax liabilities:
Property and equipment		(39,571)		(37,448)
Total deferred tax liabilities		(39,571)		(37,448)
Net deferred tax asset (liability)	$	12,497	$	(13,636)

We have U.S. net operating loss carryforwards of $238.8 million and $278.3 million for the years ended December 31, 2019 and 2018, respectively, which begin to expire in 2031, a portion of which relate to Prestige discussed further below. We have state net operating loss carryforwards of $3.4 million and $4.8 million for the years ended December 31, 2019 and 2018, respectively, which expire between 2025 through 2035.

Included above are deferred tax assets associated with our operations in Norway for which we have provided a full valuation allowance. We have Norway net operating loss carryforwards of $13.3 million and $13.9 million for the years ended December 31, 2019 and 2018, respectively, which can be carried forward indefinitely.

Included above are deferred tax assets associated with our branch operations in the U.K. for which we have provided a full valuation allowance. We have U.K. net operating loss carryforwards of $5.5 million and $7.5 million for the years ended December 31, 2019 and 2018, respectively, which can be carried forward indefinitely.

Included above are deferred tax assets associated with Prestige. We have U.S. net operating loss carryforwards of $145.0 million and $177.5 million for the years ended December 31, 2019 and 2018, respectively, which begin to expire in 2031. Utilization of the Prestige net operating loss carryforwards may be subject to a substantial annual limitation due to ownership change limitations that have occurred previously and/or that could occur in the future, as provided by Section 382 of the Internal Revenue Code of 1986 (“Section 382”). Ownership changes may limit the amount of net operating loss carryforwards that can be utilized to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain shareholders or public groups in the stock of a corporation by more than 50 percentage points over a three-year period. If we have experienced an ownership change, utilization of Prestige’s net operating loss carryforwards would be subject to an annual limitation under Section 382. Any limitation may result in expiration of a portion of the net operating loss carryforwards before utilization. Subsequent ownership changes could further impact the limitation in future years. We implemented certain tax restructuring strategies that created our ability to utilize the net operating loss carryforwards of Prestige, for which we had previously provided a full valuation allowance. In March 2019, we completed a Section 382 study that determined the amount of the Prestige net operations loss carryforwards that can be utilized against future

taxable income resulting in a tax benefit of $35.7 million in connection with the reversal of substantially all of the Prestige valuation allowance.

In December 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted. Among other provisions, the Act reduces the U.S. federal corporate tax rate from 35% to 21%. Also in December 2017, the SEC staff issued SAB No. 118, which addresses the recognition of provisional amounts when a company does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting for the effect of the changes in the Act. The measurement period ends when a company has obtained, prepared and analyzed the information necessary to finalize its accounting, but cannot extend beyond one year. The Company completed the accounting for the tax effects of enactment of the Act. There is no material change to the $7.4 million reduction of the value of net deferred tax liabilities (which represents future tax expenses) recorded in 2017 as a discrete tax benefit resulting from the federal corporate income tax rate reduction. Other aspects of the Act were either not applicable or did not have a material impact on the Company’s consolidated financial statements.

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits (in thousands):

	As of December 31,
	2019		2018
Unrecognized tax benefits, beginning of the year	$	532	$	532
Gross increases in tax positions from prior periods		200		—
Unrecognized tax benefits, end of year	$	732	$	532

If the $0.7 million of unrecognized tax benefits at December 31, 2019 were recognized, our effective tax rate would be minimally affected. We believe that there will not be a significant increase or decrease to the tax positions within 12 months of the reporting date. We recognize interest and penalties related to unrecognized tax benefits in income tax benefit (expense).

We file income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions and foreign jurisdictions. We are generally no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by authorities for years prior to 2016, except for years in which NOLs generated prior to 2016 are utilized.

Due to our international structure as well as the existence of international tax treaties that exempt taxation on certain activities, the repatriation of earnings from our subsidiaries would have no tax impact.

We derive our income from the international operation of ships. We are engaged in a trade or business in the U.S. and receive income from sources within the U.S. Under Section 883, certain foreign corporations are exempt from U. S. federal income or branch profits tax on U.S.-source income derived from or incidental to the international operation of ships. Applicable U.S. treasury regulations provide that a foreign corporation will qualify for the benefits of Section 883 if, in relevant part: (i) the foreign country in which the corporation is organized grants an equivalent exemption for income from the international operation of ships to corporations organized in the U.S., and (ii) the foreign corporation has one or more classes of stock that are “primarily and regularly traded on an established securities market” in the U.S. or another qualifying country. We believe that we qualify for the benefits of Section 883 because we are incorporated in qualifying countries and our ordinary shares are primarily and regularly traded on an established securities market in the U.S.

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Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

4. Goodwill and Intangible Assets

Goodwill and tradenames are not subject to amortization. As of December 31, 2019 and 2018, the carrying values were $1.4 billion for goodwill and $0.8 billion for tradenames.

The gross carrying amounts of intangible assets included within other long-term assets, the related accumulated amortization, the net carrying amounts and the weighted-average amortization periods of the Company’s intangible assets are listed in the following tables (in thousands, except amortization period):

	December 31, 2019
							Weighted-
							Average
	Gross Carrying		Accumulated		Net Carrying		Amortization
	Amount		Amortization		Amount		Period (Years)
Customer relationships	$	120,000	$	(110,169)	$	9,831	6.0
License		750		(331)		419	10.0
Total intangible assets subject to amortization	$	120,750	$	(110,500)	$	10,250

	December 31, 2018
							Weighted-
							Average
	Gross Carrying		Accumulated		Net Carrying		Amortization
	Amount		Amortization		Amount		Period (Years)
Customer relationships	$	120,000	$	(91,756)	$	28,244	6.0
Licenses		3,368		(2,874)		494	5.6
Total intangible assets subject to amortization	$	123,368	$	(94,630)	$	28,738

The aggregate amortization expense is as follows (in thousands):

	Year Ended December 31,
	2019		2018		2017
Amortization expense	$	18,488	$	26,163	$	31,232

The following table sets forth the Company’s estimated aggregate amortization expense for each of the five years below (in thousands):

	Amortization
Year ended December 31,	Expense
2020	$	9,906
2021		75
2022		75
2023		75
2024		75

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Long-Term Debt

12 Months Ended

Dec. 31, 2019

Long-term Debt, Unclassified [Abstract]

Long-Term Debt

8. Long-Term Debt

Long-term debt consisted of the following:

	Interest Rate					Balance
	December 31,				Maturities	December 31,
	2019		2018		Through	2019		2018
						(in thousands)
$875.0 million senior secured revolving credit facility	—		3.96	%	2024	$	—	$	130,000
$75.0 million revolving credit line	2.75	%	—		2020		75,000		—
Term Loan A	3.06	%	4.01	%	2024		1,565,512		1,256,167
$375.0 million Term Loan B (1)	—		4.26	%	2021		—		368,982
$700.0 million 4.750% senior unsecured notes	—		4.75	%	2021		—		561,021
$565.0 million 3.625% senior unsecured notes	3.63	%	—		2024		558,781		—
€662.9 million Norwegian Epic term loan (2)	—		4.58	%	2022		—		259,394
$260 million Norwegian Jewel term loan	2.54	%	—		2022		221,860		—
$230 million Pride of America term loan	2.81	%	—		2021		229,621		—
€529.8 million Breakaway one loan (2)	2.84	%	4.09	%	2025		305,969		360,680
€529.8 million Breakaway two loan (2)	4.10	%	4.50	%	2026		370,531		426,503
€590.5 million Breakaway three loan (2)	2.98	%	2.98	%	2027		478,665		537,223
€729.9 million Breakaway four loan (2)	2.98	%	2.98	%	2029		630,088		694,536
€710.8 million Seahawk 1 term loan (2)	3.92	%	3.92	%	2030		692,150		756,061
€748.7 million Seahawk 2 term loan (2)	3.92	%	3.92	%	2031		856,188		187,612
Leonardo newbuild one loan	2.68	%	2.68	%	2034		48,009		48,009
Leonardo newbuild two loan	2.77	%	2.77	%	2035		48,009		48,009
Leonardo newbuild three loan	1.22	%	1.22	%	2036		42,700		43,667
Leonardo newbuild four loan	1.31	%	1.31	%	2037		42,700		43,667
Sirena loan	—		2.75	%	2019		—		13,856
Explorer newbuild loan	3.43	%	3.43	%	2028		242,449		268,970
Marina newbuild loan (3)	2.75	%	3.07	%	2023		156,319		201,007
Riviera newbuild loan (4)	2.48	%	3.32	%	2024		202,233		247,203
Finance lease and license obligations	Various		Various		2028		34,909		39,524
Total debt							6,801,693		6,492,091
Less: current portion of long-term debt							(746,358)		(681,218)
Total long-term debt						$	6,055,335	$	5,810,873

(1) Includes original issue discount of $0.7 million as of December 31, 2018.

(2) Currently U.S. dollar-denominated.

(3) Includes premium of $0.1 million as of December 31, 2019 and 2018.

(4) Includes premium of $0.1 million and $0.2 million as of December 31, 2019 and 2018, respectively.

On December 16, 2019, NCLC issued $565.0 million aggregate principle amount of 3.625% senior unsecured notes due December 2024 (the “Notes”) in a private offering (the “Offering”) at par. NCLC used the net proceeds from the Offering, after deducting the initial purchasers’ discount and estimated fees and expenses, together with cash on hand, to redeem $565.0 million principal amount of outstanding 4.75% Senior Notes due 2021 at a price equal to 100% of the principal amount being redeemed and paid the premium of $6.7 million. The redemption also resulted in a write-off of $2.7 million of deferred fees.

NCLC will pay interest on the Notes at 3.625% per annum, semiannually on June 15 and December 15 of each year, commencing on June 15, 2020, to holders of record at the close of business on the immediately preceding June 1 and December 1, respectively. NCLC may redeem the Notes, in whole or part, at any time prior to December 15, 2021, at a price equal to 100% of the principal amount of the Notes redeemed plus accrued and unpaid interest to, but not including, the redemption date and a “make-whole premium.” NCLC may redeem the Notes, in whole or in part, on or

after December 15, 2021, at the redemption prices set forth in the indenture governing the Notes. At any time (which may be more than once) on or prior to December 15, 2021, NCLC may choose to redeem up to 40% of the aggregate principal amount of the Notes at a redemption price equal to 103.625% of the face amount thereof with an amount equal to the net proceeds of one or more equity offerings, so long as at least 60% of the aggregate principal amount of the Notes issued remains outstanding following such redemption. The indenture governing the Notes contains covenants that limit NCLC’s ability to, among other things: (i) create liens on certain assets to secure debt; (ii) enter into sale leaseback transactions; and (iii) consolidate, merge, sell or otherwise dispose of all or substantially all of its assets. The indenture governing the Notes also provides for events of default, which, if any of them occurs, would permit or require the principal, premium (if any), interest and other monetary obligations on all of the then-outstanding Notes to become due and payable immediately.

On October 30, 2019, we took delivery of Norwegian Encore. We had export financing in place for 80% of the contract price. The associated $882.9 million term loan bears interest at a fixed rate of 3.92% with a maturity date of October 30, 2031. Principal and interest payments are payable semiannually.

In October 2019, we entered into a $75 million revolving credit line agreement that matures in October 2020 and bears interest at LIBOR plus a margin of 0.95%.

NCLC entered into a $260 million credit agreement, dated as of May 15, 2019, with Bank of America, N.A., as administrative agent and collateral agent, and certain other lenders. The proceeds of this term loan were used to prepay the then outstanding principal and accrued interest of the Norwegian Epic term loan. The $260 million term loan is secured by Norwegian Jewel Limited, bears interest at LIBOR plus a margin of 0.80%, and matures on May 15, 2022. The transaction resulted in a loss on extinguishment of debt of $1.1 million.

NCLC entered into a $230 million credit agreement, dated as of January 10, 2019, with Nordea Bank ABP, New York Branch, as administrative agent and collateral agent, and certain other lenders. The proceeds of this term loan will be used for general corporate purposes, including to finance the pre-delivery installments due to the builder under the Company’s shipbuilding contracts. The $230 million term loan is secured by Pride of America Ship Holding, LLC and bears interest at LIBOR plus a margin of 1.00%. The term loan matures on January 10, 2021; however, NCLC may elect to extend the maturity date to January 10, 2022 provided certain conditions are met. Should NCLC elect to extend the maturity date, the interest rate will be LIBOR plus a margin of 1.10% for the third year.

NCLC entered into a Fourth Amended and Restated Credit Agreement, dated as of January 2, 2019, with a subsidiary of NCLC, as co-borrower and JPMorgan Chase Bank, N.A., as administrative agent, and certain other lenders. This revised facility, among other things, (a) reduced the pricing of our existing $875 million Revolving Loan Facility, (b) reduced the pricing and increased the approximately $1.3 billion principal amount outstanding under the term loan A facility to $1.6 billion, and (c) extended the maturity dates for our Revolving Loan Facility and our term loan A facility to 2024, subject to certain conditions. We used the proceeds from the increase in our term loan A facility to prepay all of the then outstanding amounts under our term loan B facility. The transaction resulted in a loss on extinguishment of debt of $2.9 million.

