# UNITED	STATES

# SECURITIES	AND	EXCHANGE	COMMISSION

# (Mark	One)

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

# For	the	fiscal	year	ended	December	31,	2018

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

# NORWEGIAN	CRUISE	LINE	HOLDINGS	LTD.

(Exact	name	of	registrant	as	specified	in	its	charter)

Bermuda

(State	or	other	jurisdiction	of incorporation	or	organization)

7665	Corporate	Center	Drive,	Miami,	Florida	33126

# (Address	of	principal	executive	offices)	(zip	code)

(Registrant's	telephone	number,	including	area	code)

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

Title	of	each	class

Ordinary	shares,	par	value	$.001	per	share

Name	of	each	exchange	on	which	registered

New	York	Stock	Exchange

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

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

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

Indicate	by	check	mark	whether	the	registrant	(1)	has	filed	all	reports	required	to	be	filed	by	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934	during	the preceding	12	months	(or	for	such	shorter	period	that	the	registrant	was	required	to	file	such	reports),	and	(2)	has	been	subject	to	such	filing	requirements	for	the	past	90 days.				Yes		x				No		¨

Indicate	by	check	mark	whether	the	registrant	has	submitted	electronically	every	Interactive	Data	File	required	to	be	submitted	pursuant	to	Rule	405	of	Regulation S-T	(§	232.405	of	this	chapter)	during	the	preceding	12	months	(or	for	such	shorter	period	that	the	registrant	was	required	to	submit	such	files).				Yes		x				No		¨

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

Indicate	by	check	mark	whether	the	registrant	is	a	large	accelerated	filer,	an	accelerated	filer,	a	non-accelerated	filer,	a	smaller	reporting	company,	or	emerging growth	company.	See	the	definitions	of	"large	accelerated	filer,"	"accelerated	filer,"	"smaller	reporting	company"	and	"emerging	growth	company"	in	Rule	12b-2	of	the Exchange	Act.

Large	accelerated	filer x

Non-accelerated	filer

Accelerated	filer

Smaller	reporting	company ¨

Emerging	growth	company ¨

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

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

As	of	June	29,	2018,	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	$9.7	billion.

# Documents	Incorporated	by	Reference

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

# TABLE	OF	CONTENTS

# PART	I

| PART	I |  |  |
| :--- | :--- | :--- |
| Item\t1. | Business | 7 |
| Item\t1A. | Risk\tFactors | 24 |
| Item\t1B. | Unresolved\tStaff\tComments | 33 |
| Item\t2. | Properties | 33 |
| Item\t3. | Legal\tProceedings | 34 |
| Item\t4. | Mine\tSafety\tDisclosures | 34 |
| PART\tII |  |  |
| Item\t5. | Market\tfor\tRegistrant's\tCommon\tEquity,\tRelated\tStockholder\tMatters\tand\tIssuer\tPurchases\tof\tEquity\tSecurities | 35 |
| Item\t6. | Selected\tFinancial\tData | 36 |
| Item\t7. | Management's\tDiscussion\tand\tAnalysis\tof\tFinancial\tCondition\tand\tResults\tof\tOperations | 37 |
| Item\t7A. | Quantitative\tand\tQualitative\tDisclosures\tabout\tMarket\tRisk | 48 |
| Item\t8. | Financial\tStatements\tand\tSupplementary\tData | 49 |
| Item\t9. | Changes\tIn\tand\tDisagreements\tWith\tAccountants\ton\tAccounting\tand\tFinancial\tDisclosure | 49 |
| Item\t9A. | Controls\tand\tProcedures | 50 |
| Item\t9B. | Other\tInformation | 50 |
| PART\tIII |  |  |
| Item\t10. | Directors,\tExecutive\tOfficers\tand\tCorporate\tGovernance | 51 |
| Item\t11. | Executive\tCompensation | 51 |
| Item\t12. | Security\tOwnership\tof\tCertain\tBeneficial\tOwners\tand\tManagement\tand\tRelated\tStockholder\tMatters | 51 |
| Item\t13. | Certain\tRelationships\tand\tRelated\tTransactions,\tand\tDirector\tIndependence | 51 |
| Item\t14. | Principal\tAccounting\tFees\tand\tServices | 51 |
| PART\tIV |  |  |
| Item\t15. | Exhibits,\tFinancial\tStatement\tSchedules | 52 |
| Item\t16. | Form\t10-K\tSummary | 59 |
| Signatures |  | 60 |

# Terms	Used	in	this	Annual	Report

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

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

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

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

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

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

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

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

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

·	Adjusted	Net	Revenue.	Net	Revenue	adjusted	for	supplemental	adjustments.

·	Adjusted	Net	Yield.	Net	Yield	adjusted	for	supplemental	adjustments.

·	Allura	Class	Ships.		Oceania	Cruises'	two	ships	on	order.

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

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

·	Breakaway	Class	Ships.	Norwegian	Breakaway	and	Norwegian	Getaway.

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

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

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

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

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

# ·	EBITDA.	Earnings	before	interest,	taxes,	and	depreciation	and	amortization.

# ·	EPS.	Earnings	per	share.

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

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

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

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

·	Gross	Yield.	Total	revenue	per	Capacity	Day.

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

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

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

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

·	Net	Yield.	Net	Revenue	per	Capacity	Day.

·	O-Class	Ships.	Oceania	Cruises'	Marina	and	Riviera.

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

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

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

·	R-Class	Ships.	Oceania	Cruises'	Regatta,	Insignia,	Nautica,	and	Sirena.

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

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

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

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

# Cautionary	Statement	Concerning	Forward-Looking	Statements

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

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

· adverse	incidents	involving	cruise	ships;

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

· the	spread	of	epidemics	and	viral	outbreaks;

· breaches	in	data	security	or	other	disturbances	to	our	information	technology	and	other	networks;

· the	risks	and	increased	costs	associated	with	operating	internationally;

· changes	in	fuel	prices	and/or	other	cruise	operating	costs;

· fluctuations	in	foreign	currency	exchange	rates;

· our	expansion	into	and	investments	in	new	markets;

· overcapacity	in	key	markets	or	globally;

· the	unavailability	of	attractive	port	destinations;

· our	inability	to	obtain	adequate	insurance	coverage;

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

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

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

· our	inability	to	recruit	or	retain	qualified	personnel	or	the	loss	of	key	personnel;

· delays	in	our	shipbuilding	program	and	ship	repairs,	maintenance	and	refurbishments;

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

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

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

· pending	or	threatened	litigation,	investigations	and	enforcement	actions;

· our	ability	to	keep	pace	with	developments	in	technology;

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

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

· other	factors	set	forth	under	"Risk	Factors."

