Norwegian Cruise Line Holdings (NCLH) 10-K risk factor changes: FY2019 vs FY2018

[removed: _Terrorist] [added: 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 [removed: cruises._][added: cruises.]

[removed: _Adverse] [added: Adverse] incidents involving cruise ships may adversely affect our business, financial condition and results of [removed: operations._][added: operations.]

Any such event may result in loss of life or property, loss of revenue or increased [removed: costs.][added: costs and the frequency and severity of natural disasters may increase due to climate change.]

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 [removed: results of operations.]

This could result in material lost revenue and/or [added: increased] expenditures.

[removed: _The] [added: 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 [removed: conditions._][added: 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 [removed: trade including continued uncertainty surrounding the United Kingdom’s withdrawal from the European Union,] [added: 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.

[removed: _Epidemics] [added: Epidemics] and viral outbreaks could have an adverse effect on our business, financial condition and results of [removed: operations._][added: 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 [removed: diseases,] [added: diseases] may impact demand for cruises and result in cruise cancellations and employee absenteeism.

[removed: If any] [added: Any future] wide-ranging health [removed: scare should occur,] [added: scares would also likely adversely affect] our business, financial condition and results of [removed: operations would likely be adversely affected.][added: operations.]

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

The integrity and reliability of [removed: these] [added: our information technology] systems and networks are crucial to our business operations and disruptions to these systems or networks could impair our [removed: operations and] [added: operations,] have an adverse impact on our financial results and negatively affect our reputation and customer demand.

Among other things, actual or threatened natural [removed: disasters (e.g., hurricanes, earthquakes, tornadoes, fires, floods or similar events),] [added: 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.

[removed: While we have and continue to invest in] [added: Our] business continuity, disaster recovery, data restoration plans and data and information technology [removed: security, we cannot completely insulate ourselves from] [added: security may not prevent] disruptions that could result in adverse effects on our operations and financial results.

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 [removed: information, including email addresses, home addresses and financial data such as credit card] information.

[removed: Despite our implementation of security measures to protect against security breaches, unauthorized access to our data and other cyber-attacks or incidents, our] [added: Our] systems and networks [removed: are] [added: 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.

[removed: We have] implemented additional safeguards, and we do not believe that we experienced any material losses related to this incident; however, there can be no assurance that this or any other breach or incident will not have a material impact on our operations and financial results in the future.

Our failure to successfully prevent, mitigate or timely respond to [removed: any breach, attack or unauthorized use of our information systems to gain access to sensitive information, corrupt data or create general disturbances in our operations systems] [added: such incidents] could impair our ability to conduct business and damage our reputation.

We are also subject to laws [added: in multiple jurisdictions] relating to [added: the] privacy [added: and protection] of personal data, including [added: the] European [removed: Union data privacy regulations.][added: Union’s General Data Protection Regulation and the California Consumer Privacy Act.]

[removed: The] [added: Noncompliance with these and other privacy laws or the] compromise of [removed: our] information systems [added: 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 [removed: guests or] [added: guests,] employees [added: 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.

[removed: _Conducting] [added: Conducting] business internationally may result in increased costs and [removed: risks._][added: risks.]

We have operations in and source passengers from the U.K. and [removed: other] member countries of the European Union.

[removed: The consequences for the economies of the U.K. and other European Union member states as a result of the U.K.’s withdrawal from the European Union are unknown and unpredictable,] [added: Union,] which could make it more difficult to source passengers from these regions.

The [removed: proposed] withdrawal could also [removed: potentially] 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 [removed: Union.]

[removed: _Changes] [added: Changes] in fuel prices [added: 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 [removed: prices._][added: prices.]

For example, [added: as of January 2020,] the IMO’s convention entitled Prevention of Pollution from Ships (MARPOL) [removed: has] set a global limit on fuel sulfur content of 0.5% (reduced from the [removed: current] [added: previous] 3.5% global [removed: limit) beginning January 2020.][added: limit).]

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 [removed: ships.][added: ships in certain areas.]

[removed: Other ships] [added: Ships] in our fleet that do not have exhaust gas cleaning [removed: systems] [added: systems, and in specified areas even ships with exhaust gas cleaning systems,] will be required to use low-sulfur fuels.

There can be no assurance that our hedging arrangements will be [removed: cost-effective, will provide any particular level of protection against rises in fuel prices] [added: cost-effective] or that our counterparties will be able to perform under our hedging arrangements.

[removed: _Fluctuations] [added: Fluctuations] in foreign currency exchange rates could adversely affect our financial [removed: results._][added: results.]

[removed: _Our] [added: Our] expansion into and investments in new markets may not be [removed: successful._][added: 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, [removed: as we did with Cuba,] and we are in the process of such expansion efforts.

[removed: _Overcapacity] [added: Overcapacity] in key markets or globally could adversely affect our operating [removed: results._][added: results.]

We continue to expand our fleet through our newbuild program and expect to add [removed: 11] [added: nine] additional ships to our fleet through 2027.

[removed: _Unavailability] [added: Unavailability] of ports of call may materially adversely affect our business, financial condition and results of [removed: operations._][added: operations.]

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, [removed: safety] [added: 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.

[removed: Any limitations] [added: Limitations] on the availability of ports of [removed: call, including Cuba,] [added: call] or on the availability of shore excursions and other service providers at such ports [removed: could] [added: have] adversely [removed: affect] [added: affected] our business, financial condition and results of [removed: operations.][added: operations in the past and could do so in the future.]

[removed: _Our] [added: Our] inability to obtain adequate insurance coverage may adversely affect our business, financial condition and results of [removed: operations._][added: operations.]

[removed: _Our] [added: 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 [removed: agreements._][added: agreements.]

results of operations.

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.

We have

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.

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.

effect on our business, financial condition and results of operations.

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.

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.

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.

In the past, states have implemented taxes that impact the cruise industry.

rights, and sale, of any shares acquired in excess of that limit.

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We have made significant investments in our information technology systems to optimize booking procedures, enhance the marketing power of our websites and control costs.

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On June 23, 2016, voters in the U.K. approved an advisory referendum to withdraw from the European Union.

Negotiations on the terms of the U.K.’s future relationship with the European Union are ongoing, with the U.K. due to exit the European Union on March 29, 2019.

While negotiations are continuing, there remains considerable uncertainty around the withdrawal.

Current discussions between the U.K. and the European Union may result in any number of outcomes including an extension or delay of the U.K.’s withdrawal from the European Union.

Despite any fuel hedges we are currently a party to, or may enter into in the future, increases in fuel prices or other cruise operating costs could have a material adverse effect on our business, financial condition and results of operations if we are unable to recover these increased costs through price increases charged to our guests.

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We garner a pricing premium from our itineraries to Cuba as opposed to other Caribbean itineraries.

If there is a change in the diplomatic relationship between the U.S. and Cuba, or either government issued sanctions or regulations that affect travel to Cuba, it is possible that we will no longer include Cuba in our itineraries.

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_Evolving requirements and regulations regarding data privacy and protection and any actual or perceived compliance failures by us could increase our liability and costs and otherwise materially adversely affect our business operations._

We process and store sensitive information relating to our guests, employees, business partners and others and we are subject to requirements and regulations regarding data privacy and protection in multiple jurisdictions.

Government regulators, privacy advocates and individuals are increasingly scrutinizing how companies collect, process, store, share and transmit personal data.

New laws governing data privacy and protection, such as the European Union’s General Data Protection Regulation (“GDPR”) have been enacted and more are being considered worldwide.

The GDPR contains stringent data privacy and protection requirements and enables regulators to impose significant penalties for non-compliance.

Any actual or perceived failure by us or our business partners to comply with posted privacy policies, federal, state or international data privacy and protection laws and regulations, or privacy commitments contained in our contracts could result in proceedings against us by governmental entities or others and significant fines, which could have a material adverse effect on our business and operating results and harm our reputation.

Additionally, if third parties we work with, such as vendors, violate applicable laws or regulations or our policies, such violations may also result in increased liability for us and have an adverse effect on our business.

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_Amendments to the collective bargaining agreements for crew members of our fleet and other employee relation issues may materially adversely affect our financial results._

Four of these agreements are in effect through 2020, two through 2021 and two through 2027.

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_Our revenue is seasonal, owing to variations in passenger fare rates and occupancy levels at different times of the year.

We may not be able to generate revenue that is sufficient to cover our expenses during certain periods of the year._

The demand for our cruises is seasonal, with the greatest demand for cruises generally occurring during the Northern Hemisphere’s summer months.

This 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 Dry-docks, which we typically schedule during off-peak demand periods for such ships.