The applicable margin under the new term loan A facility and new Revolving Loan Facility is determined by reference to a total leverage ratio, with an applicable margin of between 1.75% and 1.00% with respect to Eurocurrency loans and between 0.75% and 0.00% with respect to base rate loans. The margin as of December 31, 2019 for borrowings under the new term loan A facility and new Revolving Loan Facility was 1.25% with respect to Eurocurrency borrowings. In addition to paying interest on outstanding principal under the borrowings, we are obligated to pay a quarterly commitment fee at a rate determined by reference to a total net leverage ratio, with a maximum commitment fee of 0.30%.

Interest expense, net for the year ended December 31, 2019 was $272.9 million which included $27.5 million of amortization of deferred financing fees and a $16.7 million loss on extinguishment and modification of debt. Interest expense, net for the year ended December 31, 2018 was $270.4 million which included $31.4 million of amortization of deferred financing fees and a $6.3 million loss on extinguishment of debt. Interest expense, net for the year ended

December 31, 2017 was $267.8 million which included $32.5 million of amortization of deferred financing fees and a $23.9 million loss on extinguishment and modification of debt.

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

The following are scheduled principal repayments on long-term debt including finance lease obligations as of December 31, 2019 for each of the next five years (in thousands):

Year	Amount
2020	$	746,358
2021		899,206
2022		667,456
2023		574,492
2024		2,260,295
Thereafter		1,778,870
Total	$	6,926,677

We had an accrued interest liability of $33.3 million and $37.2 million as of December 31, 2019 and 2018, respectively.

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Schedule of components of net income before income taxes

The components of net income before income taxes consist of the following (in thousands):

	Year Ended December 31,
	2019		2018		2017
Bermuda	$	—	$	—	$	—
Foreign - Other		911,365		969,310		770,614
Net income before income taxes	$	911,365	$	969,310	$	770,614

Schedule of components of the provision for income taxes

The components of the provision for income taxes consisted of the following benefit (expense) (in thousands):

	Year Ended December 31,
	2019		2018		2017
Current:
Bermuda	$	—	$	—	$	—
United States		(975)		(7,409)		1,828
Foreign - Other		(6,294)		(5,371)		(4,617)
Total current:		(7,269)		(12,780)		(2,789)
Deferred:
Bermuda		—		—		—
United States		25,785		(1,912)		(8,439)
Foreign - Other		347		225		486
Total deferred:		26,132		(1,687)		(7,953)
Income tax benefit (expense)	$	18,863	$	(14,467)	$	(10,742)

Schedule of reconciliation of income tax expense

Our reconciliation of income tax expense computed by applying our Bermuda statutory rate and reported income tax benefit (expense) was as follows (in thousands):

	Year Ended December 31,
	2019		2018		2017
Tax at Bermuda statutory rate	$	—	$	—	$	—
Foreign income taxes at different rates		(18,630)		(17,540)		(28,188)
Tax contingencies		(206)		(5)		11,184
Return to provision adjustments		2,014		2,961		(1,397)
Benefit (expense) from change in tax rate		(14)		117		7,659
Valuation allowance		35,699		—		—
Income tax benefit (expense)	$	18,863	$	(14,467)	$	(10,742)

Schedule of deferred tax assets and liabilities

Deferred tax assets and liabilities were as follows (in thousands):

	As of December 31,
	2019		2018
Deferred tax assets:
Loss carryforwards	$	54,342	$	63,201
Other		3,573		2,535
Valuation allowance		(5,847)		(41,924)
Total net deferred assets		52,068		23,812
Deferred tax liabilities:
Property and equipment		(39,571)		(37,448)
Total deferred tax liabilities		(39,571)		(37,448)
Net deferred tax asset (liability)	$	12,497	$	(13,636)

Schedule of reconciliation of the total amounts of unrecognized tax benefits

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits (in thousands):

	As of December 31,
	2019		2018
Unrecognized tax benefits, beginning of the year	$	532	$	532
Gross increases in tax positions from prior periods		200		—
Unrecognized tax benefits, end of year	$	732	$	532

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Property and Equipment, Net (Tables)

12 Months Ended

Dec. 31, 2019

Property Plant And Equipment [Abstract]

Schedule of property and equipment, net

Property and equipment, net consisted of the following (in thousands):

	December 31,
	2019		2018
Ships	$	14,154,578	$	13,032,555
Ships improvements		1,865,272		1,407,989
Ships under construction		387,749		491,632
Land and land improvements		38,375		34,936
Other		672,975		558,052
		17,118,949		15,525,164
Less: accumulated depreciation		(3,983,612)		(3,405,911)
Property and equipment, net	$	13,135,337	$	12,119,253

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Leases 1 (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Jan. 01, 2019
Operating leases
Right-of-use assets		$ 235,000
Other long-term assets
Operating leases
Right-of-use assets	$ 236,604
Operating lease, right-of-use asset - Extensible List	us-gaap:OtherAssetsNoncurrent
Accrued expenses and other liabilities
Operating leases
Current operating lease liabilities	$ 39,126
Operating lease liability, current - Extensible list	nclh:AccruedLiabilitiesAndOtherLiabilitiesCurrent
Other long-term liabilities
Operating leases
Non-current operating lease liabilities	$ 207,243
Operating lease liability, non current - Extensible list	us-gaap:OtherLiabilitiesNoncurrent
Property and equipment, net
Finance leases
Right-of-use assets	$ 13,873
Finance lease, right-of-use asset - Extensible List	us-gaap:PropertyPlantAndEquipmentNet
Current portion of long-term debt
Finance leases
Current finance lease liabilities	$ 6,419
Finance lease liability, current - Extensible list	us-gaap:LongTermDebtAndCapitalLeaseObligationsCurrent
Long-term debt.
Finance leases
Non-current finance lease liabilities	$ 8,812
Finance lease liability, noncurrent - Extensible list	us-gaap:LongTermDebtAndCapitalLeaseObligations

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Leases (Textuals) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Jan. 01, 2019
Lessee, Lease, Description [Line Items]
Operating lease right-of-use assets		$ 235,000
Operating Lease, Liability, Statement of Financial Position [Extensible List]	nclh:AccruedLiabilitiesAndOtherLiabilitiesCurrent us-gaap:OtherLiabilitiesNoncurrent
Operating lease liability	$ 246,369
Reclassification operating right of use assets		8,800
Undiscounted minimum annual guarantees	$ 1,100,000
Lessee, Operating Lease, Existence of Option to Extend	true
Renewal term	5 years
ASU No. 2016-02 | Restatement
Lessee, Lease, Description [Line Items]
Operating lease liability		$ 243,800

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Employee Benefits and Share-Based Compensation - Summary of Restricted Share Activity (Details) - Time-Based RSU Awards	12 Months Ended
	Dec. 31, 2019 $ / shares shares
Number of Restricted Share Awards
Non-vested as of January 1, 2019 | shares	2,973,032
Vested | shares	(1,430,291)
Non-vested as of December 31, 2019 | shares	3,245,625
Weighted-Average Grant-Date Fair Value
Non-vested as of January 1, 2019 | $ / shares	$ 53.98
Vested | $ / shares	53.02
Non-vested as of December 31, 2019 | $ / shares	$ 54.94
Restricted Stock
Number of Restricted Share Awards
Non-vested as of January 1, 2019 | shares	429
Vested | shares	(429)
Weighted-Average Grant-Date Fair Value
Non-vested as of January 1, 2019 | $ / shares	$ 58.41
Vested | $ / shares	$ 58.41

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Income Taxes - Reconciliation of Total Amounts of Unrecognized Tax Benefits (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Unrecognized tax benefits, beginning of the year	$ 532
Gross increases in tax positions from prior periods	200
Unrecognized tax benefits, end of year	$ 732

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Income Taxes - Components of Net Income Before Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Components Of Net Income Before Income Taxes [Line Items]
Net income before income taxes	$ 911,365	$ 969,310	$ 770,614
Bermuda
Components Of Net Income Before Income Taxes [Line Items]
Net income before income taxes	0	0	0
Foreign - Other
Components Of Net Income Before Income Taxes [Line Items]
Net income before income taxes	$ 911,365	$ 969,310	$ 770,614

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Fair Value Measurements and Derivatives - Effects of cash flow hedge accounting on consolidated statements of operations (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Derivative Instruments Gain Loss [Line Items]
Fuel	$ 409,602	$ 392,685	$ 361,032
Depreciation and amortization	646,188	561,060	509,957
Interest expense, net	272,867	270,404	267,804
Cash Flow Hedging
Derivative Instruments Gain Loss [Line Items]
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income	8,898	30,096
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (before ASU adoption)			(36,795)
Fuel			361,032
Depreciation and amortization			509,957
Interest expense, net			(267,804)
Cash Flow Hedging | Fuel
Derivative Instruments Gain Loss [Line Items]
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income	14,093	34,410
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (before ASU adoption)			(29,721)
Cash Flow Hedging | Depreciation and amortization
Derivative Instruments Gain Loss [Line Items]
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income	(3,062)	(3,463)
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (before ASU adoption)			(4,077)
Cash Flow Hedging | Interest expense, net
Derivative Instruments Gain Loss [Line Items]
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income	(2,133)	(851)
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (before ASU adoption)			(2,997)
Cash Flow Hedging | Fuel contracts | Fuel
Derivative Instruments Gain Loss [Line Items]
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income	14,093	34,410
Cash Flow Hedging | Foreign currency contracts | Depreciation and amortization
Derivative Instruments Gain Loss [Line Items]
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income	(3,062)	(3,463)
Cash Flow Hedging | Interest rate contracts | Interest expense, net
Derivative Instruments Gain Loss [Line Items]
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income	$ (2,133)	$ (851)
Designated as Hedging Instrument | Cash Flow Hedging | Fuel contracts
Derivative Instruments Gain Loss [Line Items]
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (before ASU adoption)			(29,721)
Designated as Hedging Instrument | Cash Flow Hedging | Foreign currency contracts
Derivative Instruments Gain Loss [Line Items]
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (before ASU adoption)			(4,077)
Designated as Hedging Instrument | Cash Flow Hedging | Interest rate contracts
Derivative Instruments Gain Loss [Line Items]
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (before ASU adoption)			$ (2,997)

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Commitments and Contingencies (Textuals) (Details) € in Millions, £ in Millions, $ in Millions		12 Months Ended
	Aug. 27, 2019 item	Dec. 31, 2019 EUR (€) item	Dec. 31, 2019 GBP (£)	Dec. 31, 2019 USD ($) item
Commitments and Contingencies Disclosure [Line Items]
Number of cruises ships		27		27
Capacity of ship, berths		58,400		58,400
Performance guarantee required to be maintained | $				$ 32.0
Security gurantee | £			£ 41.5
Consumer protection policy | €		€ 110.0
Number of lawsuits filed	2
Ship to be delivered in 2023
Commitments and Contingencies Disclosure [Line Items]
Number of additional ships		1		1
Ship order delivery in 2022 and 2025
Commitments and Contingencies Disclosure [Line Items]
Number of additional ships		2		2
Capacity of ship, tons		67,000		67,000
Capacity of ship, berths		1,200		1,200
Ship order delivery in 2022 and 2025 | Oceania Cruises
Commitments and Contingencies Disclosure [Line Items]
Number of additional cruise ships, subject to approvals		1		1
Ship Construction Contracts
Commitments and Contingencies Disclosure [Line Items]
Number of additional ships		10		10
Aggregate contract price of new ships		€ 7,400.0		$ 8,300.0
Export credit facility financing as percentage of contract price		80.00%		80.00%
Ship Construction Contracts | Ships launching period in 2022 through 2027
Commitments and Contingencies Disclosure [Line Items]
Number of cruises ships		6		6
Capacity of ship, tons		140,000		140,000
Capacity of ship, berths		3,300		3,300
Ship Construction Contracts | Ships launching period in 2026 and 2027
Commitments and Contingencies Disclosure [Line Items]
Number of cruises ships		2		2
Ship Construction Contracts | Ship order delivery in winter 2020
Commitments and Contingencies Disclosure [Line Items]
Capacity of ship, tons		55,000		55,000
Capacity of ship, berths		750		750

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Employee Benefits and Share-Based Compensation - Amounts Related to Shipboard Retirement Plan (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Pension expense:
Service cost	$ 2,135	$ 2,167	$ 1,987
Interest cost	1,001	857	887
Amortization of prior service cost	378	378	378
Amortization of actuarial loss		51	40
Total pension expense	3,514	3,453	3,292
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	24,318	24,587	22,605
Service cost	2,135	2,167	1,987
Interest cost	1,001	857	887
Actuarial gain (loss)	2,308	(2,271)	458
Direct benefit payments	(1,067)	(1,022)	(1,350)
Projected benefit obligation at end of year	28,695	24,318	24,587
Amounts recognized in the consolidated balance sheets:
Projected benefit obligation	28,695	24,318	24,587
Amounts recognized in accumulated other comprehensive income (loss):
Prior service cost	(3,781)	(4,159)	(4,537)
Accumulated actuarial loss	(3,413)	(1,105)	(3,426)
Accumulated other comprehensive income (loss)	$ (7,194)	$ (5,264)	$ (7,963)