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

# Item	1.	Business

# History	and	Development	of	the	Company

Norwegian	commenced	operations	from	Miami	in	1966,	launching	the	modern	cruise	industry	by	offering	weekly	departures	from	Miami	to	the	Caribbean.	In	February 2011,	NCLH,	a	Bermuda	limited	company,	was	formed	with	the	issuance	to	the	Sponsors	of,	in	aggregate,	10,000	ordinary	shares,	with	a	par	value	of	$.001	per	share.	In January	2013,	NCLH	completed	its	IPO	and	the	ordinary	shares	of	NCLC,	which	were	owned	entirely	by	the	Sponsors,	were	exchanged	for	the	ordinary	shares	of NCLH,	and	NCLH	became	the	owner	of	100%	of	the	ordinary	shares	and	parent	company	of	NCLC	(the	"Corporate	Reorganization").	At	the	same	time,	NCLH contributed	$460.0	million	to	NCLC	and	the	historical	financial	statements	of	NCLC	became	those	of	NCLH.	The	Corporate	Reorganization	was	affected	solely	for	the purpose	of	reorganizing	our	corporate	structure.

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

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.

# Additional	Information

NCLH	is	a	Bermuda	exempted	company	formed	as	a	holding	company	in	2011,	with	predecessors	dating	from	1966.	Our	registered	offices	are	located	at	Walkers Corporate	(Bermuda)	Limited,	Park	Place,	3rd	Floor,	55	Par-la-Ville	Road,	Hamilton	HM	11,	Bermuda.	Our	principal	executive	offices	are	located	at	7665	Corporate Center	Drive,	Miami,	Florida	33126.	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.	Daniel	S.	Farkas, the	Company's	Executive	Vice	President,	General	Counsel	and	Assistant	Secretary,	is	our	agent	for	service	of	process	at	our	principal	executive	offices.

# Our	Company

# Business	Overview

We	are	a	leading	global	cruise	company	which	operates	the	Norwegian	Cruise	Line,	Oceania	Cruises	and	Regent	Seven	Seas	Cruises	brands.	As	of	December	31,	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.	We	have	two	Explorer	Class	Ships,	Seven	Seas	Splendor	and	one	additional	ship,	on	order	for	delivery	in the	winter	of	2020	and	fall	of	2023,	respectively.	We	have	two	Allura	Class	Ships	on	order	for	delivery	in	the	winter	of	2022	and	spring	of	2025.	Project	Leonardo	will introduce	an	additional	six	ships	with	expected	delivery	dates	from	2022	through	2027.	These	additions	to	our	fleet	will	increase	our	total	Berths	to	approximately 82,000.

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

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

# Our	Fleet

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

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

(2) Norwegian	Encore	is	scheduled	for	delivery	in	the	fall	of	2019.

(3) Seven	Seas	Splendor	is	scheduled	for	delivery	in	the	winter	of	2020.

# Our	Competitive	Strengths

We	believe	that	the	following	business	strengths	will	enable	us	to	execute	our	strategy:

# Rich	Stateroom	Mix

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

The	spacious	and	elegant	accommodations	on	Oceania	Cruises'	six	award-winning	ships,	the	684-Berth	Regatta,	Insignia,	Sirena	and	Nautica,	and	the	1,250-Berth Marina	and	Riviera,	range	from	143-square	foot	inside	staterooms	to	opulent	2,030-square	foot	owner	suites.	The	Regent	fleet	is	comprised	of	four	ships	—	Seven	Seas Voyager,	Seven	Seas	Mariner	and	Seven	Seas	Explorer	feature	all-suite,	all-balcony	accommodations	and	a	majority	of	the	accommodations	on	Seven	Seas	Navigator include	balconies.

# High-Quality	Service

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

# Diverse	Selection	of	Premium	Itineraries

We	have	expanded	our	already	broad	range	of	premium	itineraries.	Our	fleet	has	a	worldwide	deployment,	offering	a	few	days	to	180-day	itineraries,	including destinations	in	Scandinavia,	Russia,	the	Mediterranean,	the	Greek	Isles,	Alaska,	Canada	and	New	England,	Asia,	Tahiti	and	the	South	Pacific,	Australia	and	New Zealand,	Africa,	India,	South	America,	the	Panama	Canal,	and	the	Caribbean.	We	introduced	a	new	destination,	Harvest	Caye,	in	November	2016.	This	destination	in Southern	Belize	features	Belize's	only	cruise	ship	pier,	expansive	seven-acre	white	sand	beach,	15,000	sq.	ft.	pool	with	swim	up	bar,	multiple	dining	options	and	a	nature center	with	wildlife	experiences	plus	adventure	tours.

# Strong	Cash	Flow

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

# Highly	Experienced	Management	Team

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

# Our	Business	Strategies

# Driving	Demand

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

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

· creating	diverse	and	unique	itineraries	in	new	and	existing	markets	for	our	current	and	upcoming	ships;

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

· expanding	internationally.

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

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

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

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

# Leveraging	Scale	to	Suppress	Costs

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

# Enhanced	Product	Offerings	and	Guest	Experience

Norwegian's	ships	offer	up	to	28	dining	options,	a	diverse	range	of	accommodations	and	what	we	believe	is	the	widest	array	of	entertainment	at	sea.	Oceania	Cruises' award-winning	onboard	dining,	with	multiple	open	seating	dining	venues,	is	a	central	highlight	of	its	cruise	experience.	Regent's	all-inclusive	offering	includes	air transportation,	shore	excursions,	pre-cruise	hotel	stays	(for	concierge	level	and	above),	specialty	restaurants,	premium	spirits	and	fine	wines,	gratuities,	wi-fi	and	other amenities.

# Maximize	Revenue

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

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

Promotional	Strategy.	With	our	Norwegian	brand,	we	utilize	a	more	inclusive	product	offering	on	certain	sailings	and	in	certain	cabin	selections	which provides	guests	a	choice	of	multiple	amenities.