Accordingly, seasonality in demand and Dry-dock periods could adversely affect our ability to generate sufficient revenue to cover the expenses we incur during certain periods of the year.

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Among the laws impacting cruise ship operations are a 2006 ballot measure approved by Alaskan voters requiring that cruise ships meet Alaska Water Quality Standards (“WQS”).

The law was relaxed somewhat in 2013, allowing ship operators to apply for mixing zones in discharge permits, an option that has eased compliance with certain WQS.

The International Labor Organization’s Maritime Labor Convention, 2006 went into force on August 20, 2013.

By virtue of our operations in the U.S., the FMC requires us to maintain a third-party performance guarantee on our behalf in respect of liabilities for non-performance of transportation and other obligations to guests.

The FMC has proposed rules that would significantly increase the amount of our required guarantees and accordingly our cost of compliance.

There can be no assurance that such an increase in the amount of our guarantees, if required, would be available to us.

For additional discussion of the FMC’s proposed requirements, we refer you to “Item 1—Business—Regulatory Issues.”

In 2007, the state of Alaska implemented taxes, some of which were rolled back in 2010, which have impacted the cruise industry operating in Alaska.

Passenger ticket revenue primarily consists of revenue for accommodations, meals in certain restaurants on the ship, certain onboard entertainment, [added: port fees] and [added: 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 [removed: gaming,] [added: casino,] beverage sales, shore excursions, specialty dining, retail sales, spa services and photo services.

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

| | [removed: ·] [added: ●] | Onboard and other primarily consists of direct costs incurred in connection with onboard and other revenue, including casino, beverage sales and shore excursions. |

| | [removed: ·] [added: ●] | 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. |

| | [removed: ·] [added: ●] | Fuel includes fuel costs, the impact of certain fuel hedges and fuel delivery costs. |

| | [removed: ·] [added: ●] | Food consists of food costs for passengers and crew on certain ships. |

| | [removed: ·] [added: ●] | Other consists of repairs and maintenance (including Dry-dock costs), ship insurance and other ship expenses. |

These critical accounting policies, which are presented in detail in our notes to our audited consolidated financial statements, relate to ship [removed: accounting, asset impairment] [added: accounting] and [removed: contingencies.][added: asset impairment.]

[removed: _Ship Accounting_][added: Ship Accounting]

Depreciation of ships is computed on a straight-line basis over the [removed: estimated service] [added: weighted average useful] lives of primarily 30 years after a 15% reduction for the estimated residual value of the ship.

[removed: Improvement] [added: 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.

We determine the [added: weighted average] useful [removed: life] [added: lives] of our ships based primarily on our estimates of the [removed: average] useful [removed: life] [added: lives] of the ships’ major component [removed: systems,] [added: systems on the date of acquisition,] such as cabins, main diesels, main electric, superstructure and hull.

In addition, [added: to determine the useful lives of the ship or ship components,] we consider the impact of [removed: anticipated changes in] the [removed: vacation market and technological conditions and] historical useful lives of [removed: similarly-built ships.][added: 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 [removed: considerable] judgment and are [removed: inherently] uncertain.

If we reduced our estimated [added: weighted] average 30-year ship service life by one year, depreciation expense for the year ended December 31, [removed: 2018] [added: 2019] would have increased by [removed: $13.3] [added: $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 [removed: $65.9] [added: $66.4] million.

[removed: _Asset Impairment_][added: Asset Impairment]

We evaluate goodwill [added: 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.

| | [removed: ·] [added: ●] | 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; |

| | [removed: ·] [added: ●] | 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 [removed: absolute terms and relative to peers); a change in the market for an entity’s products or services; or a regulatory or political development;] |

| | [removed: ·] [added: ●] | Changes in cost factors that have a negative effect on earnings and cash flows; |

| | [removed: ·] [added: ●] | Decline in overall financial performance (for both actual and expected performance); |

| | [removed: ·] [added: ●] | 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 |

| | [removed: ·] [added: ●] | Decline in share price (in both absolute terms and relative to peers). |

[removed: If a material change occurred, we] [added: 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 [removed: the expected] [added: discounted] future cash flows and market multiples to determine the fair value of the reporting units.

As of December 31, [removed: 2018,] [added: 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.

We use certain non-GAAP financial measures, such as Net Revenue, [removed: Adjusted] Net [removed: Revenue, Net] Yield, [removed: Adjusted] Net [removed: 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.

[removed: We believe that presenting these non-GAAP measures] on both a reported and Constant Currency basis is useful in providing a more comprehensive view of trends in our business.

[added: 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.

The amounts excluded in the presentation of these non-GAAP financial measures may vary from period to period; accordingly, our presentation of Adjusted Net [removed: Revenue, Adjusted Net Yield, Adjusted Net] Income and Adjusted EPS may not be indicative of future adjustments or results.

[removed: A similar impairment was] [added: Similar expenses were] not incurred in the [removed: years] [added: year] ended December 31, [removed: 2018 or December 31, 2016.][added: 2019.]

We included this as an adjustment in the reconciliation of Adjusted Net Income since [removed: this impairment amount was] [added: these expenses were] not representative of our day-to-day operations and we have included similar non-representative adjustments in prior periods.

Summary of Significant [removed: 2018] [added: 2019] Events

[removed: In March 2018,] [added: Throughout 2019,] we repurchased approximately [removed: $263.5] [added: $349.9] million of NCLH’s outstanding ordinary shares under our previously authorized three-year, [removed: $500.0 million] [added: $1.0 billion] share repurchase [removed: program, exhausting the remaining authorization under the] program.

In [removed: April 2018,] [added: December 2019,] we redeemed [removed: $135.0] [added: $565.0] million principal amount of the [removed: $700.0 million aggregate principal amount of] outstanding 4.75% Senior Notes due [removed: 2021.][added: 2021 and issued $565.0 million of 3.625% Senior Notes due 2024.]

Total revenue increased [removed: 12.2%] [added: 6.7%] to [removed: $6.1] [added: $6.5] billion for the year ended December 31, [removed: 2018] [added: 2019] compared to [removed: $5.4] [added: $6.1] billion for the year ended December 31, [removed: 2017.][added: 2018.]

Gross Yield increased [removed: 3.4%.][added: 4.6%.]

Net Revenue for the year ended December 31, [removed: 2018] [added: 2019] increased [removed: 12.6%] [added: 5.1%] to [removed: $4.7] [added: $4.9] billion from [removed: $4.2] [added: $4.7] billion in the same period in [removed: 2017] [added: 2018] with an [removed: improvement] [added: increase] in Net Yield of [removed: 3.7%] [added: 2.9%] and an increase in Capacity Days of [removed: 8.5%.][added: 2.1%.]

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.

The useful lives of ship improvements are estimated based on the economic lives of the new components.

For tradenames we also provide a qualitative assessment to determine if there is any indication of impairment.

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

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.

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.

We believe that presenting these non-GAAP measures

For example, for the year ended December 31, 2018, we incurred Secondary Equity Offering expenses of $0.9 million.

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.

As of December 31, 2019, $248.8 million of authorized repurchases remained.

​

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.

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.

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We believe our estimates and judgments with respect to our long-lived assets, principally ships, goodwill, tradenames and other indefinite-lived intangible assets are reasonable.

Nonetheless, if there was a material change in assumptions used in the determination of such fair values or if there is a material change in the conditions or circumstances that influence such assets, we could be required to record an impairment charge.

For our annual impairment evaluation, we performed a Step 0 Test for the Norwegian, Regent Seven Seas and Oceania Cruises reporting units.

As of December 31, 2018, our annual review consisting of the Step 0 Test supports the carrying value of these assets.

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Contingencies

Periodically, we assess potential liabilities related to any lawsuits or claims brought against us or any asserted claims, including tax, legal and/or environmental matters.

Although it is typically very difficult to determine the timing and ultimate outcome of such actions, we use our best judgment to determine if it is probable that we will incur an expense related to the settlement or final adjudication of such matters and whether a reasonable estimation of such probable loss, if any, can be made.

In assessing probable losses, we take into consideration estimates of the amount of insurance recoveries, if any.

In accordance with the guidance on accounting for contingencies, we accrue a liability when we believe a loss is probable and the amount of loss can be reasonably estimated.

Although we believe that our estimates and judgments are reasonable, due to the inherent uncertainties related to the eventual outcome of litigation and potential insurance recoveries, it is possible that certain matters may be resolved for amounts materially different from any estimated provisions or previous disclosures.

In addition, Adjusted Net Revenue and Adjusted Net Yield, which exclude certain business combination accounting entries, are non-GAAP financial measures that we believe are useful as supplemental measures in evaluating the performance of our operating business and provide greater transparency into our results of operations.