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Long-Term Debt - Summary of Long-Term Debt (Parenthetical) (Details) € in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2019 EUR (€)	Dec. 31, 2018 EUR (€)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
$875.0 Million Senior Secured Revolving Loan Facility
Debt Instrument [Line Items]
Maximum borrowing capacity			$ 875.0	$ 875.0
$75.0 Million Revolving Credit Line
Debt Instrument [Line Items]
Maximum borrowing capacity			75.0	75.0
$375.0 Million Term Loan B
Debt Instrument [Line Items]
Term loan amount			375.0	375.0
Original issue discount				0.7
$700.0 Million 4.750% Senior Unsecured Notes
Debt Instrument [Line Items]
Term loan amount			700.0	700.0
Interest rate	4.75%	4.75%
$565.0 Million 3.625% Senior Unsecured Notes
Debt Instrument [Line Items]
Term loan amount			565.0	565.0
Interest rate	3.625%	3.625%
EUR 662.9 Million Norwegian Epic Term Loan
Debt Instrument [Line Items]
Term loan amount | €	€ 662.9	€ 662.9
$260 Million Norwegian Jewel Term Loan
Debt Instrument [Line Items]
Term loan amount			260.0	260.0
$230 Pride of America Term Loan
Debt Instrument [Line Items]
Term loan amount			230.0	230.0
EUR 529.8 Million Breakaway One Loan
Debt Instrument [Line Items]
Term loan amount | €	529.8	529.8
EUR 529.8 Million Breakaway Two Loan
Debt Instrument [Line Items]
Term loan amount | €	529.8	529.8
EUR 590.5 Million Breakaway Three Loan
Debt Instrument [Line Items]
Term loan amount | €	590.5	590.5
EUR 729.9 Million Breakaway Four Loan
Debt Instrument [Line Items]
Term loan amount | €	729.9	729.9
EUR 710.8 Million Seahawk 1 Term Loan
Debt Instrument [Line Items]
Term loan amount | €	710.8	710.8
EUR 748.7 Million Seahawk 2 Term Loan
Debt Instrument [Line Items]
Term loan amount | €	€ 748.7	€ 748.7
Marina Newbuild Loan
Debt Instrument [Line Items]
Net unamortized premium			0.1
Riviera Newbuild Loan
Debt Instrument [Line Items]
Net unamortized premium			$ 0.1	$ 0.2

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Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Statement of Comprehensive Income [Abstract]
Net income	$ 930,228	$ 954,843	$ 759,872
Other comprehensive income (loss):
Shipboard Retirement Plan	(1,930)	2,697	(40)
Cash flow hedges:
Net unrealized gain (loss)	(123,015)
Net unrealized gain (loss)		(161,214)	304,684
Amount realized and reclassified into earnings	(8,898)
Amount realized and reclassified into earnings		(30,096)	36,795
Total other comprehensive income (loss)	(133,843)	(188,613)	341,439
Total comprehensive income	$ 796,385	$ 766,230	$ 1,101,311

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Subsequent Events (Textuals) (Details) - USD ($) $ in Thousands	1 Months Ended
	Jan. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Subsequent Event [Line Items]
Principal amount outstanding		$ 6,801,693	$ 6,492,091
Subsequent Event | Regent Seven Seas Splendor
Subsequent Event [Line Items]
Contract price percentage	80.00%
Subsequent Event | $426 Million Seven Seas Splendor Term Loan | Regent Seven Seas Splendor
Subsequent Event [Line Items]
Principal amount	$ 426,000
Interest rate	3.01%
Maturity date	Jan. 30, 2032

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Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Thousands	Ordinary Shares	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Retained Earnings	Treasury Shares	Total
Balance at Dec. 31, 2016	$ 232	$ 3,890,119	$ (314,473)	$ 1,201,103	$ (239,255)	$ 4,537,726
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Share-based compensation		87,039				87,039
Issuance of shares under employee related plans	1	30,031				30,032
Net share settlement of restricted share units		(6,342)				(6,342)
Other comprehensive income, net			341,439			341,439
Net income				759,872		759,872
Balance at Dec. 31, 2017	233	3,998,694	26,966	1,963,128	(239,255)	5,749,766
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cumulative change in accounting policy		(2,153)		2,153
Share-based compensation		115,983				115,983
Issuance of shares under employee related plans	2	28,817				28,819
Treasury shares					(664,811)	(664,811)
Net share settlement of restricted share units		(13,855)				(13,855)
Other comprehensive income, net | Accounting Standards Update 2017-12 [Member]			(188,601)			(188,601)
Other comprehensive income, net						(188,613)
Net income				954,843		954,843
Balance at Dec. 31, 2018	235	4,129,639	(161,647)	2,898,840	(904,066)	5,963,001
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cumulative change in accounting policy			(12)	(19,131)		(19,143)
Share-based compensation		95,055				95,055
Issuance of shares under employee related plans	2	31,935				31,937
Treasury shares					(349,860)	(349,860)
Net share settlement of restricted share units		(20,939)				(20,939)
Other comprehensive income, net			(133,843)			(133,843)
Net income				930,228		930,228
Balance at Dec. 31, 2019	$ 237	$ 4,235,690	$ (295,490)	$ 3,829,068	$ (1,253,926)	$ 6,515,579

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Fair Value Measurements and Derivatives - Derivatives measured at fair value and disclosed by balance sheet location (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Derivatives, Fair Value [Line Items]
Derivative assets, fair value	$ 277	$ 12,125
Derivative liabilities, fair value	192,034	116,352
Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Derivative assets, fair value	3,429	17,217
Derivative liabilities, fair value	192,034	117,879
Fuel contracts | Designated as Hedging Instrument | Prepaid expenses and other assets
Derivatives, Fair Value [Line Items]
Derivative assets, fair value		2,583
Derivative liabilities, fair value		1
Fuel contracts | Designated as Hedging Instrument | Other long-term assets
Derivatives, Fair Value [Line Items]
Derivative assets, fair value	277	197
Derivative liabilities, fair value		29
Fuel contracts | Designated as Hedging Instrument | Accrued expenses and other liabilities
Derivatives, Fair Value [Line Items]
Derivative assets, fair value	2,300	1,173
Derivative liabilities, fair value	18,257	19,547
Fuel contracts | Designated as Hedging Instrument | Other long-term liabilities
Derivatives, Fair Value [Line Items]
Derivative assets, fair value	683	933
Derivative liabilities, fair value	17,763	51,184
Foreign currency contracts | Designated as Hedging Instrument | Prepaid expenses and other assets
Derivatives, Fair Value [Line Items]
Derivative assets, fair value		5,285
Derivative liabilities, fair value		1,497
Foreign currency contracts | Designated as Hedging Instrument | Other long-term assets
Derivatives, Fair Value [Line Items]
Derivative assets, fair value		3,514
Foreign currency contracts | Designated as Hedging Instrument | Accrued expenses and other liabilities
Derivatives, Fair Value [Line Items]
Derivative assets, fair value		112
Derivative liabilities, fair value	33,475	5,145
Foreign currency contracts | Designated as Hedging Instrument | Other long-term liabilities
Derivatives, Fair Value [Line Items]
Derivative assets, fair value	169	2,874
Derivative liabilities, fair value	118,500	40,476
Interest rate contracts | Designated as Hedging Instrument | Prepaid expenses and other assets
Derivatives, Fair Value [Line Items]
Derivative assets, fair value		519
Interest rate contracts | Designated as Hedging Instrument | Other long-term assets
Derivatives, Fair Value [Line Items]
Derivative assets, fair value		$ 27
Interest rate contracts | Designated as Hedging Instrument | Accrued expenses and other liabilities
Derivatives, Fair Value [Line Items]
Derivative liabilities, fair value	2,178
Interest rate contracts | Designated as Hedging Instrument | Other long-term liabilities
Derivatives, Fair Value [Line Items]
Derivative liabilities, fair value	$ 1,861

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Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Schedule Of Intangible Assets [Line Items]
Gross Carrying Amount	$ 120,750	$ 123,368
Accumulated Amortization	(110,500)	(94,630)
Net Carrying Amount	10,250	28,738
Customer relationships
Schedule Of Intangible Assets [Line Items]
Gross Carrying Amount	120,000	120,000
Accumulated Amortization	(110,169)	(91,756)
Net Carrying Amount	$ 9,831	$ 28,244
Weighted- Average Amortization Period (Years)	6 years	6 years
Licenses
Schedule Of Intangible Assets [Line Items]
Gross Carrying Amount	$ 750	$ 3,368
Accumulated Amortization	(331)	(2,874)
Net Carrying Amount	$ 419	$ 494
Weighted- Average Amortization Period (Years)	10 years	5 years 7 months 6 days

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Summary of Significant Accounting Policies - Revenues by Destination (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenues by destination	$ 1,480,618	$ 1,913,851	$ 1,664,277	$ 1,403,630	$ 1,381,193	$ 1,858,356	$ 1,522,174	$ 1,293,403	$ 6,462,376	$ 6,055,126	$ 5,396,175
North America
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenues by destination									3,807,576	3,543,282	3,285,903
Europe
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenues by destination									1,666,751	1,462,698	1,347,381
Asia-Pacific
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenues by destination									500,842	721,404	394,631
Other
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenues by destination									$ 487,207	$ 327,742	$ 368,260

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Description of Business and Organization 1 (Textuals) (Details) - USD ($) $ / shares in Units, $ in Millions	1 Months Ended
	Jan. 31, 2013	Feb. 28, 2011	Dec. 31, 2019	Dec. 31, 2018
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Ordinary shares, par value (in dollars per shares)			$ 0.001	$ 0.001
Norwegian Cruise Line Holdings Ltd.
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Number of ordinary shares issued		10,000
Ordinary shares, par value (in dollars per shares)		$ 0.001
Norwegian Cruise Line Holdings Ltd. | IPO
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Ownership percentage	100.00%
Contribution to NCLC	$ 460.0

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Other Income (Expense), Net

12 Months Ended

Dec. 31, 2019

Other Income And Expenses [Abstract]

Other Income (Expense), Net

14. Other Income (Expense), Net

Other income (expense), net was income of $6.2 million, income of $20.7 million, and expense of $10.4 million for the years ended December 31, 2019, 2018 and 2017, respectively. In 2019, the income was primarily due to gains from insurance proceeds and a litigation settlement partially offset by losses on foreign currency exchange. In 2018, the income was primarily due to foreign currency exchange gains. In 2017, the expense was primarily related to foreign currency exchange losses.

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Subsequent Events

12 Months Ended

Dec. 31, 2019

Subsequent Events [Abstract]

Subsequent Events

18. Subsequent Events

In January 2020, we took delivery of Seven Seas Splendor. We had export financing in place for 80% of the contract price. The associated $426.0 million term loan bears interest at a fixed rate of 3.01% with a maturity date of January 30, 2032. Principal and interest payments are payable semiannually.

In late January 2020, the COVID-19 coronavirus outbreak began impacting the Company’s financial performance and operations. The Company has begun to experience costs and lost revenue related to itinerary modifications, travel restrictions and advisories, the unavailability of ports and/or destinations, cancellations and redeployments. The COVID-19 coronavirus is also impacting consumer sentiment regarding cruise travel generally. Due to the unknown duration and extent of the outbreak, the full effect on our financial performance cannot be quantified at this time.