Casino	Player	Strategy.	We	have	non-exclusive	arrangements	with	over	100	casino	partners	worldwide	whereby	loyal	gaming	guests	are	offered	cruise	reward certificates	redeemable	for	cruises.	Through	property	sponsored	events	and	joint	marketing	programs,	we	have	the	opportunity	to	market	cruises	to	these	guests. These	arrangements	with	casino	partners	have	the	dual	benefit	of	filling	open	inventory	and	reaching	guests	expected	to	generate	above	average	onboard revenue	through	the	casino	and	other	onboard	spending.

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

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

# Measured	Fleet	Expansion

We	have	Norwegian	Encore	on	order	for	delivery	in	the	fall	of	2019.	This	ship	will	be	the	largest	in	our	fleet,	reaching	approximately	168,000	Gross	Tons.	With approximately	4,000	Berths,	she	will	be	similar	in	design	to	Norwegian	Bliss,	which	was	delivered	in	April	2018,	and	will	include	additional	innovative	features.	Project Leonardo	consists	of	six	ships	on	order	for	the	Norwegian	brand	with	expected	delivery	dates	through	2027,	subject	to	certain	conditions.	Each	of	the	six	Project Leonardo	ships	are	approximately	140,000	Gross	Tons	and	3,300	Berths.	For	the	Regent	brand,	we	have	orders	for	two	Explorer	Class	Ships,	Seven	Seas	Splendor	and an	additional	ship,	to	be	delivered	in	2020	and	2023,	respectively.	Each	of	the	Explorer	Class	Ships	will	be	approximately	55,000	Gross	Tons	and	750	Berths.	For	the Oceania	Cruises	brand,	we	have	orders	for	two	Allura	Class	Ships	to	be	delivered	in	2022	and	2025.	Each	of	the	Allura	Class	Ships	will	be	approximately	67,000	Gross Tons	and	1,200	Berths.

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

# Expand	and	Strengthen	Our	Product	Distribution	Channels

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

Retail/Travel	Agent.	The	retail/travel	agent	channel	represents	the	majority	of	our	ticket	sales.	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.	We	have	made	substantial	investments	with	improvements	in	booking	technologies,	transparent	pricing	strategies, effective	marketing	tools,	improved	communication	and	cooperative	marketing	initiatives.	We	have	expanded	sales	teams	who	work	closely	with	our	travel agency	partners	on	maximizing	their	marketing	and	sales	effectiveness	across	all	three	of	our	brands.	Our	focused	account	management	is	designed	to	create solutions	catered	to	the	individual	retailer	through	product	and	sales	training.	This	education	creates	a	deeper	understanding	of	all	our	offerings.

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.

For	information	regarding	risks	associated	with	our	international	operations,	see	Part	I	Item	1A-Risk	Factors	in	this	annual	report	on	Form	10-K,	including	the risk	factor	titled	"Conducting	business	internationally	may	result	in	increased	costs	and	risks."

Meetings,	Incentives	and	Charters.	This	channel	focuses	on	full	ship	charters	as	well	as	corporate	meetings	and	incentive	travel.	These	sales	often	have	very long	lead	times	and	can	fill	a	significant	portion	of	the	ship's	capacity,	or	even	an	entire	sailing,	in	one	transaction.	The	acquisition	of	Sixthman	in	2012,	a company	specializing	in	developing	and	delivering	music-oriented	charters,	opened	up	a	new	market	for	travel	partners	enabling	travel	partners	to	sell	high- quality	music	experiences	at	sea	to	guests.

# Itineraries

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

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

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

# Passenger	Ticket	Revenue

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

# Onboard	and	Other	Revenue

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

# Revenue	Management	Practices

Our	revenue	management	function	performs	extensive	analyses	in	order	to	determine	booking	history	and	trends	by	sailing,	stateroom	category,	travel	partner,	market segment,	itinerary	and	distribution	channel	in	order	to	determine	cruise	ticket	pricing.	We	concentrate	on	improving	early	booking	occupancy	rates	to	drive	higher	Net Yields.	We	execute	targeted	and	high-frequency	marketing	campaigns	that	communicate	a	message	of	a	value-packed	cruise	offering	in	both	North	American	and	select international	markets.	To	increase	the	effectiveness	of	these	targeted	marketing	programs,	we	emphasize	communication	to	keep	the	travel	agents	engaged	and	informed and	utilize	call	centers	focusing	on	both	inbound	calls	and	outbound	calls	to	high	potential	targeted	customers.	This	marketing	strategy	assists	in	maximizing	the	revenue potential	from	each	customer	contact	generated	by	various	marketing	campaigns.	We	believe	these	strategies	and	other	initiatives	executed	by	our	distribution	channels will	drive	sustainable	growth	in	the	number	of	guests	carried	and	in	Net	Yields	achieved.

# Seasonality

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

# Competition

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

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

# Marketing	Strategy

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

Building	customer	loyalty	among	our	past	guests	is	an	important	element	of	our	marketing	strategy.	We	believe	that	attending	to	the	needs	and	motivations	of	our	past guests	creates	a	cost-effective	means	of	attracting	business,	particularly	to	our	new	ships	and	itineraries,	because	past	guests	are	familiar	with	our	brands,	products	and services	and	often	return	to	cruise	with	us.	We	have	shared	customer	databases	across	our	brands	to	further	enhance	our	communications	with	our	past	guests	who receive	newsletters	and	mailings	with	informative	destination	and	product	information	and	promotional	amenities.	Continued	investments	in	our	websites	is	also	key	not only	to	driving	interest	and	bookings,	but	also	to	ensuring	the	optimal	pre-cruise	planning	experience	offering	guests	the	ability	to	shop,	reserve	and	purchase	a	breadth of	onboard	products	and	services.	We	have	a	strong	communications	stream	that	provides	customized	pre-cruise	information	to	help	guests	maximize	their	cruise experience	as	well	as	a	series	of	communications	to	welcome	them	home	and	ultimately	engage	them	in	booking	another	cruise.