For example, for the year ended December 31, 2017, we incurred an impairment of $2.9 million related to assets held for sale.

| | 39 | |

In April 2018, the Board of Directors of NCLH approved a new three-year share repurchase program under which NCLH may purchase up to $1.0 billion of its ordinary shares.

We repurchased approximately $401.3 million of NCLH’s ordinary shares under the Repurchase Program.

In April 2018, Norwegian Bliss was delivered.

As of December 31, 2018, the Sponsors no longer own any NCLH ordinary shares.

| | 40 | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | 2018 | | | | 2017 | | | | 2016 | | |

| | 41 | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | 2018 | | | | 2018 Constant Currency | | | | 2017 | | | | 2017 Constant Currency | | | | 2016 | | |

| Passenger ticket revenue | | $ | 4,259,815 | | | $ | 4,244,494 | | | $ | 3,750,030 | | | $ | 3,760,886 | | | $ | 3,388,954 | |

| Total revenue | | | 6,055,126 | | | | 6,039,805 | | | | 5,396,175 | | | | 5,407,031 | | | | 4,874,340 | |

| Commissions, transportation and other expense | | | 998,948 | | | | 995,097 | | | | 894,406 | | | | 896,985 | | | | 813,559 | |

| Net Revenue | | | 4,707,522 | | | | 4,696,052 | | | | 4,182,476 | | | | 4,190,753 | | | | 3,761,895 | |

| Deferred revenue (1) | | | — | | | | — | | | | — | | | | — | | | | 1,057 | |

| Adjusted Net Revenue | | $ | 4,707,522 | | | $ | 4,696,052 | | | $ | 4,182,476 | | | $ | 4,190,753 | | | $ | 3,762,952 | |

| Gross Yield | | $ | 321.37 | | | $ | 320.56 | | | $ | 310.78 | | | $ | 311.40 | | | $ | 297.65 | |

| Net Yield | | $ | 249.85 | | | $ | 249.24 | | | $ | 240.88 | | | $ | 241.36 | | | $ | 229.72 | |

| Adjusted Net Yield | | $ | 249.85 | | | $ | 249.24 | | | $ | 240.88 | | | $ | 241.36 | | | $ | 229.78 | |

| (1) | Reflects deferred revenue fair value adjustments related to the Acquisition of Prestige that were made pursuant to business combination accounting rules. |

| | | | | | | 2018 | | | | | | | | 2017 | | | | | | |

| | | 2018 | | | | Constant Currency | | | | 2017 | | | | Constant Currency | | | | 2016 | | |

| Total cruise operating expense | | $ | 3,377,076 | | | $ | 3,365,030 | | | $ | 3,063,644 | | | $ | 3,064,892 | | | $ | 2,850,225 | |

| Gross Cruise Cost | | | 4,275,005 | | | | 4,262,468 | | | | 3,837,399 | | | | 3,837,920 | | | | 3,516,381 | |

The notional amount of [removed: our] outstanding debt associated with the interest rate swap agreements was $1.0 billion as of December 31, 2018.

As of December 31, [removed: 2017, 54%] [added: 2019, 78%] of our debt was fixed and [removed: 46%] [added: 22%] was variable, which includes the effects of the interest rate [removed: swaps.][added: swaps and collars.]

The notional amount of outstanding debt associated with the interest rate [removed: swap agreements] [added: swaps and collars] was [removed: $218.6 million] [added: $1.7 billion] as of December 31, [removed: 2017.][added: 2019.]

The change [added: in our fixed rate percentage] from December 31, [removed: 2017] [added: 2018] to December 31, [removed: 2018] [added: 2019] was [added: primarily] due to [added: higher outstanding fixed rate debt and] additional interest rate swaps [removed: executed] and [removed: the repayment of variable rate debt.][added: collars executed.]

Based on our December 31, [removed: 2018] [added: 2019] outstanding variable rate debt balance, [added: 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 [removed: $18.4] [added: $20.9] million excluding the effects of capitalization of interest.

As of December 31, [removed: 2018,] [added: 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.

[removed: The] [added: As of December 31, 2018, the] payments not hedged [removed: aggregate] [added: aggregated] €2.2 billion, or $2.5 [removed: billion] [added: billion,] based on the euro/U.S. dollar exchange rate as of December 31, 2018.

[removed: As of December 31, 2017, the] [added: The] payments not hedged [removed: aggregated €3.3] [added: aggregate €3.0] billion, or [removed: $4.0 billion,] [added: $3.4 billion] based on the euro/U.S. dollar exchange rate as of December 31, [removed: 2017.][added: 2019.]

The change from December 31, [removed: 2017] [added: 2018] to December 31, [removed: 2018] [added: 2019] was due to the delivery of a ship in [removed: April 2018] [added: October 2019] and additional foreign exchange derivatives executed.

[removed: We estimate that a 10% change] in the euro as of December 31, [removed: 2018] [added: 2019] would result in a $0.3 billion change in the U.S. dollar value of the foreign currency denominated remaining payments.

Fuel expense, as a percentage of our total cruise operating expense, was [removed: 11.6%] [added: 11.2%] for the year ended December 31, [removed: 2018] [added: 2019] and [removed: 11.8%] [added: 11.6%] for [removed: each of] the [removed: years] [added: year] ended December 31, [removed: 2017 and 2016.][added: 2018.]

We use fuel derivative agreements to mitigate the financial impact of fluctuations in fuel prices and as of December 31, [removed: 2018,] [added: 2019,] we had hedged approximately [removed: 57%, 53%] [added: 56%, 50%] and [removed: 33%] [added: 18%] of our [removed: 2019, 2020 and] [added: 2020,] 2021 [added: and 2022] projected metric tons of fuel purchases, respectively.

As of December 31, [removed: 2017,] [added: 2018,] we had hedged approximately [removed: 65%, 48%] [added: 57%, 53%] and [removed: 26%] [added: 33%] of our [removed: 2018, 2019 and] [added: 2019,] 2020 [added: and 2021] projected metric tons of fuel purchases, respectively.

The change in fuel price risk from December 31, [removed: 2017] [added: 2018] to December 31, [removed: 2018] [added: 2019] was due to additional fuel hedges executed.

We estimate that a 10% increase in our weighted-average fuel price would increase our anticipated [removed: 2019] [added: 2020] fuel expense by [removed: $40.5] [added: $50.0] million.

This increase would be partially offset by an increase in the fair value of our fuel swap agreements of [removed: $20.1] [added: $23.0] million.

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.

We estimate that a 10% change

As of December 31, 2018, we had interest rate swap agreements to manage our interest expense by hedging the interest rate risks associated with variable rates on our outstanding borrowings.

| | 48 | |

| --- | --- | --- |

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 [removed: $.001] [added: $0.001] per share.

We have [removed: two Explorer Class Ships, Seven Seas Splendor and] one additional [removed: ship,] [added: Explorer Class Ship] on order for delivery in the [removed: winter of 2020 and] fall of [removed: 2023, respectively.][added: 2023.]

| [removed: Ship (1)] [added: Ship (1)] | | [removed: Year Built] [added: Year Built] | | Primary Areas of Operation | [added: | |]

| Norwegian | [added: ​] | | [added: ​] | | [added: | ​ |]

| Norwegian Encore [removed: (2)] | [added: ​] | 2019 | [added: ​] | [removed: Bahamas,] [added: Alaska,] Bermuda, Canada & New England, [removed: Caribbean, Central America] [added: Caribbean] | [added: | ​ |]

| Norwegian Bliss | [added: ​] | 2018 | [added: ​] | Alaska, Bahamas, Caribbean, [removed: Central America, Mexico-Pacific, U.S. East Coast. U.S. West Coast] [added: Mexico-Pacific] | [added: | ​ |]

| Norwegian Joy | [added: ​] | 2017 | [added: ​] | Alaska, [removed: Asia, Bahamas,] [added: Bermuda, Canada & New England,] Caribbean, Central America, [removed: Mexico-Pacific, U.S. West Coast] [added: Mexico-Pacific] | [added: | ​ |]

| Norwegian [removed: Escape] [added: Breakaway] | [added: ​] | [removed: 2015] [added: 2013] | [added: ​] | Bahamas, Bermuda, Canada & New England, [removed: Caribbean, Europe, U.S. West Coast] [added: Caribbean] | [added: | ​ |]

| Norwegian Getaway | [added: ​] | 2014 | [added: ​] | Bahamas, [removed: Bermuda,] Caribbean, [removed: Central America, Europe, U.S. East Coast] [added: Europe] | [added: | ​ |]