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Goodwill and Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of gross carrying amounts included within goodwill and intangible assets, related accumulated amortization and the weighted-average amortization periods of intangible assets

The gross carrying amounts of intangible assets included within other long-term assets, the related accumulated amortization, the net carrying amounts and the weighted-average amortization periods of the Company’s intangible assets are listed in the following tables (in thousands, except amortization period):

	December 31, 2019
							Weighted-
							Average
	Gross Carrying		Accumulated		Net Carrying		Amortization
	Amount		Amortization		Amount		Period (Years)
Customer relationships	$	120,000	$	(110,169)	$	9,831	6.0
License		750		(331)		419	10.0
Total intangible assets subject to amortization	$	120,750	$	(110,500)	$	10,250

	December 31, 2018
							Weighted-
							Average
	Gross Carrying		Accumulated		Net Carrying		Amortization
	Amount		Amortization		Amount		Period (Years)
Customer relationships	$	120,000	$	(91,756)	$	28,244	6.0
Licenses		3,368		(2,874)		494	5.6
Total intangible assets subject to amortization	$	123,368	$	(94,630)	$	28,738

Schedule of aggregate amortization expense

The aggregate amortization expense is as follows (in thousands):

	Year Ended December 31,
	2019		2018		2017
Amortization expense	$	18,488	$	26,163	$	31,232

Schedule of estimated aggregate amortization expense

The following table sets forth the Company’s estimated aggregate amortization expense for each of the five years below (in thousands):

	Amortization
Year ended December 31,	Expense
2020	$	9,906
2021		75
2022		75
2023		75
2024		75

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Quarterly Selected Financial Data (Unaudited) (in thousands, except per share data) (Tables)

12 Months Ended

Dec. 31, 2019

Quarterly Financial Information Disclosure [Abstract]

Schedule of quarterly financial information

	First Quarter				Second Quarter				Third Quarter				Fourth Quarter
	2019		2018		2019		2018		2019		2018		2019		2018
Total revenue	$	1,403,630	$	1,293,403	$	1,664,277	$	1,522,174	$	1,913,851	$	1,858,356	$	1,480,618	$	1,381,193
Operating income	$	158,296	$	167,053	$	308,681	$	292,152	$	511,724	$	550,276	$	199,376	$	209,580
Net income	$	118,157	$	103,155	$	240,190	$	226,676	$	450,584	$	470,378	$	121,297	$	154,634
Earnings per share:
Basic	$	0.54	$	0.45	$	1.11	$	1.02	$	2.10	$	2.12	$	0.57	$	0.70
Diluted	$	0.54	$	0.45	$	1.11	$	1.01	$	2.09	$	2.11	$	0.56	$	0.70

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Fair Value Measurements and Derivatives (Tables)

12 Months Ended

Dec. 31, 2019

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Schedule of derivatives measured at fair value and disclosed by balance sheet location

The derivatives measured at fair value and the respective location in the consolidated balance sheets includes the following (in thousands):

		Assets				Liabilities
		December 31,		December 31,		December 31,		December 31,
	Balance Sheet Location	2019		2018		2019		2018
Derivative Contracts Designated as Hedging Instruments
Fuel contracts
	Prepaid expenses and other assets	$	—	$	2,583	$	—	$	1
	Other long-term assets		277		197		—		29
	Accrued expenses and other liabilities		2,300		1,173		18,257		19,547
	Other long-term liabilities		683		933		17,763		51,184
Foreign currency contracts
	Prepaid expenses and other assets		—		5,285		—		1,497
	Other long-term assets		—		3,514		—		—
	Accrued expenses and other liabilities		—		112		33,475		5,145
	Other long-term liabilities		169		2,874		118,500		40,476
Interest rate contracts
	Prepaid expenses and other assets		—		519		—		—
	Other long-term assets		—		27		—		—
	Accrued expenses and other liabilities		—		—		2,178		—
	Other long-term liabilities		—		—		1,861		—
Total derivatives designated as hedging instruments		$	3,429	$	17,217	$	192,034	$	117,879

Schedule of gross and net amounts recognized within assets and liabilities

The gross and net amounts recognized within assets and liabilities include the following (in thousands):

			Gross				Gross
	Gross		Amounts		Total Net		Amounts
December 31, 2019	Amounts		Offset		Amounts		Not Offset		Net Amounts
Assets	$	277	$	—	$	277	$	—	$	277
Liabilities		192,034		(3,152)		188,882		(149,863)		39,019

			Gross				Gross
	Gross		Amounts		Total Net		Amounts
December 31, 2018	Amounts		Offset		Amounts		Not Offset		Net Amounts
Assets	$	12,125	$	(1,527)	$	10,598	$	(6,872)	$	3,726
Liabilities		116,352		(5,092)		111,260		(35,718)		75,542

Schedule of cash flow hedge accounting on accumulated other comprehensive income (loss)

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	Amount of Gain (Loss) Reclassified
	Amount of Gain (Loss)						Other Comprehensive	from Accumulated Other
	Recognized in Other						Income (Loss) into	Comprehensive
Derivatives	Comprehensive Income						Income	Income (Loss) into Income
	Year Ended December 31,							Year Ended December 31,
	2019		2018		2017			2019		2018		2017
Fuel contracts	$	46,154	$	(52,949)	$	50,263	Fuel	$	14,093	$	34,410	$	(29,721)
Foreign currency contracts		(163,197)		(108,911)		254,070	Depreciation and amortization		(3,062)		(3,463)		(4,077)
Interest rate contracts		(5,972)		646		351	Interest expense, net		(2,133)		(851)		(2,997)
Total gain (loss) recognized in other comprehensive income	$	(123,015)	$	(161,214)	$	304,684		$	8,898	$	30,096	$	(36,795)

Schedule of cash flow hedge accounting on the consolidated financial statements of operations

The effects of cash flow hedge accounting on the consolidated statements of operations include the following (in thousands):

	Year Ended December 31, 2019						Year Ended December 31, 2018
			Depreciation						Depreciation
			and		Interest				and		Interest
	Fuel		Amortization		Expense, net		Fuel		Amortization		Expense, net
Total amounts of income and expense line items presented in the consolidated statements of operations in which the effects of cash flow hedges are recorded	$	409,602	$	646,188	$	272,867	$	392,685	$	561,060	$	270,404
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income
Fuel contracts		14,093		—		—		34,410		—		—
Foreign currency contracts		—		(3,062)		—		—		(3,463)		—
Interest rate contracts		—		—		(2,133)		—		—		(851)

The effects of cash flow hedge accounting on the consolidated statements of operations include the following (in thousands):

	Year Ended December 31, 2017
			Depreciation
			and		Interest
	Fuel		Amortization		Expense, net
Total amounts of income and expense line items presented in the consolidated statements of operations in which the effects of cash flow hedges are recorded	$	361,032	$	509,957	$	267,804
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income
Fuel contracts		(29,721)		—		—
Foreign currency contracts		—		(4,077)		—
Interest rate contracts		—		—		(2,997)

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Leases (Tables)

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

Schedule of components of lease expense and revenue

The components of lease expense and revenue were as follows (in thousands):

	Year Ended
	December 31, 2019
Operating lease expense	$	31,596
Variable lease expense		14,284
Short-term lease expense		50,832
Finance lease cost:
Amortization of right-of-use assets		1,765
Interest on lease liabilities		1,239
Operating lease revenue		446
Sublease income		1,615

Schedule of lease balances

Lease balances were as follows (in thousands):

	Balance Sheet location	December 31, 2019
Operating leases
Right-of-use assets	Other long-term assets	$	236,604
Current operating lease liabilities	Accrued expenses and other liabilities		39,126
Non-current operating lease liabilities	Other long-term liabilities		207,243
Finance leases
Right-of-use assets	Property and equipment, net		13,873
Current finance lease liabilities	Current portion of long-term debt		6,419
Non-current finance lease liabilities	Long-term debt		8,812

Schedule of supplemental cash flow information related to leases

Supplemental cash flow information related to leases was as follows (in thousands):

	Year Ended
	December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	75,539
Operating cash outflows from finance leases		1,051
Financing cash outflows from finance leases		2,826
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		24,834
Finance leases		705

Schedule of maturities of lease liabilities, weighted-average remaining lease terms and discount rates for leases

As of December 31, 2019, maturities of lease liabilities, weighted-average remaining lease terms and discount rates for our leases were as follows (in thousands, except lease terms and discount rates):

	Operating			Finance
	leases			leases
2020	$	47,796		$	6,141
2021		32,144			4,912
2022		31,844			3,957
2023		31,740			730
2024		31,753			677
Thereafter		112,718			629
Total		287,995			17,046
Less: Present value discount		(41,626)			(1,815)
Present value of lease liabilities	$	246,369		$	15,231
Weighted average remaining lease term (years)		8.30			3.65
Weighted average discount rate		3.76	%		7.47	%

Schedule of minimum annual payments for noncancelable leases

As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018, future minimum lease payments for operating leases having initial or remaining noncancelable lease terms in excess of one year were as follows under the previous lease accounting standard (ASC 840) (in thousands):

Year	December 31, 2018
2019	$	16,651
2020		16,105
2021		15,315
2022		14,391
2023		13,462
Thereafter		52,626
Total minimum annual rentals	$	128,550

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Accumulated Other Comprehensive Income (Loss)

12 Months Ended

Dec. 31, 2019

Statement of Comprehensive Income [Abstract]

Accumulated Other Comprehensive Income (Loss)

6. Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) was as follows (in thousands):

	Year Ended December 31, 2019
						Change
	Accumulated		Change			Related to
	Other		Related to			Shipboard
	Comprehensive		Cash Flow			Retirement
	Income (Loss)		Hedges			Plan
Accumulated other comprehensive income (loss) at beginning of period	$	(161,647)	$	(157,449)		$	(4,198)
Current period other comprehensive loss before reclassifications		(125,323)		(123,015)			(2,308)
Amounts reclassified into earnings		(8,520)		(8,898)	(1)		378	(2)
Accumulated other comprehensive income (loss) at end of period	$	(295,490)	$	(289,362)	(3)	$	(6,128)

	Year Ended December 31, 2018
						Change
	Accumulated		Change			Related to
	Other		Related to			Shipboard
	Comprehensive		Cash Flow			Retirement
	Income (Loss)		Hedges			Plan
Accumulated other comprehensive income (loss) at beginning of period	$	26,966	$	33,861		$	(6,895)
Current period other comprehensive income (loss) before reclassifications		(158,943)		(161,214)			2,271
Amounts reclassified into earnings		(29,670)		(30,096)	(1)		426	(2)
Accumulated other comprehensive income (loss) at end of period	$	(161,647)	$	(157,449)		$	(4,198)

	Year Ended December 31, 2017
						Change
	Accumulated		Change			Related to
	Other		Related to			Shipboard
	Comprehensive		Cash Flow			Retirement
	Income (Loss)		Hedges			Plan
Accumulated other comprehensive income (loss) at beginning of period	$	(314,473)	$	(307,618)		$	(6,855)
Current period other comprehensive income (loss) before reclassifications		304,226		304,684			(458)
Amounts reclassified into earnings		37,213		36,795	(1)		418	(4)
Accumulated other comprehensive income (loss) at end of period	$	26,966	$	33,861		$	(6,895)

(1) We refer you to Note 10— “Fair Value Measurements and Derivatives” in these notes to consolidated financial statements for the affected line items in the consolidated statements of operations.

(2) Amortization of prior-service cost and actuarial loss reclassified to other income (expense), net.

(3) Includes $16.5 million of loss expected to be reclassified into earnings in the next 12 months.

(4) Amortization of prior-service cost and actuarial loss reclassified to payroll and related expense.

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Fair Value Measurements and Derivatives

12 Months Ended

Dec. 31, 2019

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Fair Value Measurements and Derivatives

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 regression analysis for this hedge relationship and high effectiveness is achieved when a statistically valid relationship reflects a high degree of offset and correlation between the fair values of the derivative and the hedged forecasted transaction. Cash flows from the derivatives are classified in the same category as the cash flows from the underlying hedged transaction. If it is determined that the hedged forecasted transaction is no longer probable of occurring, then the amount recognized in accumulated other comprehensive income (loss) is released to earnings. There are no amounts excluded from the assessment of hedge effectiveness and there are no credit-risk-related contingent features in our derivative agreements. We monitor concentrations of credit risk associated with financial and other institutions with which we conduct significant business. Credit risk, including but not limited to counterparty non-performance under derivatives, is not considered significant, as we primarily conduct business with large, well-established financial institutions with which we have established relationships, and which have credit risks acceptable to us, or the credit risk is spread out among many creditors. We do not anticipate non-performance by any of our significant counterparties.

As of December 31, 2019, we had fuel swaps, which are used to mitigate the financial impact of volatility of fuel prices pertaining to approximately 1.1 million metric tons of our projected fuel purchases, maturing through December 31, 2022.

As of December 31, 2019, we had foreign currency forward contracts, matured foreign currency options and matured foreign currency collars which are used to mitigate the financial impact of volatility in foreign currency exchange rates related to our ship construction contracts denominated in euros. The notional amount of our foreign currency forward contracts was €1.8 billion, or $2.0 billion based on the euro/U.S. dollar exchange rate as of December 31, 2019.

As of December 31, 2019, we had interest rate swaps and collars, which are used to hedge our exposure to interest rate movements and manage our interest expense. The notional amount of our outstanding debt associated with the interest rate swaps and collars was $1.7 billion as of December 31, 2019.