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

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

# Ship	Operations	and	Cruise	Infrastructure

# Ship	Maintenance	and	Logistics

Sophisticated	and	efficient	maintenance	and	operations	systems	support	the	technical	superiority	and	modern	look	of	our	fleet.	In	addition	to	routine	repairs	and maintenance	performed	on	an	ongoing	basis	and	in	accordance	with	applicable	requirements,	each	of	our	ships	is	generally	taken	out	of	service,	approximately	every	24 to	60	months,	for	a	period	of	one	or	more	weeks	for	scheduled	maintenance	work,	repairs	and	improvements	performed	in	Dry-dock.	Dry-dock	interval	is	a	statutory requirement	controlled	under	IMO	requirements	reflected	in	chapters	of	the	International	Convention	of	the	Safety	of	Life	at	Seas	("SOLAS")	and	to	some	extent	the International	Load	Lines	Convention.	Under	these	regulations,	it	is	required	that	a	passenger	ship	Dry-dock	once	in	five	years	(depending	on	age	of	vessel),	twice	in	5 years	(depending	on	flag	state	and	age	of	vessel)	and	the	maximum	interval	between	each	Dry-dock	cannot	exceed	3	years	(depending	age	of	vessel	and	flag	state). However,	most	of	our	international	ships	qualify	under	a	special	exemption	provided	by	the	Bahamas	and/or	Marshall	Islands	(flag	state),	as	applicable,	after	meeting certain	criteria	set	forth	by	the	ship's	flag	state	to	Dry-dock	once	every	5	years.	To	the	extent	practical,	each	ship's	crew,	catering	and	hotel	staff	remain	with	the	ship during	the	Dry-dock	period	and	assist	in	performing	repair	and	maintenance	work.	Accordingly,	Dry-dock	work	is	typically	performed	during	non-peak	demand	periods to	minimize	the	adverse	effect	on	revenue	that	results	from	ships	being	out	of	service.	Dry-docks	are	typically	scheduled	in	spring	or	autumn	and	depend	on	shipyard availability.	We	take	this	opportunity	to	upgrade	the	vessels	in	all	areas	of	both	guest-facing	services	and	innovative	compliance	technology.

# Suppliers

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

# Crew	and	Staff

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

We	place	the	utmost	importance	on	the	safety	of	our	guests	and	crew.	We	operate	all	of	our	vessels	to	meet	and	exceed	the	requirements	of	SOLAS	and	International Management	Code	for	the	Safe	Operation	of	Ships	and	for	Pollution	Prevention	("ISM	Code"),	the	international	safety	standards	which	govern	the	cruise	industry.	Every crew	member	is	well	trained	in	the	Company's	stringent	safety	protocols,	participating	in	regular	safety	trainings,	exercises	and	drills	onboard	every	one	of	our	ships.

Our	captains	are	experienced	seafarers.	We	further	ensure	that	our	captains	and	watch	standing	officers	regularly	undergo	rigorous	training	on	navigation	and	bridge operations.	To	assist	our	captains	and	officers	while	at	sea,	we	have	extensive	navigation	protocols	in	place.	Our	bridge	operations	are	based	on	robust	navigational procedures	and	risk	analysis.	Our	bridge	teams	follow	pre-set	voyage	plans	which	are	thoroughly	reviewed	and	discussed	by	the	captain	and	bridge	team	prior	to	port departures	and	arrivals.	In	addition,	all	of	our	ships	employ	the	latest	state-of-the-art	navigational	equipment	and	technology	to	ensure	that	our	bridge	teams	have	the most	accurate	data	regarding	the	planned	itinerary.

Prior	to	every	cruise	setting	sail	or	upon	departure,	we	hold	a	mandatory	safety	drill	for	all	guests	during	which	important	safety	information	is	reviewed	and demonstrated.	We	also	show	an	extensive	safety	video	which	runs	continuously	on	the	stateroom	televisions.	Our	fleet	is	equipped	with	modern	navigational	control	and fire	prevention	and	control	systems.	In	recent	years,	our	ships	have	continuously	been	upgraded	and	include	internal	and	external	regulatory	audits.

We	have	developed	Safety	Management	Systems	("SMS"),	which	establish	policies,	procedures,	training,	qualification,	quality,	compliance,	audit	and	self-improvement standards	for	all	employees,	both	shipboard	and	shoreside.	SMS	also	provides	real-time	reports	and	information	to	support	the	fleet	and	risk	management	decisions. Through	these	systems,	our	senior	managers,	as	well	as	ship	management,	can	focus	on	consistent,	high	quality	operation	of	the	fleet.	Our	SMS	are	approved	and	audited regularly	by	our	classification	society,	Lloyds	Register,	and	they	also	undergo	regular	internal	audits	as	well	as	annual/semiannual	inspections	by	the	U.S.	Coast	Guard, flag	state	and	other	port	and	state	authorities.	We	screen	and	train	our	crew	to	ensure	crew	familiarity	and	proficiency	with	the	safety	equipment	onboard.	Various	safety measures	have	been	implemented	on	all	of	our	ships	and	additional	personnel	have	been	appointed	in	our	ship	operations	departments.

# Insurance

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

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

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

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

· Insurance	for	our	shoreside	property,	cybersecurity	and	general	liability	risks.

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

# Trademarks	and	Tradenames

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

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

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

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

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

# Regulatory	Issues

# Registration	of	Our	Ships

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

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

# Environmental	Protection

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

With	regard	to	air	quality	requirements,	the	International	Maritime	Organization's	("IMO")	convention	entitled	Prevention	of	Pollution	from	Ships	("MARPOL")	has set	a	global	limit	on	fuel	sulfur	content	of	0.5%	(reduced	from	the	current	3.5%	global	limit)	beginning	January	2020.	Various	compliance	methods,	such	as	the	use	of alternative	fuels,	or	exhaust	gas	cleaning	systems	that	reduce	an	equivalent	amount	of	sulfur	emissions,	may	be	utilized.

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

Ballast	water	discharges	are	governed	by	the	MARPOL	Ballast	Water	Management	Convention,	which	came	into	force	in	2017	("The	Convention"),	and	which	governs the	discharge	of	ballast	water	from	ships.	Ballast	water,	which	is	seawater	held	onboard	ships	and	used	for	stabilization,	may	contain	a	variety	of	marine	species.	The Convention	is	designed	to	regulate	the	treatment	and	discharge	of	ballast	water	to	avoid	the	transfer	of	marine	species	to	new,	different,	or	potentially	unsuitable environments.	Applicable	vessels	sailing	in	specific	itineraries	have	also	been	upgraded	with	ballast	water	treatment	systems	to	further	prevent	the	spread	of	invasive species.