| Norwegian [removed: Breakaway] [added: Pearl] | [added: ​] | [removed: 2013] [added: 2006] | [added: ​] | Bahamas, [removed: Bermuda,] Canada & New England, Caribbean, Europe, [removed: U.S. East Coast] | [added: | ​ |]

| Norwegian Epic | [added: ​] | 2010 | [added: ​] | [removed: Bahamas,] Caribbean, [removed: Europe, U.S. East Coast] [added: Europe] | [added: | ​ |]

| Norwegian Gem | [added: ​] | 2007 | [added: ​] | [removed: Bahamas,] Bermuda, Canada & New England, Caribbean, [removed: Central America, Mexico-Pacific, U.S. East Coast, U.S. West Coast] [added: Mexico-Pacific] | [added: | ​ |]

| Norwegian Jade | [added: ​] | 2006 | [added: ​] | [added: Africa,] Asia, [removed: Bahamas, Bermuda,] Caribbean, [removed: Central America,] Europe | [added: | ​ |]

| [removed: Norwegian Pearl] [added: Oceania Insignia] | [added: ​] | [removed: 2006] [added: 1998] | [added: ​] | [added: Africa,] Alaska, [removed: Bahamas,] [added: Asia,] Bermuda, Canada & New England, Caribbean, [removed: Central America,] Europe, [added: Hawaii,] Mexico-Pacific, [removed: U.S. West Coast] [added: South America, South Pacific] | [added: | ​ |]

| Norwegian Jewel | [added: ​] | 2005 | [added: ​] | Alaska, [removed: Asia,] Australia & New Zealand, Hawaii, South [removed: Pacific, U.S. West Coast] [added: Pacific] | [added: | ​ |]

| Pride of America | [added: ​] | 2005 | [added: ​] | Hawaii | [added: | ​ |]

| Norwegian Dawn | [added: ​] | 2002 | [added: ​] | [added: Asia,] Bahamas, Bermuda, [removed: Canada & New England,] Caribbean, Europe [removed: U.S. East Coast] | [added: | ​ |]

| Norwegian Star | [added: ​] | 2001 | [added: ​] | [removed: Bahamas, Bermuda, Central America,] Europe, [removed: Mexico-Pacific,] South [removed: America, U.S. West Coast] [added: America] | [added: | ​ |]

| Norwegian Sun | [added: ​] | 2001 | [added: ​] | [added: Alaska,] Bahamas, Caribbean, Central [removed: America, Cuba, South] America | [added: | ​ |]

| Norwegian Sky | [added: ​] | 1999 | [added: ​] | Bahamas, [removed: Cuba] [added: Caribbean] | [added: | ​ |]

| Norwegian Spirit | [added: ​] | 1998 | [added: ​] | Africa, Asia, Europe | [added: | ​ |]

| Oceania Cruises | [added: ​] | [added: ​] | [added: ​] | | [added: | ​ |]

| Oceania Marina | [added: ​] | 2011 | [added: ​] | [removed: Bermuda, Canada & New England,] Europe, [removed: Hawaii, Mexico-Pacific,] South [removed: America, South Pacific] [added: America] | [added: | ​ |]

| Oceania Nautica | [added: ​] | 2000 | [added: ​] | Africa, Asia, Europe | [added: | ​ |]

| Oceania Regatta | [added: ​] | 1998 | [added: ​] | Alaska, Asia, Australia & New Zealand, Central America, [removed: Cuba, Hawaii, Mexico-Pacific, U.S. West Coast] [added: South Pacific] | [added: | ​ |]

| [removed: Oceania Insignia] [added: Seven Seas Navigator] | [added: ​] | [removed: 1998] [added: 1999] | [added: ​] | [removed: Africa, Alaska, Asia,] Australia & New Zealand, [removed: Bahamas, Bermuda,] Canada & New England, Caribbean, Central America, [removed: Cuba,] Europe, Hawaii, [removed: Mexico-Pacific,] South America, South [removed: Pacific, U.S. East Coast, U.S. West Coast] [added: Pacific] | [added: ​ | |]

| Regent | | | | | [added: | |]

| Seven Seas [removed: Splendor (3) Seven Seas] Explorer | [added: ​] | [removed: 2020] 2016 | [added: ​] | [removed: Caribbean, Cuba, Europe Africa,] Alaska, Asia, Australia & New Zealand, Caribbean, [removed: Cuba, Europe, South America] [added: Europe] | [added: ​ | |]

| Seven Seas Voyager | [added: ​] | 2003 | [added: ​] | Africa, [added: Asia,] Australia & New Zealand, [removed: Caribbean, Cuba,] Europe, South America | [added: ​ | |]

| Seven Seas Mariner | [added: ​] | 2001 | [added: ​] | [removed: Africa,] Alaska, Asia, Australia & New Zealand, Caribbean, [removed: Cuba,] Europe, South [removed: America, South Pacific, U.S. West Coast] [added: America] | [added: ​ | |]

| [removed: |] (1) | The table above does not include an additional 9 ships on order. |

Our [added: Mission and] Competitive Strengths

We believe that the following business strengths [removed: will enable us] [added: support our overall strategy] to [removed: execute] [added: deliver on] our [removed: strategy:][added: mission:]

[removed: _Rich] [added: Rich] Stateroom [removed: Mix_][added: Mix]

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, [removed: balconies,] [added: 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 [removed: three bedroom] [added: three-bedroom] Garden Villas measuring up to 6,694 square feet.

In addition, [removed: nine] [added: 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.

[removed: Onboard] [added: 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.

[removed: The Regent fleet is comprised of four ships —] Seven Seas Voyager, Seven Seas [removed: Mariner and] [added: Mariner,] Seven Seas Explorer [added: and Seven Seas Splendor] feature all-suite, all-balcony [removed: accommodations] [added: accommodations,] and a majority of the accommodations on Seven Seas Navigator include balconies.

[removed: _High-Quality Service_][added: High-Quality Service]

As a result of the Secondary Equity Offerings, as of December 2018, the Sponsors no longer owned the ordinary shares they held in NCLH.

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.

| ​ | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| ​ | ​ | ​ | ​ | ​ | | ​ |

| Norwegian Escape | ​ | 2015 | ​ | Caribbean, Europe | | ​ |

| ​ | ​ | ​ | ​ | ​ | | ​ |

| Oceania Riviera | ​ | 2012 | ​ | Caribbean, Europe | | ​ |

| Oceania Sirena | ​ | 1999 | ​ | Africa, Asia, Caribbean, Europe | | ​ |

| Seven Seas Splendor (2) | ​ | 2020 | ​ | Caribbean, Central America, Europe | ​ | |

| --- | --- |

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

| --- | --- |

Our core mission is to provide exceptional vacation experiences delivered by passionate team members committed to world-class hospitality and innovation.

The Regent fleet is comprised of five ships.

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.

​

Our fleet has a worldwide deployment, offering voyages ranging from three days to a 180-day around-the-world cruise.

We have also developed destinations to enhance the shore experience for our guests.

In 2016, we introduced Harvest Caye in Southern Belize.

We were the first cruise line to offer calls to a private destination at Great Stirrup Cay in the Bahamas.

| | ● | strengthening our global footprint. |

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

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.

We believe our brands deliver a strong product offering and superb guest experience.

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.

Norwegian Encore was delivered in October 2019.

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.

Our travel partner base is comprised of an extensive network of approximately 23,000 independent travel advisors worldwide.

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.

We utilize a market-to-fill strategy to encourage guests to book earlier which extends our booking window and drives higher pricing.

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.

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.

The Sponsors have completed numerous Secondary Equity Offerings of NCLH’s ordinary shares.

As of December 2018, the Sponsors no longer own any NCLH ordinary shares.

NCLH is a Bermuda exempted company formed as a holding company in 2011, with predecessors dating from 1966.

Our telephone number is (305) 436-4000.

Our website is located at _www.nclhltdinvestor.com_.

The information that appears on our websites is not part of, and is not incorporated by reference into this annual report or any other report or document filed with or furnished to the SEC.

As of December 31, 2018, we had 26 ships with approximately 54,400 Berths.

We plan to introduce 11 additional ships through 2027, subject to certain conditions.

Norwegian Encore is on order for delivery in the fall of 2019.

| | 7 | |

| --- | --- | --- |

| --- | --- | --- | --- | --- |

| | | | | |

| Oceania Riviera | | 2012 | | Bahamas, Bermuda, Canada & New England, Caribbean, Central America, Cuba, Europe |

| Oceania Sirena | | 1999 | | Bahamas, Bermuda, Canada & New England, Caribbean, Central America, Cuba, Europe, South America, U.S. West Coast |

| Seven Seas Navigator | | 1999 | | Africa, Asia, Australia & New Zealand, Bermuda, Caribbean, Cuba, Europe, South America, South Pacific, U.S. West Coast |

| | (2) (3) | Norwegian Encore is scheduled for delivery in the fall of 2019. Seven Seas Splendor is scheduled for delivery in the winter of 2020. |

| | | |

| | 8 | |

We introduced a new destination, Harvest Caye, in November 2016.

| | 9 | |

| | · | expanding internationally. |

| | 10 | |

Optimization of Deployment. We manage our ships’ deployment to promote better breadth of itineraries and to offer sailings further in advance.