The derivatives measured at fair value and the respective location in the consolidated balance sheets includes the following (in thousands):

		Assets				Liabilities
		December 31,		December 31,		December 31,		December 31,
	Balance Sheet Location	2019		2018		2019		2018
Derivative Contracts Designated as Hedging Instruments
Fuel contracts
	Prepaid expenses and other assets	$	—	$	2,583	$	—	$	1
	Other long-term assets		277		197		—		29
	Accrued expenses and other liabilities		2,300		1,173		18,257		19,547
	Other long-term liabilities		683		933		17,763		51,184
Foreign currency contracts
	Prepaid expenses and other assets		—		5,285		—		1,497
	Other long-term assets		—		3,514		—		—
	Accrued expenses and other liabilities		—		112		33,475		5,145
	Other long-term liabilities		169		2,874		118,500		40,476
Interest rate contracts
	Prepaid expenses and other assets		—		519		—		—
	Other long-term assets		—		27		—		—
	Accrued expenses and other liabilities		—		—		2,178		—
	Other long-term liabilities		—		—		1,861		—
Total derivatives designated as hedging instruments		$	3,429	$	17,217	$	192,034	$	117,879

The fair values of swap and forward contracts are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. The Company determines the value of options

and collars utilizing an option pricing model based on inputs that are either readily available in public markets or can be derived from information available in publicly quoted markets. The option pricing model used by the Company is an industry standard model for valuing options and is used by the broker/dealer community. The inputs to this option pricing model are the option strike price, underlying price, risk-free rate of interest, time to expiration, and volatility. The fair value of option contracts considers both the intrinsic value and any remaining time value associated with those derivatives that have not yet settled. The Company also considers counterparty credit risk and its own credit risk in its determination of all estimated fair values.

Our derivatives and financial instruments were categorized as Level 2 in the fair value hierarchy, and we had no derivatives or financial instruments categorized as Level 1 or Level 3. Our derivative contracts include rights of offset with our counterparties. We have elected to net certain assets and liabilities within counterparties when the rights of offset exist. We are not required to post cash collateral related to our derivative instruments.

The gross and net amounts recognized within assets and liabilities include the following (in thousands):

			Gross				Gross
	Gross		Amounts		Total Net		Amounts
December 31, 2019	Amounts		Offset		Amounts		Not Offset		Net Amounts
Assets	$	277	$	—	$	277	$	—	$	277
Liabilities		192,034		(3,152)		188,882		(149,863)		39,019

			Gross				Gross
	Gross		Amounts		Total Net		Amounts
December 31, 2018	Amounts		Offset		Amounts		Not Offset		Net Amounts
Assets	$	12,125	$	(1,527)	$	10,598	$	(6,872)	$	3,726
Liabilities		116,352		(5,092)		111,260		(35,718)		75,542

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	Amount of Gain (Loss) Reclassified
	Amount of Gain (Loss)						Other Comprehensive	from Accumulated Other
	Recognized in Other						Income (Loss) into	Comprehensive
Derivatives	Comprehensive Income						Income	Income (Loss) into Income
	Year Ended December 31,							Year Ended December 31,
	2019		2018		2017			2019		2018		2017
Fuel contracts	$	46,154	$	(52,949)	$	50,263	Fuel	$	14,093	$	34,410	$	(29,721)
Foreign currency contracts		(163,197)		(108,911)		254,070	Depreciation and amortization		(3,062)		(3,463)		(4,077)
Interest rate contracts		(5,972)		646		351	Interest expense, net		(2,133)		(851)		(2,997)
Total gain (loss) recognized in other comprehensive income	$	(123,015)	$	(161,214)	$	304,684		$	8,898	$	30,096	$	(36,795)

The effects of cash flow hedge accounting on the consolidated statements of operations include the following (in thousands):

	Year Ended December 31, 2019						Year Ended December 31, 2018
			Depreciation						Depreciation
			and		Interest				and		Interest
	Fuel		Amortization		Expense, net		Fuel		Amortization		Expense, net
Total amounts of income and expense line items presented in the consolidated statements of operations in which the effects of cash flow hedges are recorded	$	409,602	$	646,188	$	272,867	$	392,685	$	561,060	$	270,404
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income
Fuel contracts		14,093		—		—		34,410		—		—
Foreign currency contracts		—		(3,062)		—		—		(3,463)		—
Interest rate contracts		—		—		(2,133)		—		—		(851)

The effects of cash flow hedge accounting on the consolidated statements of operations include the following (in thousands):

	Year Ended December 31, 2017
			Depreciation
			and		Interest
	Fuel		Amortization		Expense, net
Total amounts of income and expense line items presented in the consolidated statements of operations in which the effects of cash flow hedges are recorded	$	361,032	$	509,957	$	267,804
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income
Fuel contracts		(29,721)		—		—
Foreign currency contracts		—		(4,077)		—
Interest rate contracts		—		—		(2,997)

Other

The carrying amounts reported in the consolidated balance sheets of all other financial assets and liabilities approximate fair value.

Long-Term Debt

As of December 31, 2019 and 2018, the fair value of our long-term debt, including the current portion, was $6,957.8 million and $6,601.9 million, respectively, which was $31.3 million higher and $8.4 million lower, respectively, than the carrying values. The difference between the fair value and carrying value of our long-term debt is due to our fixed and variable rate debt obligations carrying interest rates that are above or below market rates at the measurement dates. Market risk associated with our long-term variable rate debt is the potential increase in interest expense from an increase in interest rates. The fair value of our long-term debt was calculated based on estimated rates for the same or similar instruments with similar terms and remaining maturities, which represent Level 2 inputs in the fair value hierarchy.

Non-Recurring Measurements of Non-Financial Assets

Goodwill and other indefinite-lived assets, principally tradenames, are reviewed for impairment on an annual basis or earlier if there is an event or change in circumstances that would indicate that the carrying value of these assets may not be fully recoverable.

We believe our estimates and judgments with respect to our long-lived assets, principally ships, and goodwill and other indefinite-lived intangible assets are reasonable. Nonetheless, if there was a material change in assumptions used in the determination of such fair values or if there is a material change in the conditions or circumstances that influence such assets, we could be required to record an impairment charge. We estimate fair value based on the best information

available utilizing estimates, judgments and projections as necessary. As of December 31, 2019, our annual review supports the carrying value of these assets.

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Employee Benefits and Share-Based Compensation - Summary of Compensation Expense Recognized for Share-Based Compensation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total share-based compensation expense	$ 95,055	$ 115,983	$ 87,039
Payroll and related
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total share-based compensation expense	17,597	15,629	9,455
Marketing, general and administrative expense
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total share-based compensation expense	$ 77,458	$ 100,354	$ 77,584

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Commitments and Contingencies - Minimum Annual Payments for Non-Cancelable Ship Construction Contracts (Details) - Ship Construction Contracts $ in Thousands	Dec. 31, 2019 USD ($)
Other Commitments [Line Items]
2020	$ 556,784
2021	279,254
2022	1,595,262
2023	1,439,097
2024	888,790
Thereafter	829,303
Total minimum annual payments	$ 5,588,490

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Income Taxes - Reconciliation of Income Tax Expense Computed by Applying our Bermuda Statutory Rate and Reported Income Tax Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Tax Disclosure [Abstract]
Tax at Bermuda statutory rate	$ 0	$ 0	$ 0
Foreign income taxes at different rates	(18,630)	(17,540)	(28,188)
Tax contingencies	(206)	(5)	11,184
Return to provision adjustments	2,014	2,961	(1,397)
Benefit (expense) from change in tax rate	(14)	117	7,659
Valuation allowance	35,699
Tax benefit connection with the reversal of substantially all of valuation allowance on net operating loss carryforwards	35,700
Income tax benefit (expense)	$ 18,863	$ (14,467)	$ (10,742)

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Employee Benefits and Share-Based Compensation - Fair value assumptions of Share Option Awards (Details) - Performance-Based Option Awards	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected share price volatility		25.97%
Expected share price volatility, minimum	31.50%
Expected share price volatility, maximum	32.20%
Risk-free interest rate, minimum	2.48%
Risk-free interest rate, maximum	2.58%
Risk-free interest rate		1.81%
Expected term		4 years 2 months 12 days
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term	3 years 8 months 19 days
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term	4 years 2 months 19 days

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Goodwill and Intangible Assets (Textuals) (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	$ 1,388,931	$ 1,388,931
Tradenames	$ 817,525	$ 817,525

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Leases 3 (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Operating leases
2020	$ 47,796
2021	32,144
2022	31,844
2023	31,740
2024	31,753
Thereafter	112,718
Total	287,995
Less: Present value discount	(41,626)
Present value of lease liabilities	$ 246,369
Operating leases, Weighted average remaining lease term (years)	8 years 3 months 18 days
Operating leases, Weighted average discount rate	3.76%
Finance leases
2020	$ 6,141
2021	4,912
2022	3,957
2023	730
2024	677
Thereafter	629
Total	17,046
Less: Present value discount	(1,815)
Present value of lease liabilities	$ 15,231
Finance leases, Weighted average remaining lease term (years)	3 years 7 months 24 days
Finance leases, Weighted average discount rate	7.47%

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Accumulated Other Comprehensive Income (Loss) (Parenthetical) (Details) $ in Millions	12 Months Ended
	Dec. 31, 2019 USD ($)
Statement of Comprehensive Income [Abstract]
Amount of loss expected to be reclassified into earnings	$ 16.5

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Employee Benefits and Share-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2019

Share Based Compensation Arrangement By Share Based Payment Award [Line Items]

Schedule of summary of option activity

The following table sets forth a summary of option activity under NCLH’s Restated 2013 Plan for the period presented:

										Weighted-
	Number of Share Option Awards			Weighted-Average Exercise Price						Average	Aggregate
	Time-	Performance-	Market-	Time-		Performance-		Market-		Contractual	Intrinsic
	Based	Based	Based	Based		Based		Based		Term	Value
	Awards	Awards	Awards	Awards		Awards		Awards		(years)	(in thousands)
Outstanding as of January 1, 2019	5,686,793	410,499	208,333	$	50.65	$	45.67	$	59.43	6.22	$	13,946
Exercised	(636,073)	(138,759)	—		40.30		19.00		—
Forfeited and cancelled	(132,166)	(156,251)	—		56.13		59.43		—
Outstanding as of December 31, 2019	4,918,554	115,489	208,333	$	51.84	$	59.11	$	59.43	5.42	$	33,413
Vested and expected to vest as of December 31, 2019	4,918,554	115,489	—	$	51.84	$	59.11	$	—	5.41	$	33,413
Exercisable as of December 31, 2019	4,917,721	115,489	—	$	51.84	$	59.11	$	—	5.41	$	33,411

Schedule of restricted share activity of NCLH shares

The following is a summary of NCLH’s restricted ordinary share activity for the period presented:

	Number of
	Time-	Weighted-
	Based	Average Grant
	Awards	Date Fair Value
Non-vested as of January 1, 2019	429	$	58.41
Vested	(429)		58.41
Non-vested as of December 31, 2019	—	$	—

Schedule of restricted stock units activity

The following table sets forth a summary of RSU activity for the period presented:

	Number of	Weighted-		Number of		Weighted-		Number of	Weighted-
	Time-Based	Average Grant		Performance-		Average Grant		Market-	Average Grant
	Awards	Date Fair Value		Based Awards		Date Fair Value		Based Awards	Date Fair Value
Non-vested as of January 1, 2019	2,973,032	$	53.98	825,614		$	56.58	50,000	$	59.43
Granted	1,929,495		55.00	462,282	(1)		55.27	—		—
Vested	(1,430,291)		53.02	(121,000)			56.27	—		—
Forfeited or expired	(226,611)		55.04	(37,500)			56.27	—		—
Non-vested as of December 31, 2019	3,245,625	$	54.94	1,129,396		$	56.09	50,000	$	59.43
Non-vested and expected to vest as of December 31, 2019	3,245,625	$	54.94	483,976		$	56.61	—	$	—

Schedule of compensation expense recognized for share-based compensation

The compensation expense recognized for share-based compensation for the periods presented include the following (in thousands):

	Year Ended December 31,
Classification of expense	2019		2018		2017
Payroll and related (1)	$	17,597	$	15,629	$	9,455
Marketing, general and administrative (2)		77,458		100,354		77,584
Total share-based compensation expense	$	95,055	$	115,983	$	87,039

(1) Amounts relate to equity granted to certain of our shipboard officers.

(2) Amounts relate to equity granted to certain of our corporate employees.