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

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

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

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

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

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

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

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

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

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

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

# Permits	for	Glacier	Bay,	Alaska

In	connection	with	certain	Alaska	cruise	operations,	we	rely	on	concession	permits	from	the	U.S.	National	Park	Service	to	operate	our	ships	in	Glacier	Bay	National	Park and	Preserve.	We	currently	hold	a	concession	permit	allowing	for	22	calls	per	summer	cruising	season	through	September	30,	2019.	Our	renewal	application	for	Glacier Bay	National	Park	and	Preserve	was	submitted	in	2018.	However,	there	can	be	no	assurance	that	such	permit	will	be	renewed	when	necessary	or	that	regulations	relating to	the	renewal	of	such	permit	will	remain	unchanged	in	the	future.

# Passenger	Well-Being

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

# Security	and	Safety

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

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

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

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

In	addition	to	the	requirements	of	the	ISPS	Code,	the	U.S.	Congress	enacted	the	Maritime	Transportation	Security	Act	of	2002	("MTSA")	which	implements	a	number of	security	measures	at	ports	in	the	U.S.	including	measures	that	apply	to	ships	registered	outside	the	U.S.	while	docking	at	ports	in	the	U.S.	The	U.S.	Coast	Guard	has published	MTSA	regulations	that	require	a	security	plan	for	every	ship	entering	the	territorial	waters	of	the	U.S.,	provide	for	identification	requirements	for	ships entering	such	waters	and	establish	various	procedures	for	the	identification	of	crew	members	on	such	ships.	The	Transportation	Workers	Identification	Credential	is	a U.S.	requirement	for	accessibility	into	and	onto	U.S.	ports	and	U.S.-flagged	ships.

# Maritime-Labor

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

# Financial	Requirements

The	Federal	Maritime	Commission	("FMC")	requires	evidence	of	financial	responsibility	for	those	offering	transportation	on	passenger	ships	operating	out	of	U.S.	ports to	indemnify	passengers	in	the	event	of	non-performance	of	the	transportation.	Accordingly,	each	of	our	three	brands	are	required	to	maintain	a	$30.0	million	third-party performance	guarantee	in	respect	of	liabilities	for	non-performance	of	transportation	and	other	obligations	to	passengers.	The	guarantee	requirements	are	subject	to additional	consumer	price	index-based	adjustments.	Also,	our	brands	have	a	legal	requirement	to	maintain	a	security	guarantee	based	on	cruise	business	originated	from the	U.K.	As	of	December	31,	2018,	approximately	British	Pound	Sterling	30.5	million	was	in	place	as	a	security	guarantee.	We	also	are	required	to	establish	financial responsibility	by	other	jurisdictions	to	meet	liability	in	the	event	of	non-performance	of	our	obligations	to	passengers	from	those	jurisdictions.

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

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

# Taxation

# U.S.	Income	Taxation

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

# Exemption	of	International	Shipping	Income	under	Section	883	of	the	Code

Under	Section	883	of	the	Code	("Section	883")	and	the	related	regulations,	a	foreign	corporation	will	be	exempt	from	U.S.	federal	income	taxation	on	its	U.S.-source income	derived	from	the	international	operation	of	ships	("shipping	income")	if:	(a)	it	is	organized	in	a	qualified	foreign	country,	which	is	one	that	grants	an	"equivalent exemption"	from	tax	to	corporations	organized	in	the	U.S.	in	respect	of	each	category	of	shipping	income	for	which	exemption	is	being	claimed	under	Section	883;	and (b)	either:	(1)	more	than	50%	of	the	value	of	its	stock	is	beneficially	owned,	directly	or	indirectly,	by	qualified	shareholders,	which	includes	individuals	who	are "residents"	of	a	qualified	foreign	country;	(2)	one	or	more	classes	of	its	stock	representing,	in	the	aggregate,	more	than	50%	of	the	combined	voting	power	and	value	of all	classes	of	its	stock	are	"primarily	and	regularly	traded	on	one	or	more	established	securities	markets"	in	a	qualified	foreign	country	or	in	the	U.S.	(the	"publicly	traded test");	or	(3)	it	is	a	"controlled	foreign	corporation"	(a	"CFC")	for	more	than	half	of	the	taxable	year	and	more	than	50%	of	its	stock	is	owned	by	qualified	U.S.	persons for	more	than	half	of	the	taxable	year	(the	"CFC	test").	In	addition,	U.S.	Treasury	Regulations	require	a	foreign	corporation	and	certain	of	its	direct	and	indirect shareholders	to	satisfy	detailed	substantiation	and	reporting	requirements.

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

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

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

For	U.S.	federal	income	tax	purposes,	Regent	and	its	non-U.S.	subsidiaries	are	disregarded	as	entities	separate	from	their	immediate	foreign	parent	(PCH)	and	Oceania Cruises	was	treated	as	a	corporation	until	December	31,	2017,	and	a	disregarded	entity	as	of	January	1,	2018.	For	2018,	2017	and	2016,	both	Regent	and	Oceania Cruises	relied	on	NCLH's	ability	to	meet	the	requirements	necessary	to	qualify	for	the	benefits	of	Section	883	as	discussed	above.

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

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

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

If	we	do	not	qualify	for	exemption	under	Section	883,	or	if	the	provision	was	repealed,	then	any	U.S.-sourced	shipping	income	or	any	other	income	that	is	considered	to be	effectively	connected	income	would	be	subject	to	U.S.	federal	corporate	income	taxation	on	a	net	basis	(generally	at	a	35%	rate,	21%	rate	effective	January	1,	2018) and	state	and	local	taxes,	and	our	effectively	connected	earnings	and	profits	may	also	be	subject	to	an	additional	branch	profits	tax	of	30%,	unless	a	lower	treaty	rate applies	(the	"Net	Tax	Regime").	Our	U.S.	source	shipping	income	is	considered	effectively	connected	income	if	we	have,	or	are	considered	to	have,	a	fixed	place	of business	in	the	U.S.	involved	in	the	earning	of	U.S.	source	shipping	income,	and	substantially	all	of	our	U.S.	source	shipping	income	is	attributable	to	regularly scheduled	transportation,	such	as	the	operation	of	a	vessel	that	follows	a	published	schedule	with	repeated	sailings	at	regular	intervals	between	the	same	points	for voyages	that	begin	or	end	in	the	U.S.