We have Norwegian Encore on order for delivery in the fall of 2019.

For the Regent brand, we have orders for two Explorer Class Ships, Seven Seas Splendor and an additional ship, to be delivered in 2020 and 2023, respectively.

We continue to invest in our brands by enhancing websites and passenger services departments through which travel agents and guests have the ability to book cruise vacations.

We focus on distribution through our three primary channels: “Retail/Travel Agent,” “International,” and “Meetings, Incentives and Charters.”

Our travel partner base is comprised of an extensive network of approximately 23,000 independent travel agencies including brick and mortar, internet-based and home-based operators located in North America, South America, Europe, Africa, Asia and Australia.

International. The international channel represents an underpenetrated channel of distribution and one that we have increased focus on since 2015.

Focus on this market accomplishes the dual objective of allowing us to grow our yields and capacity faster than if we only focused on the North American market while also allowing us to diversify our risk.

As part of this focus, we have undertaken a three-pronged strategy of:

| | · | expanding the management, sales and marketing teams that oversee this area, |

| | · | broadening our travel agency distribution to multiple partners in each region, and |

| | · | expanding the geographic reach of our product by deploying our ships in areas that appeal to international guests and by personalizing our product for their tastes. |

As part of this strategy, we have opened offices in Sydney, Shanghai, Beijing, Hong Kong, Mumbai, Tokyo, Auckland and Singapore and expanded or renovated our existing offices in Southampton, Sao Paulo and Wiesbaden.

| | 11 | |

Norwegian generates additional revenue on our ships from casino operations, food and beverage, shore excursions, gift shop purchases, spa services, photo services and other similar items.

Both Regent and Oceania Cruises generate additional revenue from casino operations, gift shop purchases, premium shore excursions and spa services.

We concentrate on improving early booking occupancy rates to drive higher Net Yields.

[removed: On] [added: As previously disclosed in our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2019, June 30, 2019, and] September [added: 30, 2019, on September] 21, 2018, a [removed: purported] [added: 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 complaint [removed: alleges] [added: alleged] that the Company concealed that it received proceeds on the sale of the travel insurance portion of the plan.

The complaint [removed: seeks] [added: sought] an unspecified amount of damages, fees and costs.

_Booksafe Travel Protection Plan_

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.

_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_

*​*

[removed: FORM 10-K][added: FORM 10-K]

| | [removed: x] [added: ☒] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

For the fiscal year [removed: ended December] [added: ended December] 31, [removed: 2018][added: 2019]

| | [removed: ¨] [added: ☐] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

For the transition period [removed: from to][added: from to]

Commission file [removed: number: 001-35784][added: number: 001-35784]

7665 Corporate Center [removed: Drive, Miami, Florida 33126][added: Drive, Miami, Florida 33126]

[removed: (305) 436-4000][added: (305) 436-4000]

[removed: Securities] [added: Securities] registered pursuant to Section 12(b) of the [removed: Act:][added: Act:]

| Title of each class | | [added: Trading Symbol(s) | |] Name of each exchange on which registered |

| [removed: Ordinary] [added: Ordinary] shares, par value [removed: $.001] [added: $0.001] per [removed: share] [added: share] | | [removed: New] [added: NCLH | | The New] York Stock [removed: Exchange] [added: Exchange] |

Yes [removed: x] [added: ⌧] No [removed: ¨][added: ◻]

Yes [removed: ¨] [added: ◻] No [removed: x][added: ⌧]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or [added: an] emerging growth company.

| Large accelerated filer [removed: | x] [added: ☒] | Accelerated filer [removed: | ¨] [added: ◻] |

| Non-accelerated filer [removed: | ¨] [added: ◻] | Smaller reporting company [removed: | ¨] [added: ☐] |

| | [removed: |] Emerging growth company [removed: | ¨] [added: ☐] |

As of June [removed: 29, 2018,] [added: 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 [removed: $9.7] [added: $11.5] billion.

There were [removed: 217,727,855] [added: 213,202,541] ordinary shares outstanding as of February [removed: 15, 2019.][added: 14, 2020.]

Portions of the Proxy Statement for the registrant’s [removed: 2019] [added: 2020] Annual General Meeting of Shareholders, to be filed with the Securities and Exchange Commission not later than 120 days after December 31, [removed: 2018,] [added: 2019,] are incorporated by reference in Part III herein.

| [added: ​] | [added: ​] | Page |

| [Item [removed: 1.](#a_002)] [added: 1.](#Item1Business_43952)] | [removed: [Business](#a_002)] [added: [Business](#Item1Business_43952)] | [removed: [7](#a_002)] [added: 7] |

| [Item [removed: 1A.](#a_003)] [added: 1A.](#Item1ARiskFactors_560063)] | [Risk [removed: Factors](#a_003)] [added: Factors](#Item1ARiskFactors_560063)] | [removed: [24](#a_003)] [added: 25] |

| [Item [removed: 1B.](#a_004)] [added: 1B.](#Item1BUnresolvedStaffComments_860256)] | [Unresolved Staff [removed: Comments](#a_004)] [added: Comments](#Item1BUnresolvedStaffComments_860256)] | [removed: [33](#a_004)] [added: 36] |

| [Item [removed: 2.](#a_005)] [added: 2.](#Item2Properties_501929)] | [removed: [Properties](#a_005)] [added: [Properties](#Item2Properties_501929)] | [removed: [33](#a_005)] [added: 36] |

| [Item [removed: 3.](#a_006)] [added: 3.](#Item3LegalProceedings_239827)] | [Legal [removed: Proceedings](#a_006)] [added: Proceedings](#Item3LegalProceedings_239827)] | [removed: [34](#a_006)] [added: 36] |

| [Item [removed: 4.](#a_007)] [added: 4.](#Item4MineSafetyDisclosures_474955)] | [Mine Safety [removed: Disclosures](#a_007)] [added: Disclosures](#Item4MineSafetyDisclosures_474955)] | [removed: [34](#a_007)] [added: 37] |

| [Item [removed: 5.](#a_009)] [added: 5.](#Item5MarketforRegistrantsCommonEquity_53)] | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#a_009)] [added: Securities](#Item5MarketforRegistrantsCommonEquity_53)] | [removed: [35](#a_009)] [added: 38] |

| [Item [removed: 6.](#a_010)] [added: 6.](#Item6SelectedFinancialData_172233)] | [Selected Financial [removed: Data](#a_010)] [added: Data](#Item6SelectedFinancialData_172233)] | [removed: [36](#a_010)] [added: 39] |

| [Item [removed: 7.](#a_011)] [added: 7.](#Item7ManagementsDiscussionandAnalysis_58)] | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#a_011)] [added: Operations](#Item7ManagementsDiscussionandAnalysis_58)] | [removed: [37](#a_011)] [added: 41] |

| [Item [removed: 7A.](#a_012)] [added: 7A.](#Item7AQuantitativeandQualitativeDisclosu)] | [Quantitative and Qualitative Disclosures about Market [removed: Risk](#a_012)] [added: Risk](#Item7AQuantitativeandQualitativeDisclosu)] | [removed: [48](#a_012)] [added: 54] |

| [Item [removed: 8.](#a_013)] [added: 8.](#Item8FinancialStatementsandSupplementary)] | [Financial Statements and Supplementary [removed: Data](#a_013)] [added: Data](#Item8FinancialStatementsandSupplementary)] | [removed: [49](#a_013)] [added: 55] |

| [Item [removed: 9.](#a_014)] [added: 9.](#Item9ChangesInandDisagreementsWithAccoun)] | [Changes [removed: In] [added: in] and Disagreements With Accountants on Accounting and Financial [removed: Disclosure](#a_014)] [added: Disclosure](#Item9ChangesInandDisagreementsWithAccoun)] | [removed: [49](#a_014)] [added: 55] |

| [Item [removed: 9A.](#a_015)] [added: 9A.](#Item9AControlsandProcedures_599198)] | [Controls and [removed: Procedures](#a_015)] [added: Procedures](#Item9AControlsandProcedures_599198)] | [removed: [50](#a_015)] [added: 55] |