Schedule of amounts related to the Shipboard Retirement Plan

The amounts related to the Shipboard Retirement Plan were as follows (in thousands):

	As of or for the Year Ended December 31,
	2019		2018		2017
Pension expense:
Service cost	$	2,135	$	2,167	$	1,987
Interest cost		1,001		857		887
Amortization of prior service cost		378		378		378
Amortization of actuarial loss		—		51		40
Total pension expense	$	3,514	$	3,453	$	3,292
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	24,318	$	24,587	$	22,605
Service cost		2,135		2,167		1,987
Interest cost		1,001		857		887
Actuarial gain (loss)		2,308		(2,271)		458
Direct benefit payments		(1,067)		(1,022)		(1,350)
Projected benefit obligation at end of year	$	28,695	$	24,318	$	24,587
Amounts recognized in the consolidated balance sheets:
Projected benefit obligation	$	28,695	$	24,318	$	24,587

	For the Year Ended December 31,
	2019		2018		2017
Amounts recognized in accumulated other comprehensive income (loss):
Prior service cost	$	(3,781)	$	(4,159)	$	(4,537)
Accumulated actuarial loss		(3,413)		(1,105)		(3,426)
Accumulated other comprehensive income (loss)	$	(7,194)	$	(5,264)	$	(7,963)

Schedule of pension benefits expected to be paid in each of the next five years and in aggregate for the five years thereafter

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	Amount
2020	$	922
2021		949
2022		1,045
2023		1,208
2024		1,340
Next five years		10,585

Performance-Based Option Awards

Share Based Compensation Arrangement By Share Based Payment Award [Line Items]

Schedule of assumptions used within the option-pricing model

	2018	2017
Dividend yield	—%	—%
Expected share price volatility	31.50% - 32.20%	25.97%
Risk-free interest rate	2.48% - 2.58%	1.81%
Expected term	3.72 - 4.22 years	4.20 years

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Accumulated Other Comprehensive Income (Loss) (Tables)

12 Months Ended

Dec. 31, 2019

Statement of Comprehensive Income [Abstract]

Schedule of accumulated other comprehensive income (loss)

	Year Ended December 31, 2019
						Change
	Accumulated		Change			Related to
	Other		Related to			Shipboard
	Comprehensive		Cash Flow			Retirement
	Income (Loss)		Hedges			Plan
Accumulated other comprehensive income (loss) at beginning of period	$	(161,647)	$	(157,449)		$	(4,198)
Current period other comprehensive loss before reclassifications		(125,323)		(123,015)			(2,308)
Amounts reclassified into earnings		(8,520)		(8,898)	(1)		378	(2)
Accumulated other comprehensive income (loss) at end of period	$	(295,490)	$	(289,362)	(3)	$	(6,128)

	Year Ended December 31, 2018
						Change
	Accumulated		Change			Related to
	Other		Related to			Shipboard
	Comprehensive		Cash Flow			Retirement
	Income (Loss)		Hedges			Plan
Accumulated other comprehensive income (loss) at beginning of period	$	26,966	$	33,861		$	(6,895)
Current period other comprehensive income (loss) before reclassifications		(158,943)		(161,214)			2,271
Amounts reclassified into earnings		(29,670)		(30,096)	(1)		426	(2)
Accumulated other comprehensive income (loss) at end of period	$	(161,647)	$	(157,449)		$	(4,198)

	Year Ended December 31, 2017
						Change
	Accumulated		Change			Related to
	Other		Related to			Shipboard
	Comprehensive		Cash Flow			Retirement
	Income (Loss)		Hedges			Plan
Accumulated other comprehensive income (loss) at beginning of period	$	(314,473)	$	(307,618)		$	(6,855)
Current period other comprehensive income (loss) before reclassifications		304,226		304,684			(458)
Amounts reclassified into earnings		37,213		36,795	(1)		418	(4)
Accumulated other comprehensive income (loss) at end of period	$	26,966	$	33,861		$	(6,895)

(1) We refer you to Note 10— “Fair Value Measurements and Derivatives” in these notes to consolidated financial statements for the affected line items in the consolidated statements of operations.

(2) Amortization of prior-service cost and actuarial loss reclassified to other income (expense), net.

(3) Includes $16.5 million of loss expected to be reclassified into earnings in the next 12 months.

(4) Amortization of prior-service cost and actuarial loss reclassified to payroll and related expense.

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Description of Business and Organization (Textuals) (Details)	Dec. 31, 2019 item
Description Of Business And Organization [Line Items]
Number of cruises ships	27
Capacity of ship, berths	58,400
Ships Launching Period Through 2027
Description Of Business And Organization [Line Items]
Number of additional ships	10
Increased number of berths	82,000
Ships Launching Period Through 2027 | Project Leonardo Ships
Description Of Business And Organization [Line Items]
Number of additional ships	6
Ships Launching Period Through 2022 And 2025
Description Of Business And Organization [Line Items]
Number of additional ships	2
Ship to be delivered in 2023
Description Of Business And Organization [Line Items]
Number of additional ships	1

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Leases

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

Leases

5.   Leases

On January 1, 2019, we adopted ASU No. 2016-02, Leases (“Topic 842”). Topic 842 supersedes the lease accounting requirements in Accounting Standards Codification (“ASC”) 840—Leases. In August 2018, the FASB issued ASU 2018-11, Targeted Improvements to Topic 842, which included an option to apply the new leases standard at the adoption date using a modified retrospective approach, which the Company elected.

Nature of Leases

We have finance leases for certain ship equipment and a corporate office. We have operating leases for port facilities, corporate offices, warehouses, and certain equipment. Many of our leases include both lease and non-lease components. We have adopted the practical expedient which allows us to combine lease and non-lease components by class of asset. We have applied this expedient for office leases, port facilities, and certain equipment.

Significant Assumptions and Judgments in Applying Topic 842 and Practical Expedients Elected

Our leases contain both fixed and variable payments. Fixed payments and variable lease payments that depend on a rate or index are included in the calculation of the right-of-use asset. Other variable payments are excluded from the calculation unless there is an unavoidable fixed minimum cost related to those payments such as a minimum annual guarantee. Our lease assets are amortized on a straight-line basis except for our rights to use port facilities. The expenses related to port facilities are amortized based on passenger counts as this basis represents the pattern in which the economic benefit is derived from the right to use the underlying asset.

For non-consecutive lease terms, which relate to our rights to use certain port facilities, the term of the lease is based on the number of days on which we have the right to use a specified asset. We have adopted the practical expedient to exclude leases with terms of less than one year from being included on the balance sheet. Lease expense for agreements that are short-term are disclosed below and include both fixed and variable payments.

Certain leases include one or more options to extend or terminate and are primarily in five-year increments. Lease extensions and terminations, including auto-renewing lease terms, were only included in the calculation of the right-of-use asset to the extent that the right to renew or terminate was at the option of the lessor only or where there was a more than insignificant penalty for termination.

As our leases do not have a readily determinable implicit rate, we used our weighted average cost of debt to determine the net present value of the lease payments at the adoption date. Our weighted average cost of debt is similar to the

incremental borrowing rate we would have obtained if we had borrowed collateralized debt over the lease term to purchase the asset, and the rate was adjusted for longer term leases.

We have also adopted the practical expedient which allows us, by class of asset, to not separate lease and non-lease components when we are the lessor in the underlying transaction, the transactions would otherwise be accounted for under ASC 606–Revenue Recognition and the non-lease components are the predominant components of the agreements. We have applied this practical expedient to transactions with cruise passengers and concession service providers related to the use of our ships. We refer you to Note 3 – “Revenue and Expense from Contracts with Customers.”

Impacts on Financial Statements

As a result of the adoption of Topic 842 on January 1, 2019, we recorded operating lease right-of-use assets of $235.0 million and operating lease liabilities of $243.8 million. Another $8.8 million was reclassified to the operating right-of-use assets from other asset and liability accounts relating to the existing leases. The adoption of Topic 842 did not result in the identification of new finance leases. The adoption does not significantly change the timing, classification or amount of expense recognized in our consolidated financial statements nor does it change the timing, classification or amount of cash payments included within the consolidated statement of cash flows.

The components of lease expense and revenue were as follows (in thousands):

	Year Ended
	December 31, 2019
Operating lease expense	$	31,596
Variable lease expense		14,284
Short-term lease expense		50,832
Finance lease cost:
Amortization of right-of-use assets		1,765
Interest on lease liabilities		1,239
Operating lease revenue		446
Sublease income		1,615

Lease balances were as follows (in thousands):

	Balance Sheet location	December 31, 2019
Operating leases
Right-of-use assets	Other long-term assets	$	236,604
Current operating lease liabilities	Accrued expenses and other liabilities		39,126
Non-current operating lease liabilities	Other long-term liabilities		207,243
Finance leases
Right-of-use assets	Property and equipment, net		13,873
Current finance lease liabilities	Current portion of long-term debt		6,419
Non-current finance lease liabilities	Long-term debt		8,812

Supplemental cash flow information related to leases was as follows (in thousands):

	Year Ended
	December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	75,539
Operating cash outflows from finance leases		1,051
Financing cash outflows from finance leases		2,826
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		24,834
Finance leases		705

As of December 31, 2019, maturities of lease liabilities, weighted-average remaining lease terms and discount rates for our leases were as follows (in thousands, except lease terms and discount rates):

	Operating			Finance
	leases			leases
2020	$	47,796		$	6,141
2021		32,144			4,912
2022		31,844			3,957
2023		31,740			730
2024		31,753			677
Thereafter		112,718			629
Total		287,995			17,046
Less: Present value discount		(41,626)			(1,815)
Present value of lease liabilities	$	246,369		$	15,231
Weighted average remaining lease term (years)		8.30			3.65
Weighted average discount rate		3.76	%		7.47	%

As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018, future minimum lease payments for operating leases having initial or remaining noncancelable lease terms in excess of one year were as follows under the previous lease accounting standard (ASC 840) (in thousands):

Year	December 31, 2018
2019	$	16,651
2020		16,105
2021		15,315
2022		14,391
2023		13,462
Thereafter		52,626
Total minimum annual rentals	$	128,550

Leases That Have Not Yet Commenced

We have multiple agreements that have been executed where the lease term has not commenced as of December 31, 2019. These are primarily related to our rights to use certain port facilities currently under construction. Although we may have provided design input, construction management services, or advances related to these assets, we have determined that we do not control these assets during the period of construction. These port facilities are expected to open for use during 2020 and include undiscounted minimum annual guarantees of approximately $1.1 billion of passenger fees.

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Related Party Disclosures

12 Months Ended

Dec. 31, 2019

Related Party Transactions [Abstract]

Related Party Disclosures

9. Related Party Disclosures

Transactions with Genting HK and Apollo

In December 2018, as part of a public equity offering of NCLH’s ordinary shares owned by Apollo and Genting HK, NCLH repurchased 1,683,168 of its ordinary shares sold in the offering for approximately $85.0 million pursuant to its Repurchase Program.

In March 2018, as part of a public equity offering of NCLH’s ordinary shares owned by Apollo and Genting HK, NCLH repurchased 4,722,312 of its ordinary shares sold in the offering for approximately $263.5 million pursuant to its then existing share repurchase program.

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Employee Benefits and Share-Based Compensation - (Textuals) (Details) - USD ($) $ / shares in Units, $ in Thousands		1 Months Ended			12 Months Ended			36 Months Ended
	Mar. 01, 2019	May 31, 2016	Apr. 30, 2014	Jan. 31, 2013	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2019
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Maximum percentage of employee eligible compensation that may be contributed towards 401(k) Plan					100.00%
Matching contributions vesting period					5 years
Forfeited contributions utilized					$ 200	$ 300	$ 300
Recorded expenses related to 401(k) plan					$ 9,100	$ 9,300	$ 7,300
Discount rate used in the net periodic benefit cost calculation					4.20%	3.60%	4.00%
Amortization period of losses					18 years 10 months 28 days
Total taxes paid pursuant to net share settlements					$ 20,939	$ 13,855	$ 6,342
First 3% of Each Participant's Contributions
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Defined contribution plan, percentage of employee contribution					3.00%
Employer matching contribution percent					100.00%
Amounts Greater Than 3%
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Defined contribution plan, percentage of employee contribution					50.00%
Amounts Greater Than 3% | Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Employer matching contribution percent					3.00%
Amounts Greater Than 3% | Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Employer matching contribution percent					10.00%
Restated 2013 Performance Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of additional shares authorized		12,430,000
Ordinary shares authorized				15,035,106
Maximum number of shares that can be granted		27,465,106
Maximum number of shares that can be granted to one individual				5,000,000
Employee Stock Purchase Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percentage of purchase price discount					15.00%
Accrued payroll liability					$ 2,100	1,900		$ 2,100
Employee Stock Purchase Plan | Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of additional shares authorized			2,000,000
Shipboard Retirement Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Projected benefit obligation included in accrued expenses and other liabilities					900	1,000		900
Projected benefit obligation included in other long-term liabilities					27,800	23,300		27,800
Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total intrinsic value of stock options exercised					13,300	16,700	18,900
Proceeds from the exercise of share options					28,300	$ 25,800	$ 27,400
Total unrecognized compensation cost related to share options granted					$ 0			$ 0
Time-Based Option Awards
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of share option awards granted								0
Time-Based Option Awards | Restated 2013 Performance Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Description of share-based awards vesting period		The vesting period for time-based options is typically set at three, four or five years with a contractual life ranging from seven to 10 years
Time-Based Option Awards | Restated 2013 Performance Incentive Plan | Employee | Option Vesting Period, Three Years
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based award, vesting period		3 years
Time-Based Option Awards | Restated 2013 Performance Incentive Plan | Employee | Option Vesting Period, Four Years
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based award, vesting period		4 years
Time-Based Option Awards | Restated 2013 Performance Incentive Plan | Employee | Option Vesting Period, Five Years
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based award, vesting period		5 years
Time-Based Option Awards | Restated 2013 Performance Incentive Plan | Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based award, contractual life		7 years
Time-Based Option Awards | Restated 2013 Performance Incentive Plan | Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based award, contractual life		10 years
Performance-Based Option Awards
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of share option awards granted					0
Weighted-average grant-date fair value of options granted						$ 15.20	$ 8.55
Time-Based RSU Awards
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted share unit awards granted					1,929,495
Total unrecognized compensation cost related to restricted share unit awards					$ 106,500			$ 106,500
Weighted-average period for recognition of unrecognized compensation expense					1 year 9 months 18 days
Time-Based RSU Awards | Employee | Awarded on March 1, 2019
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted share unit awards granted	1,900,000
Share-based award, vesting period	3 years
Performance-Based RSU Awards
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted share unit awards granted					462,282
Total unrecognized compensation cost related to restricted share unit awards					$ 9,200			9,200
Weighted-average period for recognition of unrecognized compensation expense					1 year 1 month 6 days
Performance-Based RSU Awards | Members of management team | Awarded on March 1, 2019
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted share unit awards granted	500,000
Market-Based RSU Awards
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total unrecognized compensation cost related to restricted share unit awards					$ 0			$ 0
Weighted-average period for recognition of unrecognized compensation expense					0 years
Restricted Share Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based award, vesting period		3 years