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

# Other	United	States	Taxation

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

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

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

# U.K.	Income	Taxation

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

# U.S.	Taxation	of	Gain	on	Sale	of	Vessels

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

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

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

# Changes	in	Tax	Laws

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

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

# Employees

As	of	December	31,	2018,	we	employed	approximately	3,200	employees	worldwide	in	our	shoreside	operations	and	approximately	30,000	shipboard	employees.	Regent and	Oceania	Cruises'	ships	also	utilize	a	third	party	to	provide	additional	hotel	and	restaurant	employees	onboard.	We	refer	you	to	"Risk	Factors—Amendments	to	the collective	bargaining	agreements	for	crew	members	of	our	fleet	and	other	employee	relation	issues	may	materially	adversely	affect	our	financial	results"	for	more information	regarding	our	relationships	with	union	employees	and	our	collective	bargaining	agreements	that	are	currently	in	place.

# Ports	and	Facilities

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

· an	agreement	with	the	Government	of	Bermuda	whereby	we	are	permitted	weekly	calls	in	Bermuda	through	2022	from	Boston	and	New	York.

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

· a	concession	permit	with	the	U.S.	National	Park	Service	whereby	our	ships	are	permitted	to	call	on	Glacier	Bay	during	each	summer	cruise	season	through September	30,	2019.

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

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

· an	agreement	with	the	Port	of	Seattle	for	a	15-year	lease	through	October	2030	with	an	option	to	extend	the	agreement	for	an	additional	five	years	where	we have	committed	to	a	capital	investment	to	develop	the	port	for	approximately	$30	million	and	the	port	has	committed	to	reimburse	$15	million.

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

# Available	Information

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

We	also	maintain	an	Internet	site	at	http://www.nclhltdinvestor.com.	We	will,	as	soon	as	reasonably	practicable	after	we	electronically	file	or	furnish	our	annual	report on	Form	10-K,	quarterly	reports	on	Form	10-Q,	current	reports	on	Form	8-K,	proxy	statements	and	amendments	to	those	reports,	if	applicable,	make	available	such reports	free	of	charge	on	our	website.	Our	website	and	the	information	contained	therein	or	connected	thereto	are	not	incorporated	into	this	annual	report	on Form	10-K.

# Executive	Officers

The	following	table	sets	forth	certain	information	regarding	NCLH's	executive	officers	as	of	February	18,	2019.

| Name | Age | Position |
| :--- | :--- | :--- |
| Frank\tJ.\tDel\tRio | 64 | \t Director,\tPresident\tand\tChief\tExecutive\tOfficer |
| Mark\tA.\tKempa | 47 | \t Executive\tVice\tPresident\tand\tChief\tFinancial\tOfficer |
| Robert\tBinder | 54 | \t Vice\tChairman\tOceania\tCruises\tand\tRegent,\tPresident\tand\tChief\tExecutive\tOfficer,\tOceania\tCruises\tbrand |
| Jason\tM.\tMontague | 45 | President\tand\tChief\tExecutive\tOfficer,\tRegent\tbrand |
| Harry\tSommer | 51 | President\tInternational |
| Andrew\tStuart | 55 | President\tand\tChief\tExecutive\tOfficer,\tNorwegian\tbrand |
| Daniel\tS.\tFarkas | 50 | \t Executive\tVice\tPresident,\tGeneral\tCounsel\tand\tAssistant\tSecretary |
| T.\tRobin\tLindsay | 61 | \t Executive\tVice\tPresident,\tVessel\tOperations |
| Faye\tL.\tAshby | 47 | Senior\tVice\tPresident\tand\tChief\tAccounting\tOfficer |

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

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

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

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

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

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

Andrew	Stuart	has	served	as	the	President	and	Chief	Executive	Officer	for	the	Norwegian	brand	since	September	2016	and	as	President	and	Chief	Operating	Officer for	the	Norwegian	brand	from	March	2015	until	September	2016.	He	was	previously	Executive	Vice	President,	Global	Sales	and	Passenger	Services	from	November 2008	until	March	2015.	From	April	2008	through	September	2008,	he	held	the	position	of	Executive	Vice	President	and	Chief	Product	Officer.	From	September	2003 through	March	2008,	he	served	as	Executive	Vice	President	of	Marketing,	Sales	and	Passenger	Services.	Prior	to	that,	he	was	the	Company's	Senior	Vice	President	of Passenger	Services	as	well	as	Vice	President	of	Sales	Planning.	He	joined	the	Company	in	August	1988	in	our	London	office	holding	various	Sales	and	Marketing positions	before	relocating	to	our	headquarters	in	Miami.	Mr.	Stuart	earned	a	B.S.	in	Catering	Administration	from	Bournemouth	University,	United	Kingdom.

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

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

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

# Item	1A.	Risk	Factors

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

# Risks	Related	to	the	Company

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

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

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

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

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

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

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

Public	perception	about	the	safety	of	travel	and	adverse	publicity	related	to	passenger	or	crew	illness,	such	as	incidents	of	viral	illnesses,	stomach	flu	or	other	contagious diseases,	may	impact	demand	for	cruises	and	result	in	cruise	cancellations	and	employee	absenteeism.	If	any	wide-ranging	health	scare	should	occur,	our	business, financial	condition	and	results	of	operations	would	likely	be	adversely	affected.

# Breaches	in	data	security	or	other	disturbances	to	our	information	technology	and	other	networks	could	impair	our	operations	and	have	a	material	adverse	impact on	our	business,	financial	condition	and	results	of	operations.