| [Item [removed: 9B.](#a_016)] [added: 9B.](#Item9BOtherInformation_195488)] | [Other [removed: Information](#a_016)] [added: Information](#Item9BOtherInformation_195488)] | [removed: [50](#a_016)] [added: 56] |

| [PART [removed: III](#a_017)] [added: III](#PARTIII_603837)] | [added: ​] | [added: ​] |

| [Item [removed: 10.](#a_018)] [added: 10.](#Item10DirectorsExecutiveOfficers_706917)] | [Directors, Executive Officers and Corporate [removed: Governance](#a_018)] [added: Governance](#Item10DirectorsExecutiveOfficers_706917)] | [removed: [51](#a_018)] [added: 57] |

| [Item [removed: 11.](#a_019)] [added: 11.](#Item11ExecutiveCompensation_622713)] | [Executive [removed: Compensation](#a_019)] [added: Compensation](#Item11ExecutiveCompensation_622713)] | [removed: [51](#a_019)] [added: 57] |

| [Item [removed: 12.](#a_020)] [added: 12.](#Item12SecurityOwnershipofCertain_548787)] | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#a_020)] [added: Matters](#Item12SecurityOwnershipofCertain_548787)] | [removed: [51](#a_020)] [added: 57] |

| [Item [removed: 13.](#a_021)] [added: 13.](#Item13CertainRelationshipsandRelatedTran)] | [Certain Relationships and Related Transactions, and Director [removed: Independence](#a_021)] [added: Independence](#Item13CertainRelationshipsandRelatedTran)] | [removed: [51](#a_021)] [added: 57] |

​

​

| | |

| | | | | |

| --- | --- | --- | --- | --- |

Yes ⌧ No ◻

Yes ⌧ No ◻

| ​ | ​ |

| --- | --- |

Yes ☐ No ☒

​

​

| ​ | ​ | ​ |

| ​ | ​ | ​ |

| [PART I](#PARTI_806835) | ​ | ​ |

| ​ | ​ | ​ |

| [PART II](#PARTII_246029) | ​ | ​ |

| ​ | ​ | ​ |

| ​ | ​ | ​ |

| [PART IV](#PARTIV_704841) | ​ | ​ |

| [Signatures](#SIGNATURES_43877) | | 67 |

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| | • | the unavailability of ports of call; |

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10-K 1 tv513897_10k.htm FORM 10-K

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

| --- | --- | --- | --- |

| | | |

| [PART I](#a_001) | | |

| [PART II](#a_008) | | |

| [PART IV](#a_023) | | |

| [Signatures](#a_026) | | [60](#a_026) |

· _Adjusted Net Revenue._ Net Revenue adjusted for supplemental adjustments.

· _Adjusted Net Yield._ Net Yield adjusted for supplemental adjustments.

· _Bareboat Charter._ The hire of a ship for a specified period of time whereby no crew or provisions are provided by the Company.

· _Business Enhancement Capital Expenditures_.

Capital expenditures other than those related to new ship construction and ROI Capital Expenditures.

| | 3 | |

· _O-Class Ships._ Oceania Cruises’ Marina and Riviera.

· _Occupancy Percentage_.

The ratio of Passenger Cruise Days to Capacity Days.

· _R-Class Ships._ Oceania Cruises’ Regatta, Insignia, Nautica, and Sirena.

· _ROI Capital Expenditures._ Comprised of project-based capital expenditures which have a quantified return on investment.

· _Shipboard Retirement Plan_.

| | 4 | |

| | · | the unavailability of attractive port destinations; |

| | · | evolving requirements and regulations regarding data privacy and protection and any actual or perceived compliance failures by us; |

| | 5 | |

| | · | amendments to our collective bargaining agreements for crew members and other employee relation issues; |

| | · | seasonal variations in passenger fare rates and occupancy levels at different times of the year; |

| | 6 | |

[removed: Additionally, we] [added: We] lease a number of [added: domestic and] international offices throughout Europe, Asia, South America and Australia to administer our brand operations globally.

We also have a lease of approximately 77,500 square feet for Prestige’s former executive offices in Miami, Florida which we have subleased to a third party.

We lease approximately (i) 31,200 square feet of office space over 2 locations in Sunrise, Florida for sales; (ii) 19,200 square feet of office space in Southampton, England for sales, marketing, operations, and other administrative activity in the U.K. and Ireland; (iii) 12,200 square feet of office space in Wiesbaden, Germany for sales and marketing in Europe; (iv) 28,000 square feet of office space in Phoenix, Arizona for a call center; (v) 17,600 square feet in Omaha, Nebraska for a call center; and (vi) 46,000 square feet of warehouse space in Tampa, Florida for entertainment theatrical production.

| | 33 | |

| --- | --- | --- |

​

| | 34 | |

| --- | --- | --- |

As of February [removed: 15, 2019,] [added: 14, 2020,] there were [removed: 245] [added: 248] record holders of NCLH’s ordinary shares.

[removed: Share] [added: There was no share] repurchase activity during the three months ended December 31, [removed: 2018 was as follows:][added: 2019 and approximately $248.8 million remained available under the Repurchase Program.]

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 [removed: trading day of fiscal 2013.]

[removed: ][added: ]

​

trading day of fiscal 2014.

| Period | | Total Number of Shares Purchased as Part of a Publicly Announced Program (in thousands) | | | | Average Price Paid per Share | | | | Approximate Dollar Value of Shares that May Yet be Purchased Under the Program (in thousands) | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| October 1, 2018 – October 31, 2018 | | | — | | | $ | — | | | $ | 800,000 | |

| November 1, 2018 – November 30, 2018 | | | 2,354 | | | $ | 49.40 | | | $ | 683,694 | |

| December 1, 2018 – December 31, 2018 | | | 1,683 | | | $ | 50.50 | | | $ | 598,694 | |

| Total for the three months ended December 31, 2018 | | | 4,037 | | | $ | 49.86 | | | $ | 598,694 | |

| | 35 | |

| --- | --- | --- |

| [added: ​] | [added: ​] | [removed: As] [added: As] of or for the Year Ended December [removed: 31, | | | |] [added: 31,] | | | | | | | | | | | | | | |

| [removed: (in thousands, except share data, per share] [added: share] data and operating [removed: data) | | 2018 | |] [added: data)] | [added: ​] | [removed: 2017] [added: 2019] | | [added: ​] | [added: 2018] | [removed: 2016] | [added: ​] | [added: 2017] | | [removed: 2015] [added: ​] | [added: 2016] | | [added: ​] | [removed: 2014] [added: 2015] | | [added: ​] |

| [removed: Statement] [added: Statement] of operations [removed: data: | | | |] [added: data:] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] |

| Total revenue | [added: ​] | $ | [removed: 6,055,126 |] [added: 6,462,376] | [added: ​] | $ | [removed: 5,396,175 |] [added: 6,055,126] | [added: ​] | $ | [removed: 4,874,340 |] [added: 5,396,175] | [added: ​] | $ | [removed: 4,345,048 |] [added: 4,874,340] | [added: ​] | $ | [removed: 3,125,881] [added: 4,345,048] | [added: ​] |

| Operating income | [added: ​] | $ | [removed: 1,219,061 |] [added: 1,178,077] | [added: ​] | $ | [removed: 1,048,819 |] [added: 1,219,061] | [added: ​] | $ | [removed: 925,464 |] [added: 1,048,819] | [added: ​] | $ | [removed: 702,486 |] [added: 925,464] | [added: ​] | $ | [removed: 502,941] [added: 702,486] | [added: ​] |

| Net income | [added: ​] | $ | [removed: 954,843 |] [added: 930,228] | [added: ​] | $ | [removed: 759,872 |] [added: 954,843] | [added: ​] | $ | [removed: 633,085 |] [added: 759,872] | [added: ​] | $ | [removed: 427,137 |] [added: 633,085] | [added: ​] | $ | [removed: 342,601] [added: 427,137] | [added: ​] |

| EPS: | [removed: | | | |] [added: ​] | | | [added: ​] | | | [added: ​] | | | [added: ​] | | | [added: ​] | | | [added: ​] |

| Basic | [added: ​] | $ | [removed: 4.28 |] [added: 4.33] | [added: ​] | $ | [removed: 3.33 |] [added: 4.28] | [added: ​] | $ | [removed: 2.79 |] [added: 3.33] | [added: ​] | $ | [removed: 1.89 |] [added: 2.79] | [added: ​] | $ | [removed: 1.64] [added: 1.89] | [added: ​] |