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Commitments and Contingencies - Future Commitments to Pay for Usage of Port Facilities (Details) - Port Facility Commitments $ in Thousands	Dec. 31, 2019 USD ($)
Other Commitments [Line Items]
2020	$ 79,418
2021	67,671
2022	68,049
2023	70,100
2024	75,112
Thereafter	1,726,575
Total minimum annual payments	$ 2,086,925

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Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Deferred tax assets:
Loss carryforwards	$ 54,342	$ 63,201
Other	3,573	2,535
Valuation allowance	(5,847)	(41,924)
Total net deferred assets	52,068	23,812
Deferred tax liabilities:
Property and equipment	(39,571)	(37,448)
Total deferred tax liabilities	(39,571)	(37,448)
Net deferred tax asset	$ 12,497
Net deferred tax liability		$ (13,636)

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Employee Benefits and Share-Based Compensation - Summary of Share Option Awards (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended		36 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019
Weighted-Average Contractual Term (years)
Options Outstanding, Weighted-Average Contractual Term	5 years 5 months 1 day	6 years 2 months 19 days
Vested and expected to vest	5 years 4 months 28 days
Exercisable	5 years 4 months 28 days
Aggregate Intrinsic Value
Options Outstanding, Aggregate Intrinsic Value	$ 33,413	$ 13,946	$ 33,413
Vested and expected to vest	33,413		33,413
Exercisable	$ 33,411		$ 33,411
Time-Based Option Awards
Number of Share Option Awards
Outstanding as of January 1, 2019	5,686,793
Granted			0
Exercised	(636,073)
Forfeited and cancelled	(132,166)
Outstanding as of December 31, 2019	4,918,554	5,686,793	4,918,554
Vested and expected to vest as of end of period	4,918,554		4,918,554
Exercisable as of end of period	4,917,721		4,917,721
Weighted-Average Exercise Price
Outstanding as of January 1, 2019	$ 50.65
Exercised	40.30
Forfeited and cancelled	56.13
Outstanding as of December 31, 2019	51.84	$ 50.65	$ 51.84
Vested and expected to vest as of end of period	51.84		51.84
Exercisable as of end of period	$ 51.84		$ 51.84
Performance-Based Option Awards
Number of Share Option Awards
Outstanding as of January 1, 2019	410,499
Granted	0
Exercised	(138,759)
Forfeited and cancelled	(156,251)
Outstanding as of December 31, 2019	115,489	410,499	115,489
Vested and expected to vest as of end of period	115,489		115,489
Exercisable as of end of period	115,489		115,489
Weighted-Average Exercise Price
Outstanding as of January 1, 2019	$ 45.67
Exercised	19.00
Forfeited and cancelled	59.43
Outstanding as of December 31, 2019	59.11	$ 45.67	$ 59.11
Vested and expected to vest as of end of period	59.11		59.11
Exercisable as of end of period	$ 59.11		$ 59.11
Market-Based Option Awards
Number of Share Option Awards
Outstanding as of January 1, 2019	208,333
Outstanding as of December 31, 2019	208,333	208,333	208,333
Weighted-Average Exercise Price
Outstanding as of January 1, 2019	$ 59.43
Outstanding as of December 31, 2019	$ 59.43	$ 59.43	$ 59.43

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Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Accumulated other comprehensive income (loss) at beginning of period	$ (161,647)	$ 26,966	$ (314,473)
Current period other comprehensive income (loss) before reclassifications	(125,323)	(158,943)	304,226
Amounts reclassified into earnings	(8,520)	(29,670)	37,213
Accumulated other comprehensive income (loss) at end of period	(295,490)	(161,647)	26,966
Amount of loss expected to be reclassified into earnings	16,500
Change Related to Cash Flow Hedges
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Accumulated other comprehensive income (loss) at beginning of period	(157,449)
Current period other comprehensive income (loss) before reclassifications	(123,015)
Amounts reclassified into earnings	(8,898)
Accumulated other comprehensive income (loss) at end of period	(289,362)	(157,449)
Change Related to Cash Flow Hedge
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Accumulated other comprehensive income (loss) at beginning of period	(157,449)	33,861	(307,618)
Current period other comprehensive income (loss) before reclassifications		(161,214)	304,684
Amounts reclassified into earnings		(30,096)	36,795
Accumulated other comprehensive income (loss) at end of period		(157,449)	33,861
Change Related to Shipboard Retirement Plan
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Accumulated other comprehensive income (loss) at beginning of period	(4,198)	(6,895)	(6,855)
Current period other comprehensive income (loss) before reclassifications	(2,308)	2,271	(458)
Amounts reclassified into earnings	378	426	418
Accumulated other comprehensive income (loss) at end of period	$ (6,128)	$ (4,198)	$ (6,895)

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Goodwill and Intangible Assets 2 (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Amortization Expense
2020	$ 9,906
2021	75
2022	75
2023	75
2024	$ 75

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Leases 2 (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$ 75,539
Operating cash outflows from finance leases	1,051
Financing cash outflows from finance leases	2,826
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	24,834
Finance leases	$ 705

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Long-Term Debt - Summary of Long-Term Debt (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Finance lease and license obligations	$ 34,909	$ 39,524
Extended maturity year	2028
Total debt	$ 6,801,693	6,492,091
Less: current portion of long-term debt	(746,358)	(681,218)
Total long-term debt	$ 6,055,335	5,810,873
$875.0 Million Senior Secured Revolving Loan Facility
Debt Instrument [Line Items]
Long-term Debt		$ 130,000
Interest Rate		3.96%
Extended maturity year	2024
$75.0 Million Revolving Credit Line
Debt Instrument [Line Items]
Long-term Debt	$ 75,000
Interest Rate	2.75%
Extended maturity year	2020
Term Loan A
Debt Instrument [Line Items]
Long-term Debt	$ 1,565,512	$ 1,256,167
Interest Rate	3.06%	4.01%
Extended maturity year	2024
$375.0 Million Term Loan B
Debt Instrument [Line Items]
Long-term Debt		$ 368,982
Interest Rate		4.26%
Extended maturity year	2021
$700.0 Million 4.750% Senior Unsecured Notes
Debt Instrument [Line Items]
Long-term Debt		$ 561,021
Interest Rate		4.75%
Extended maturity year	2021
$565.0 Million 3.625% Senior Unsecured Notes
Debt Instrument [Line Items]
Long-term Debt	$ 558,781
Interest Rate	3.63%
Extended maturity year	2024
EUR 662.9 Million Norwegian Epic Term Loan
Debt Instrument [Line Items]
Long-term Debt		$ 259,394
Interest Rate		4.58%
Extended maturity year	2022
$260 Million Norwegian Jewel Term Loan
Debt Instrument [Line Items]
Long-term Debt	$ 221,860
Interest Rate	2.54%
Extended maturity year	2022
$230 Pride of America Term Loan
Debt Instrument [Line Items]
Long-term Debt	$ 229,621
Interest Rate	2.81%
Extended maturity year	2021
EUR 529.8 Million Breakaway One Loan
Debt Instrument [Line Items]
Long-term Debt	$ 305,969	$ 360,680
Interest Rate	2.84%	4.09%
Extended maturity year	2025
EUR 529.8 Million Breakaway Two Loan
Debt Instrument [Line Items]
Long-term Debt	$ 370,531	$ 426,503
Interest Rate	4.10%	4.50%
Extended maturity year	2026
EUR 590.5 Million Breakaway Three Loan
Debt Instrument [Line Items]
Long-term Debt	$ 478,665	$ 537,223
Interest Rate	2.98%	2.98%
Extended maturity year	2027
EUR 729.9 Million Breakaway Four Loan
Debt Instrument [Line Items]
Long-term Debt	$ 630,088	$ 694,536
Interest Rate	2.98%	2.98%
Extended maturity year	2029
EUR 710.8 Million Seahawk 1 Term Loan
Debt Instrument [Line Items]
Long-term Debt	$ 692,150	$ 756,061
Interest Rate	3.92%	3.92%
Extended maturity year	2030
EUR 748.7 Million Seahawk 2 Term Loan
Debt Instrument [Line Items]
Long-term Debt	$ 856,188	$ 187,612
Interest Rate	3.92%	3.92%
Extended maturity year	2031
Leonardo Newbuild One Loan
Debt Instrument [Line Items]
Long-term Debt	$ 48,009	$ 48,009
Interest Rate	2.68%	2.68%
Extended maturity year	2034
Leonardo Newbuild Two Loan
Debt Instrument [Line Items]
Long-term Debt	$ 48,009	$ 48,009
Interest Rate	2.77%	2.77%
Extended maturity year	2035
Leonardo Newbuild Three Loan
Debt Instrument [Line Items]
Long-term Debt	$ 42,700	$ 43,667
Interest Rate	1.22%	1.22%
Extended maturity year	2036
Leonardo Newbuild Four Loan
Debt Instrument [Line Items]
Long-term Debt	$ 42,700	$ 43,667
Interest Rate	1.31%	1.31%
Extended maturity year	2037
Sirena Loan
Debt Instrument [Line Items]
Long-term Debt		$ 13,856
Interest Rate		2.75%
Extended maturity year	2019
Explorer Newbuild Loan
Debt Instrument [Line Items]
Long-term Debt	$ 242,449	$ 268,970
Interest Rate	3.43%	3.43%
Extended maturity year	2028
Marina Newbuild Loan
Debt Instrument [Line Items]
Long-term Debt	$ 156,319	$ 201,007
Interest Rate	2.75%	3.07%
Extended maturity year	2023
Riviera Newbuild Loan
Debt Instrument [Line Items]
Long-term Debt	$ 202,233	$ 247,203
Interest Rate	2.48%	3.32%
Extended maturity year	2024

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Consolidated Statements of Operations - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Revenue
Total revenue	$ 6,462,376	$ 6,055,126	$ 5,396,175
Cruise operating expense
Payroll and related	924,157	881,606	803,632
Fuel	409,602	392,685	361,032
Total cruise operating expense	3,663,261	3,377,076	3,063,644
Other operating expense
Marketing, general and administrative	974,850	897,929	773,755
Depreciation and amortization	646,188	561,060	509,957
Total other operating expense	1,621,038	1,458,989	1,283,712
Operating income	1,178,077	1,219,061	1,048,819
Non-operating income (expense)
Interest expense, net	(272,867)	(270,404)	(267,804)
Other income (expense), net	6,155	20,653	(10,401)
Total non-operating income (expense)	(266,712)	(249,751)	(278,205)
Net income before income taxes	911,365	969,310	770,614
Income tax benefit (expense)	18,863	(14,467)	(10,742)
Net income	$ 930,228	$ 954,843	$ 759,872
Weighted-average shares outstanding
Basic (in shares)	214,929,977	223,001,739	228,040,825
Diluted (in shares)	216,475,076	224,419,205	229,418,326
Earnings per share
Basic (in dollars per share)	$ 4.33	$ 4.28	$ 3.33
Diluted (in dollars per share)	$ 4.30	$ 4.25	$ 3.31
Commissions, transportation and other
Cruise operating expense
Total cruise operating expense	$ 1,120,886	$ 998,948	$ 894,406
Passenger ticket
Revenue
Total revenue	4,517,393	4,259,815	3,750,030
Onboard and other
Revenue
Total revenue	1,944,983	1,795,311	1,646,145
Cruise operating expense
Total cruise operating expense	394,673	348,656	319,293
Food
Cruise operating expense
Total cruise operating expense	222,602	216,031	198,357
Other
Cruise operating expense
Total cruise operating expense	$ 591,341	$ 539,150	$ 486,924