We	have	made	significant	investments	in	our	information	technology	systems	to	optimize	booking	procedures,	enhance	the	marketing	power	of	our	websites	and	control costs.	The	integrity	and	reliability	of	these	systems	and	networks	are	crucial	to	our	business	operations	and	disruptions	to	these	systems	or	networks	could	impair	our operations	and	have	an	adverse	impact	on	our	financial	results	and	negatively	affect	our	reputation	and	customer	demand.	In	addition,	certain	networks	are	dependent	on third-party	technologies,	systems	and	service	providers	for	which	there	is	no	certainty	of	uninterrupted	availability.	Among	other	things,	actual	or	threatened	natural disasters	(e.g.,	hurricanes,	earthquakes,	tornadoes,	fires,	floods	or	similar	events),	information	systems	failures,	computer	viruses,	denial	of	service	attacks	and	other cyber-attacks	may	cause	disruptions	to	our	information	technology,	telecommunications	and	other	networks.	While	we	have	and	continue	to	invest	in	business continuity,	disaster	recovery,	data	restoration	plans	and	data	and	information	technology	security,	we	cannot	completely	insulate	ourselves	from	disruptions	that	could result	in	adverse	effects	on	our	operations	and	financial	results.	We	carry	limited	business	interruption	insurance	for	certain	shoreside	operations,	subject	to	limitations, exclusions	and	deductibles.

As	part	of	our	ordinary	business	operations,	we	and	certain	of	our	third-party	service	providers	collect,	process,	transmit	and	store	a	large	volume	of	personally identifiable	information,	including	email	addresses,	home	addresses	and	financial	data	such	as	credit	card	information.	The	security	of	the	systems	and	networks	where we	and	our	service	providers	store	this	data	is	a	critical	element	of	our	business.	Despite	our	implementation	of	security	measures	to	protect	against	security	breaches, unauthorized	access	to	our	data	and	other	cyber-attacks	or	incidents,	our	systems	and	networks	are	vulnerable	to	computer	viruses,	malware,	worms,	hackers	and	other security	issues,	including	physical	and	electronic	break-ins,	router	disruption,	sabotage	or	espionage,	disruptions	from	unauthorized	access	and	tampering	(including through	social	engineering	such	as	phishing	attacks),	impersonation	of	authorized	users	and	coordinated	denial-of-service	attacks.	For	example,	in	October	2018,	we discovered	limited	instances	of	unauthorized	access	to	certain	employee	e-mail	communications,	some	of	which	contained	proprietary	business	and	personally identifiable	information.	We	have	implemented	additional	safeguards,	and	we	do	not	believe	that	we	experienced	any	material	losses	related	to	this	incident;	however, there	can	be	no	assurance	that	this	or	any	other	breach	or	incident	will	not	have	a	material	impact	on	our	operations	and	financial	results	in	the	future.	In	addition,	we may	not	be	in	a	position	to	promptly	address	security	breaches,	unauthorized	access	or	other	cyber-attacks	or	incidents	or	to	implement	adequate	preventative	measures	if we	are	unable	to	immediately	detect	such	incidents.	Our	failure	to	successfully	prevent,	mitigate	or	timely	respond	to	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	could	impair	our	ability	to	conduct business	and	damage	our	reputation.

We	are	also	subject	to	laws	relating	to	privacy	of	personal	data,	including	European	Union	data	privacy	regulations.	The	compromise	of	our	information	systems resulting	in	the	loss,	disclosure,	misappropriation	of	or	access	to	the	personally	identifiable	information	of	our	guests,	prospective	guests	or	employees	could	result	in governmental	investigation,	civil	liability	or	regulatory	penalties	under	laws	protecting	the	privacy	of	personal	information,	any	or	all	of	which	could	disrupt	our operations	and	materially	adversely	affect	our	business.	Additionally,	any	material	failure	by	us	or	our	service	providers	to	maintain	compliance	with	the	Payment	Card Industry	security	requirements	or	to	rectify	a	data	security	issue	may	result	in	fines	and	restrictions	on	our	ability	to	accept	credit	cards	as	a	form	of	payment.

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

# Conducting	business	internationally	may	result	in	increased	costs	and	risks.

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

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

We	have	operations	in	and	source	passengers	from	the	U.K.	and	other	member	countries	of	the	European	Union.	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.	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,	which	could	make	it	more	difficult	to	source	passengers	from	these	regions.	The	proposed	withdrawal	could	also	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	Union.	These	events	could	have	a	material	adverse	effect	on	our	business,	financial	condition	and	results	of	operations.

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

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

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

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

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

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

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

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

We	continue	to	expand	our	fleet	through	our	newbuild	program	and	expect	to	add	11	additional	ships	to	our	fleet	through	2027.	Our	competitors	have	also	announced similar	expansions	to	their	fleets.	These	increases	in	capacity	in	the	cruise	industry	globally	and	potential	overcapacity	in	certain	key	markets	may	cause	us	to	lower pricing,	which	would	reduce	profitability	and	adversely	affect	our	results	of	operations.	Additionally,	older	ships	in	our	fleet	may	not	be	as	competitive	as	new	ships enter	the	market	and	we	may	not	be	able	to	sell	such	older	ships	at	optimal	prices.

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

We	believe	that	attractive	port	destinations	are	a	major	reason	why	guests	choose	to	go	on	a	particular	cruise	or	on	a	cruise	vacation.	The	availability	of	ports,	including the	specific	port	facility	at	which	our	guests	will	embark	and	disembark,	is	affected	by	a	number	of	factors,	including,	but	not	limited	to,	existing	capacity	constraints, security,	safety	and	environmental	concerns,	adverse	weather	conditions	and	natural	disasters	such	as	hurricanes,	floods,	typhoons	and	earthquakes,	financial	limitations on	port	development,	political	instability,	exclusivity	arrangements	that	ports	may	have	with	our	competitors,	local	governmental	regulations	and	fees,	local	community concerns	about	port	development	and	other	adverse	impacts	on	their	communities	from	additional	tourists	and	sanctions	programs	implemented	by	the	Office	of	Foreign Assets	Control	of	the	United	States	Treasury	Department	or	other	regulatory	bodies.	For	example,	we	had	to	temporarily	change	certain	itineraries	in	the	Caribbean	due to	damage	some	ports	sustained	during	an	active	hurricane	season	in	2017.	There	can	be	no	assurance	that	our	ports	of	call	will	not	be	similarly	affected	in	the	future. 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.	Any limitations	on	the	availability	of	ports	of	call,	including	Cuba,	or	on	the	availability	of	shore	excursions	and	other	service	providers	at	such	ports	could	adversely	affect our	business,	financial	condition	and	results	of	operations.