| Diluted | [added: ​] | $ | [removed: 4.25 |] [added: 4.30] | [added: ​] | $ | [removed: 3.31 |] [added: 4.25] | [added: ​] | $ | [removed: 2.78 |] [added: 3.31] | [added: ​] | $ | [removed: 1.86 |] [added: 2.78] | [added: ​] | $ | [removed: 1.62] [added: 1.86] | [added: ​] |

| Weighted-average shares outstanding: | [removed: | | | |] [added: ​] | | | [added: ​] | | | [added: ​] | | | [added: ​] | | | [added: ​] | | | [added: ​] |

| Basic | [added: ​] | | [removed: 223,001,739] [added: 214,929,977] | [added: ​] | | [added: 223,001,739] | [removed: 228,040,825] [added: ​] | | [added: 228,040,825] | [added: ​] | [removed: 227,121,875] | [added: 227,121,875] | [added: ​] | | 226,591,437 | [removed: | | | 206,524,968 |] [added: ​] |

| Diluted | [added: ​] | | [removed: 224,419,205] [added: 216,475,076] | [added: ​] | | [added: 224,419,205] | [removed: 229,418,326] [added: ​] | | [added: 229,418,326] | [added: ​] | [removed: 227,850,286] | [added: 227,850,286] | [added: ​] | | 230,040,132 | [removed: | | | 212,017,784 |] [added: ​] |

| [removed: Balance] [added: Balance] sheet [removed: data: | | | |] [added: data:] | [added: ​] | | | [added: ​] | | | [added: ​] | | | [added: ​] | | | [added: ​] | | | [added: ​] |

| Total assets | [added: ​] | $ | [removed: 15,205,970 |] [added: 16,684,599] | [added: ​] | $ | [removed: 14,094,869 |] [added: 15,205,970] | [added: ​] | $ | [removed: 12,973,911 |] [added: 14,094,869] | [added: ​] | $ | [removed: 12,264,757 |] [added: 12,973,911] | [added: ​] | $ | [removed: 11,468,996] [added: 12,264,757] | [added: ​] |

| Property and equipment, net | [added: ​] | $ | [removed: 12,119,253 |] [added: 13,135,337] | [added: ​] | $ | [removed: 11,040,488 |] [added: 12,119,253] | [added: ​] | $ | [removed: 10,117,689 |] [added: 11,040,488] | [added: ​] | $ | [removed: 9,458,805 |] [added: 10,117,689] | [added: ​] | $ | [removed: 8,623,773] [added: 9,458,805] | [added: ​] |

| Long-term debt, including current portion | [added: ​] | $ | [removed: 6,492,091 |] [added: 6,801,693] | [added: ​] | $ | [removed: 6,307,765 |] [added: 6,492,091] | [added: ​] | $ | [removed: 6,398,687 |] [added: 6,307,765] | [added: ​] | $ | [removed: 6,397,537 |] [added: 6,398,687] | [added: ​] | $ | [removed: 6,080,023] [added: 6,397,537] | [added: ​] |

| Total shareholders’ equity | [added: ​] | $ | [removed: 5,963,001 |] [added: 6,515,579] | [added: ​] | $ | [removed: 5,749,766 |] [added: 5,963,001] | [added: ​] | $ | [removed: 4,537,726 |] [added: 5,749,766] | [added: ​] | $ | [removed: 3,780,880 |] [added: 4,537,726] | [added: ​] | $ | [removed: 3,518,813] [added: 3,780,880] | [added: ​] |

| [removed: Operating data: | | | |] [added: Operating data:] | [added: ​] | | [added: ​] | [added: ​] | | | [added: ​] | | | [added: ​] | | | [added: ​] | | | [added: ​] |

| Passengers carried | [added: ​] | | [removed: 2,795,101] [added: 2,695,718] | [added: ​] | | [added: 2,795,101] | [removed: 2,519,324] [added: ​] | | [added: 2,519,324] | [added: ​] | [removed: 2,337,311] | [added: 2,337,311] | [added: ​] | | 2,164,404 | [removed: | | | 1,933,044 |] [added: ​] |

| Passenger Cruise Days | [added: ​] | | [removed: 20,276,568] [added: 20,637,949] | [added: ​] | | [added: 20,276,568] | [removed: 18,523,030] [added: ​] | | [added: 18,523,030] | [added: ​] | [removed: 17,588,707] | [added: 17,588,707] | [added: ​] | | 16,027,743 | [removed: | | | 13,634,200 |] [added: ​] |

| Capacity Days | [added: ​] | | [removed: 18,841,678] [added: 19,233,459] | [added: ​] | | [added: 18,841,678] | [removed: 17,363,422] [added: ​] | | [added: 17,363,422] | [added: ​] | [removed: 16,376,063] | [added: 16,376,063] | [added: ​] | | 14,700,990 | [removed: | | | 12,512,459 |] [added: ​] |

| Occupancy Percentage | [added: ​] | | [removed: 107.6] [added: 107.3] | % | | [removed: | 106.7] [added: 107.6] | % | | [removed: | 107.4] [added: 106.7] | % | | [removed: | 109.0] [added: 107.4] | % | | [removed: |] 109.0 | % |

The consolidated financial statements as of December 31, 2019 include the impact of a change in accounting policy related the adoption of Accounting Standards Codification 842 – _Leases_ on January 1, 2019.

See Note 5, Leases, to the Notes to the Consolidated Financial Statements included herein for additional information about these changes in accounting policy.

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| (in thousands, except share data, per | | ​ | ​ | | ​ | ​ | | ​ | ​ | | ​ | ​ | | ​ | ​ | ​ |

The consolidated financial statements as of and for the year ended December 31, 2014 include the financial results of Prestige commencing on November 19, 2014, the date the Acquisition of Prestige was consummated.

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Net income attributable to non-controlling interest | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 4,249 | |

| Net income attributable to Norwegian Cruise Line Holdings Ltd. | | $ | 954,843 | | | $ | 759,872 | | | $ | 633,085 | | | $ | 427,137 | | | $ | 338,352 | |

| | 36 | |

| --- | --- | --- |

| | 49 | |

| --- | --- | --- |

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, [removed: 2018.][added: 2019.]

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, [removed: 2018,] [added: 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.

Based on this evaluation under the COSO Framework, management concluded that our internal control over financial reporting was effective as of December 31, [removed: 2018.][added: 2019.]

The effectiveness of the Company’s internal control over financial reporting as of December 31, [removed: 2018] [added: 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.

There have been no changes in our internal control over financial reporting during the quarter ended December 31, [removed: 2018] [added: 2019] that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

​

| | 50 | |

| --- | --- | --- |

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, [removed: 2018] [added: 2019] in connection with our [removed: 2019] [added: 2020] Annual General Meeting of Shareholders.

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, [removed: 2018] [added: 2019] in connection with our [removed: 2019] [added: 2020] Annual General Meeting of Shareholders.

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, [removed: 2018] [added: 2019] in connection with our [removed: 2019] [added: 2020] Annual General Meeting of Shareholders.

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, [removed: 2018] [added: 2019] in connection with our [removed: 2019] [added: 2020] Annual General Meeting of Shareholders.

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, [removed: 2018] [added: 2019] in connection with our [removed: 2019] [added: 2020] Annual General Meeting of Shareholders.

​

| | 51 | |

| --- | --- | --- |

Schedule II: Valuation and Qualifying Accounts for the three years ended December 31, [removed: 2018] [added: 2019] are included on page [removed: 61.][added: 68.]

| [removed: [3.1](http://www.sec.gov/Archives/edgar/data/1513761/000119312513006058/d345508dex31.htm)] [added: 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))](http://www.sec.gov/Archives/edgar/data/1513761/000119312513006058/d345508dex31.htm) |

| [removed: [3.2](http://www.sec.gov/Archives/edgar/data/1513761/000157104915004612/t1501245_ex3-2.htm)] [added: 3.2] | | [Amended and Restated Bye-Laws of Norwegian Cruise Line Holdings Ltd., effective as of [removed: May 20, 2015] [added: June 13, 2019] (incorporated herein by reference to Exhibit 3.2 to Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on [removed: May 26, 2015] [added: June 14, 2019] (File No. [removed: 001-35784))](http://www.sec.gov/Archives/edgar/data/1513761/000157104915004612/t1501245_ex3-2.htm)] [added: 001-35784))](http://www.sec.gov/Archives/edgar/data/1513761/000114420419031027/tv523567_ex3-2.htm)] |