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Quarterly Selected Financial Data (Unaudited) (in thousands, except per share data) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Quarterly Financial Information Disclosure [Abstract]
Total revenue	$ 1,480,618	$ 1,913,851	$ 1,664,277	$ 1,403,630	$ 1,381,193	$ 1,858,356	$ 1,522,174	$ 1,293,403	$ 6,462,376	$ 6,055,126	$ 5,396,175
Operating income	199,376	511,724	308,681	158,296	209,580	550,276	292,152	167,053	1,178,077	1,219,061	1,048,819
Net income	$ 121,297	$ 450,584	$ 240,190	$ 118,157	$ 154,634	$ 470,378	$ 226,676	$ 103,155	$ 930,228	$ 954,843	$ 759,872
Earnings per share
Basic (in dollars per share)	$ 0.57	$ 2.10	$ 1.11	$ 0.54	$ 0.70	$ 2.12	$ 1.02	$ 0.45	$ 4.33	$ 4.28	$ 3.33
Diluted (in dollars per share)	$ 0.56	$ 2.09	$ 1.11	$ 0.54	$ 0.70	$ 2.11	$ 1.01	$ 0.45	$ 4.30	$ 4.25	$ 3.31

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Cash flows from operating activities
Net income	$ 930,228	$ 954,843	$ 759,872
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	647,102	566,972	521,484
Deferred income taxes, net	(26,134)	1,508	9,153
Loss on extinguishment of debt	13,397	6,346	22,211
Provision for bad debts and inventory obsolescence	3,884	5,570	2,431
Gain on involuntary conversion of assets	(4,152)
Share-based compensation expense	95,055	115,983	87,039
Net foreign currency adjustments	(1,934)	(5,537)
Changes in operating assets and liabilities:
Accounts receivable, net	(14,104)	(15,886)	15,050
Inventories	(6,155)	(9,052)	(17,129)
Prepaid expenses and other assets	(74,295)	(29,519)	(22,714)
Accounts payable	(58,635)	106,387	14,047
Accrued expenses and other liabilities	(29,028)	114,953	55,791
Advance ticket sales	347,376	262,603	154,012
Net cash provided by operating activities	1,822,605	2,075,171	1,601,247
Cash flows from investing activities
Additions to property and equipment, net	(1,637,170)	(1,566,796)	(1,372,214)
Cash received on settlement of derivatives	289	64,796	2,346
Cash paid on settlement of derivatives	(47,085)	(1,719)	(35,694)
Other	3,774	1,011	664
Net cash used in investing activities	(1,680,192)	(1,502,708)	(1,404,898)
Cash flows from financing activities
Repayments of long-term debt	(3,806,732)	(1,716,244)	(1,916,885)
Proceeds from long-term debt	4,122,297	1,904,865	1,816,390
Proceeds from employee related plans	31,937	28,819	30,032
Net share settlement of restricted share units	(20,939)	(13,855)	(6,342)
Purchases of treasury shares	(349,860)	(664,811)
Early redemption premium	(6,829)	(5,154)	(15,506)
Deferred financing fees	(23,262)	(118,422)	(56,195)
Net cash used in financing activities	(53,388)	(584,802)	(148,506)
Net increase (decrease) in cash and cash equivalents	89,025	(12,339)	47,843
Cash and cash equivalents at beginning of period	163,851	176,190	128,347
Cash and cash equivalents at end of period	$ 252,876	$ 163,851	$ 176,190

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Related Party Disclosures (Textuals) (Details) - Repurchase Program [Member] - USD ($) $ in Millions	1 Months Ended
	Dec. 31, 2018	Mar. 31, 2018
Related Party Transaction [Line Items]
Stock repurchase, shares	1,683,168	4,722,312
Stock repurchase, value	$ 85.0	$ 263.5

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Summary of Significant Accounting Policies (Textuals) (Details) $ in Thousands, shares in Millions	12 Months Ended
	Dec. 31, 2019 USD ($) segment item shares	Dec. 31, 2018 USD ($) item shares	Dec. 31, 2017 USD ($) shares
Schedule Of Significant Accounting Policies [Line Items]
Allowance for doubtful accounts	$ 10,600	$ 9,600
Advertising costs included in prepaid expenses and other assets		800
Expenses related to advertising costs	$ 400,600	$ 327,300	$ 289,100
Antidilutive securities excluded from computation of earnings per share | shares	4.0	4.7	5.6
Reduction in estimated residual values, percentage	15.00%
Number of reporting units | item	3
Goodwill	$ 1,388,931	$ 1,388,931
Impairment of goodwill	0
Impairment of tradenames	$ 0
Number of reportable segments | segment	1
Number of cruises ships | item	27
Ship, carrying value	$ 13,135,337	12,119,253
Foreign currency transaction (gains) losses	$ 7,000	$ 19,800	$ 14,200
Income tax expense due to reduction of deferred tax liabilities			$ 7,400
Tax Year 2017
Schedule Of Significant Accounting Policies [Line Items]
U.S. corporate income tax rate			35.00%
Tax Year 2018
Schedule Of Significant Accounting Policies [Line Items]
U.S. corporate income tax rate	21.00%
Oceania Cruises
Schedule Of Significant Accounting Policies [Line Items]
Goodwill	$ 523,000
Regent
Schedule Of Significant Accounting Policies [Line Items]
Goodwill	462,100
Norwegian Reporting Units [Member]
Schedule Of Significant Accounting Policies [Line Items]
Goodwill	$ 403,800
Revenue
Schedule Of Significant Accounting Policies [Line Items]
Concentration risk, benchmark	No other individual country’s revenues exceeded 10% in any of our last three years.	No other individual country’s revenues exceeded 10% in any of our last three years.	No other individual country’s revenues exceeded 10% in any of our last three years.
BAHAMAS Registry | Ships
Schedule Of Significant Accounting Policies [Line Items]
Number of cruises ships | item	19	18
Ship, carrying value	$ 10,200,000	$ 9,100,000
MARSHALL ISLAND Registry | Ships
Schedule Of Significant Accounting Policies [Line Items]
Number of cruises ships | item	7	7
Ship, carrying value	$ 1,900,000
United States | Revenue | Passenger ticket
Schedule Of Significant Accounting Policies [Line Items]
Percentage of revenue attributable to U.S.- sourced passengers	81.00%	77.00%	77.00%
United States Registry | Ships
Schedule Of Significant Accounting Policies [Line Items]
Number of cruises ships | item	1	1
Ship, carrying value	$ 300,000	$ 300,000

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Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands		12 Months Ended
	Dec. 16, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Adjustments to reconcile net income to net cash provided by operating activities:
Loss on extinguishment of debt (previously write-off of financing fees)		$ 13,397	$ 6,346	$ 22,211
Changes in operating assets and liabilities:
Prepaid expenses and other assets		(74,295)	(29,519)	(22,714)
Net cash provided by operating activities		1,822,605	2,075,171	1,601,247
Cash flows from financing activities
Early redemption premium		(6,829)	(5,154)	(15,506)
Net cash used in financing activities		$ (53,388)	$ (584,802)	$ (148,506)
Senior Notes due 2021 (the "Notes") [Member]
Cash flows from financing activities
Early redemption premium	$ (6,700)

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Goodwill and Intangible Assets 1 (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 18,488	$ 26,163	$ 31,232

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Schedule of reconciliation between basic and diluted EPS

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

	Year Ended December 31,
	2019		2018		2017
Net income	$	930,228	$	954,843	$	759,872
Basic weighted-average shares outstanding		214,929,977		223,001,739		228,040,825
Dilutive effect of share awards		1,545,099		1,417,466		1,377,501
Diluted weighted-average shares outstanding		216,475,076		224,419,205		229,418,326
Basic earnings per share	$	4.33	$	4.28	$	3.33
Diluted earnings per share	$	4.30	$	4.25	$	3.31

Schedule of estimated residual values of ships

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

	Useful Life
Ships	30 years
Computer hardware and software	3‑10 years
Other property and equipment	3‑40 years
Leasehold improvements	Shorter of lease term or asset life
Ship improvements	Shorter of asset life or life of the ship

Schedule of revenues by destination

Revenues by destination consisted of the following (in thousands):

	Year Ended December 31,
	2019		2018		2017
North America	$	3,807,576	$	3,543,282	$	3,285,903
Europe		1,666,751		1,462,698		1,347,381
Asia-Pacific		500,842		721,404		394,631
Other		487,207		327,742		368,260
Total revenue	$	6,462,376	$	6,055,126	$	5,396,175

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2019

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

13. Commitments and Contingencies

Ship Construction Contracts

For the Norwegian Brand, Project Leonardo will introduce an additional six ships, each approximately 140,000 Gross Tons with approximately 3,300 Berths, with expected delivery dates from 2022 through 2027, subject to certain conditions. The effectiveness of the contracts to construct two of the ships, expected to be delivered in 2026 and 2027, is contingent upon certain Italian government approvals. For the Regent brand, we have an Explorer Class Ship, Seven Seas Splendor, with approximately 55,000 Gross Tons and 750 Berths, which was delivered in January 2020. We refer

you to Note 18 – “Subsequent Events” for additional information. We have one additional order for an Explorer Class Ship to be delivered in 2023. For the Oceania Cruises brand, we have orders for two Allura Class Ships to be delivered in 2022 and 2025, one of which is contingent upon certain Italian government approvals. Each of the Allura Class Ships will be approximately 67,000 Gross Tons and 1,200 Berths.

The combined contract prices of the 10 ships on order for delivery, including Seven Seas Splendor, which was delivered in January 2020, was approximately €7.4 billion, or $8.3 billion based on the euro/U.S. dollar exchange rate as of December 31, 2019.

We have obtained export credit financing for the ships on order which is expected to fund approximately 80% of each contract price, subject to certain conditions. We do not anticipate any contractual breaches or cancellation to occur. However, if any such events were to occur, it could result in, among other things, the forfeiture of prior deposits or payments made by us and potential claims and impairment losses which may materially impact our business, financial condition and results of operations.

As of December 31, 2019, minimum annual payments for non-cancelable ship construction contracts with initial or remaining terms in excess of one year were as follows (in thousands):

Year	Amount
2020	$	556,784
2021		279,254
2022		1,595,262
2023		1,439,097
2024		888,790
Thereafter		829,303
Total minimum annual payments	$	5,588,490

Port Facility Commitments

As of December 31, 2019, future commitments to pay for usage of certain port facilities were as follows (in thousands):

Year	Amount
2020	$	79,418
2021		67,671
2022		68,049
2023		70,100
2024		75,112
Thereafter		1,726,575
Total port facility future commitments	$	2,086,925

Other Commitments

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

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

Helms-Burton Act

On August 27, 2019, two lawsuits were filed against Norwegian Cruise Line Holdings Ltd. in the United States District Court for the Southern District of Florida under Title III of the Cuban Liberty and Solidarity (Libertad) Act of 1996, also known as the Helms-Burton Act. The complaint filed by Havana Docks Corporation alleges it holds an interest in the Havana Cruise Port Terminal and the complaint filed by Javier Garcia-Bengochea alleges that he holds an interest in the Port of Santiago, Cuba, both of which were expropriated by the Cuban Government. The complaints further allege that the Company “trafficked” in those properties by embarking and disembarking passengers at these facilities. The plaintiffs seek all available statutory remedies, including the value of the expropriated property, plus interest, treble damages, attorneys’ fees and costs. On January 7, 2020, the United States District Court for the Southern District of Florida dismissed the claim by Havana Docks Corporation. We believe that the plaintiff plans to appeal the order. Although we believe we have meritorious defenses to the claims and intend to vigorously defend these matters, as of December 31, 2019, we are unable to reasonably estimate any potential contingent loss from these matters due to a lack of legal precedence.

Other

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

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

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Quarterly Selected Financial Data (Unaudited) (in thousands, except per share data)

12 Months Ended

Dec. 31, 2019

Quarterly Financial Information Disclosure [Abstract]

Quarterly Selected Financial Data (Unaudited) (in thousands, except per share data)

17. Quarterly Selected Financial Data (Unaudited) (in thousands, except per share data)

	First Quarter				Second Quarter				Third Quarter				Fourth Quarter
	2019		2018		2019		2018		2019		2018		2019		2018
Total revenue	$	1,403,630	$	1,293,403	$	1,664,277	$	1,522,174	$	1,913,851	$	1,858,356	$	1,480,618	$	1,381,193
Operating income	$	158,296	$	167,053	$	308,681	$	292,152	$	511,724	$	550,276	$	199,376	$	209,580
Net income	$	118,157	$	103,155	$	240,190	$	226,676	$	450,584	$	470,378	$	121,297	$	154,634
Earnings per share:
Basic	$	0.54	$	0.45	$	1.11	$	1.02	$	2.10	$	2.12	$	0.57	$	0.70
Diluted	$	0.54	$	0.45	$	1.11	$	1.01	$	2.09	$	2.11	$	0.56	$	0.70

The seasonality of the North American cruise industry generally results in the greatest demand for cruises during the Northern Hemisphere’s summer months. This predictable seasonality in demand has resulted in fluctuations in our revenue and results of operations. The seasonality of our results is increased due to ships being taken out of service for regularly scheduled Dry-docks, which we typically scheduled during non-peak demand periods.