| [removed: [4.1](http://www.sec.gov/Archives/edgar/data/1513761/000157104916020650/t1603071_ex4-1.htm)] [added: 4.1] | | [Indenture, dated as of December [removed: 14, 2016,] [added: 16, 2019,] between NCL Corporation Ltd. and U.S. Bank National Association, as [removed: trustee] [added: trustee,] with respect to [removed: $700.0] [added: $565.0] million aggregate principal amount of [removed: 4.750%] [added: 3.625%] senior unsecured notes due [removed: 2021] [added: 2024] (incorporated herein by reference to Exhibit 4.1 to Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on December [removed: 14, 2016] [added: 16, 2019] (File No. [removed: 001-35784))](http://www.sec.gov/Archives/edgar/data/1513761/000157104916020650/t1603071_ex4-1.htm)] [added: 001-35784))](http://www.sec.gov/Archives/edgar/data/1513761/000110465919073070/tm1925258d1_ex4-1.htm)] |

| [removed: [4.2](http://www.sec.gov/Archives/edgar/data/1513761/000119312513006058/d345508dex47.htm)] [added: 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))](http://www.sec.gov/Archives/edgar/data/1513761/000119312513006058/d345508dex47.htm) |

| [removed: [9.1](http://www.sec.gov/Archives/edgar/data/1513761/000119312513029891/d474597dex91.htm)] [added: 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))](http://www.sec.gov/Archives/edgar/data/1513761/000119312513029891/d474597dex91.htm) |

| [removed: [10.1](http://www.sec.gov/Archives/edgar/data/1318742/000119312513006091/d458415dex105.htm)] [added: 10.19] | | [removed: [Sixth Supplemental Deed,] [added: [Second Amendment,] dated [removed: June 1,] [added: May 31,] 2012, to [removed: €662.9] [added: €529.8] million [removed: Norwegian Epic Loan,] [added: Breakaway Two Credit Agreement,] dated as of [removed: September 22, 2006, as amended,] [added: November 18, 2010,] by and among [removed: F3] [added: Breakaway] Two, [removed: Ltd., NCL Corporation] Ltd. and a syndicate of international banks [removed: and related amended and restated Guarantee by NCL Corporation Ltd.] (incorporated herein by reference to Exhibit [removed: 10.5] [added: 10.14] to NCL Corporation Ltd.’s report on Form [removed: 6-K/A] [added: 6-K] filed on [removed: January 8, 2013] [added: November 2, 2012] (File No. [removed: 333-128780))+†](http://www.sec.gov/Archives/edgar/data/1318742/000119312513006091/d458415dex105.htm)] [added: 333-128780))+](http://www.sec.gov/Archives/edgar/data/1318742/000119312512447406/d345508dex1014.htm)] |

| [removed: [10.2](http://www.sec.gov/Archives/edgar/data/1513761/000157104916012414/t1600485_ex10-5.htm)] | | [removed: [Letter, dated November 27, 2015, amending €662.9 million Norwegian Epic Loan, dated as of September 22, 2006, as amended, by and among Norwegian Epic, Ltd. (formerly F3 Two, Ltd.), NCL Corporation Ltd. and a syndicate of international banks and related amended and restated Guarantee] [added: [related guarantee] by NCL Corporation Ltd. (incorporated herein by reference to Exhibit [removed: 10.5] [added: 10.33] to Norwegian Cruise Line Holdings Ltd.’s Form 10-K filed on February 29, 2016 (File No. [removed: 001-35784))](http://www.sec.gov/Archives/edgar/data/1513761/000157104916012414/t1600485_ex10-5.htm)] [added: 001-35784))+](http://www.sec.gov/Archives/edgar/data/1513761/000157104916012414/t1600485_ex10-33.htm)] |

| [removed: [10.3](http://www.sec.gov/Archives/edgar/data/1318742/000095014407001914/g05791exv4w46.htm)] [added: 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))+](http://www.sec.gov/Archives/edgar/data/1318742/000095014407001914/g05791exv4w46.htm) |

| [removed: [10.4](http://www.sec.gov/Archives/edgar/data/1318742/000095014408001868/g11904exv4w64.htm)] [added: 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))+](http://www.sec.gov/Archives/edgar/data/1318742/000095014408001868/g11904exv4w64.htm) |

| [removed: [10.5](http://www.sec.gov/Archives/edgar/data/1318742/000119312511018810/dex1045.htm)] [added: 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))](http://www.sec.gov/Archives/edgar/data/1318742/000119312511018810/dex1045.htm) |

| [removed: [10.6](http://www.sec.gov/Archives/edgar/data/1318742/000119312512447406/d345508dex106.htm)] [added: 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))+](http://www.sec.gov/Archives/edgar/data/1318742/000119312512447406/d345508dex106.htm) |

| [removed: [10.7](http://www.sec.gov/Archives/edgar/data/1513761/000157104915003821/t1500927_ex10-3.htm)] [added: 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))+](http://www.sec.gov/Archives/edgar/data/1513761/000157104915003821/t1500927_ex10-3.htm) |

| [removed: [10.8](http://www.sec.gov/Archives/edgar/data/1513761/000157104915006416/t1501698_ex10-2.htm)] [added: 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))+](http://www.sec.gov/Archives/edgar/data/1513761/000157104915006416/t1501698_ex10-2.htm) |

| [removed: [10.9](http://www.sec.gov/Archives/edgar/data/1513761/000157104916015066/t1601208_ex10-5.htm)] [added: 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))+](http://www.sec.gov/Archives/edgar/data/1513761/000157104916015066/t1601208_ex10-5.htm) |

| [removed: [10.10](http://www.sec.gov/Archives/edgar/data/1513761/000157104917004802/t1701379_ex10-1.htm)] [added: 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))+](http://www.sec.gov/Archives/edgar/data/1513761/000157104917004802/t1701379_ex10-1.htm) |

| [removed: [10.11](http://www.sec.gov/Archives/edgar/data/1513761/000114420417057704/tv478195_ex10-3.htm)] [added: 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))](http://www.sec.gov/Archives/edgar/data/1513761/000114420417057704/tv478195_ex10-3.htm) |

| [removed: [10.12](http://www.sec.gov/Archives/edgar/data/1513761/000114420418011097/tv486495_ex10-13.htm)] [added: 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))+](http://www.sec.gov/Archives/edgar/data/1513761/000114420418011097/tv486495_ex10-13.htm) |

| [removed: [10.13](http://www.sec.gov/Archives/edgar/data/1513761/000114420418011097/tv486495_ex10-14.htm)] [added: 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))](http://www.sec.gov/Archives/edgar/data/1513761/000114420418011097/tv486495_ex10-14.htm) |

| [removed: [10.14](http://www.sec.gov/Archives/edgar/data/1513761/000114420418025758/tv492517_ex10-1.htm)] [added: 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))+](http://www.sec.gov/Archives/edgar/data/1513761/000114420418025758/tv492517_ex10-1.htm) |

| [removed: [10.18](http://www.sec.gov/Archives/edgar/data/1318742/000119312511162133/dex1057.htm)] [added: 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))+](http://www.sec.gov/Archives/edgar/data/1318742/000119312511162133/dex1057.htm) |

| [removed: [10.19](http://www.sec.gov/Archives/edgar/data/1318742/000119312512447406/d345508dex1013.htm)] [added: 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))+](http://www.sec.gov/Archives/edgar/data/1318742/000119312512447406/d345508dex1013.htm) |

| [removed: [10.20](http://www.sec.gov/Archives/edgar/data/1318742/000119312511162133/dex1058.htm)] [added: 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))+](http://www.sec.gov/Archives/edgar/data/1318742/000119312511162133/dex1058.htm) |

| [removed: [10.21](http://www.sec.gov/Archives/edgar/data/1318742/000119312511018810/dex1059.htm)] [added: 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))](http://www.sec.gov/Archives/edgar/data/1318742/000119312511018810/dex1059.htm) |

| [removed: [10.22](http://www.sec.gov/Archives/edgar/data/1318742/000119312512447406/d345508dex1014.htm)] [added: 10.21] | | [removed: [Second Amendment, dated May 31, 2012, to €529.8] [added: [€590.5] million Breakaway [removed: Two] [added: Three] Credit Agreement, dated [removed: as of November 18, 2010,] [added: October 12, 2012,] by and among Breakaway [removed: Two,] [added: Three,] Ltd. and [added: various other lenders therein defined and] a [removed: syndicate of international banks] [added: related Guaranty by NCL Corporation Ltd.] (incorporated herein by reference to Exhibit [removed: 10.14] [added: 10.17] to NCL Corporation Ltd.’s report on Form [removed: 6-K] [added: 6-K/A] filed on [removed: November 2, 2012] [added: January 8, 2013] (File No. [removed: 333-128780))+](http://www.sec.gov/Archives/edgar/data/1318742/000119312512447406/d345508dex1014.htm)] [added: 333-128780))+](http://www.sec.gov/Archives/edgar/data/1318742/000119312513006091/d458415dex1017.htm)] |