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

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

# 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.	The	regulatory	framework	for	data	privacy	and	protection	is	uncertain	for	the	foreseeable	future,	and	it	is	possible that	legal	and	regulatory	obligations	may	continue	to	increase	and	may	be	interpreted	and	applied	in	a	manner	that	is	inconsistent	or	possibly	conflicting	from	one jurisdiction	to	another.

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.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

# Delays	in	our	shipbuilding	program	and	ship	repairs,	maintenance	and	refurbishments	could	adversely	affect	our	results	of	operations	and	financial	condition.

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

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

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

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

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

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

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

Currently,	we	are	a	party	to	eight	collective	bargaining	agreements.	Four	of	these	agreements	are	in	effect	through	2020,	two	through	2021	and	two	through	2027.	Any future	amendments	to	such	collective	bargaining	agreements	or	inability	to	satisfactorily	renegotiate	such	agreements	may	increase	our	labor	costs	and	have	a	negative impact	on	our	financial	condition.	In	addition,	although	our	collective	bargaining	agreements	have	a	no-strike	provision,	they	may	not	prevent	a	disruption	in	work	on our	ships	in	the	future.	Any	such	disruptions	in	work	could	have	a	material	adverse	effect	on	our	financial	results.

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

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

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

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

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

# 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.

# Risks	Related	to	the	Regulatory	Environment	in	Which	We	Operate

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

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

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

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

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

# We	are	subject	to	complex	laws	and	regulations,	including	environmental	laws	and	regulations,	which	could	adversely	affect	our	operations	and	any	changes	in	the current	laws	and	regulations	could	lead	to	increased	costs	or	decreased	revenue.

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

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

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

These	issues	are,	and	we	believe	will	continue	to	be,	areas	of	focus	by	the	relevant	authorities	throughout	the	world.	This	could	result	in	the	enactment	of	more	stringent regulation	of	cruise	ships	that	would	subject	us	to	increasing	compliance	costs	in	the	future.	Some	environmental	groups	continue	to	lobby	for	more	extensive	oversight of	cruise	ships	and	have	generated	negative	publicity	about	the	cruise	industry	and	its	environmental	impact.	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.	It	is	possible	that other	states,	countries	or	ports	of	call	that	our	ships	regularly	visit	may	also	decide	to	assess	new	taxes	or	fees	or	change	existing	taxes	or	fees	specifically	applicable	to the	cruise	industry	and	its	employees	and/or	guests,	which	could	increase	our	operating	costs	and/or	could	decrease	the	demand	for	cruises.

# Risks	Related	to	NCLH's	Ordinary	Shares

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

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

# NCLH	does	not	currently	pay	dividends	on	its	ordinary	shares.

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

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

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

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

· a	classified	board	of	directors;

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

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

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

Additionally,	NCLH's	bye-laws	contain	provisions	that	prevent	third	parties	from	acquiring	beneficial	ownership	of	more	than	4.9%	of	its	outstanding	shares	without the	consent	of	NCLH's	Board	of	Directors	and	provide	for	the	lapse	of	rights,	and	sale,	of	any	shares	acquired	in	excess	of	that	limit.	The	effect	of	these	provisions	may preclude	third	parties	from	seeking	to	acquire	a	controlling	interest	in	NCLH	in	transactions	that	shareholders	might	consider	to	be	in	their	best	interests	and	may	prevent them	from	receiving	a	premium	above	market	price	for	their	shares.

# Item	1B.	Unresolved	Staff	Comments

Not	applicable.

# Item	2.	Properties

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

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

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

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

# Item	3.	Legal	Proceedings

On	September	21,	2018,	a	purported	class-action	lawsuit	was	filed	by	Marta	and	Jerry	Phillips	and	others	against	NCL	Corporation	Ltd.	in	the	United	States	District Court	for	the	Southern	District	of	Florida	relating	to	the	marketing	and	sales	of	our	Booksafe	Travel	Protection	Plan.	The	plaintiffs	purport	to	represent	an	alleged	class of	passengers	who	purchased	Booksafe	Travel	Protection	Plans.	The	complaint	alleges	that	the	Company	concealed	that	it	received	proceeds	on	the	sale	of	the	travel insurance	portion	of	the	plan.	The	complaint	seeks	an	unspecified	amount	of	damages,	fees	and	costs.	We	believe	we	have	meritorious	defenses	to	the	claim	and	that	any liability	which	may	arise	as	a	result	of	this	action	will	not	have	a	material	impact	on	our	consolidated	financial	statements.

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

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

# Item	4.	Mine	Safety	Disclosures

None.

# PART	II

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

# Market	Information

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

# Holders

As	of	February	15,	2019,	there	were	245	record	holders	of	NCLH's	ordinary	shares.	Since	certain	of	NCLH's	ordinary	shares	are	held	by	brokers	and	other	institutions on	behalf	of	shareholders,	the	foregoing	number	is	not	representative	of	the	number	of	beneficial	owners.

# Dividends

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

# Purchases	of	Equity	Securities	by	the	Issuer

On	April	17,	2018,	the	Board	of	Directors	of	NCLH	approved	a	three-year	share	repurchase	program	under	which	NCLH	may	purchase	up	to	$1.0	billion	of	its	ordinary shares	(the	"Repurchase	Program").	Pursuant	to	the	Repurchase	Program,	NCLH	may	repurchase	its	ordinary	shares	from	time	to	time,	in	amounts,	at	prices	and	at	such times	as	it	deems	appropriate,	subject	to	market	conditions	and	other	considerations.	Repurchases	under	the	Repurchase	Program	may	take	place	in	the	open	market	or	in privately	negotiated	transactions,	including	structured	and	derivative	transactions	such	as	accelerated	share	repurchase	transactions	and	may	be	made	under	a	Rule	10b5- 1	plan.

Share	repurchase	activity	during	the	three	months	ended	December	31,	2018	was	as	follows:

|  | Total	Number |  | Approximate |
| :--- | :--- | :--- | :--- |
|  | of\tShares |  | Dollar\tValue\tof |
|  | Purchased\tas |  | Shares\tthat\tMay |
|  | Part\tof\ta |  | Yet\tbe |
|  | Publicly |  | Purchased |
|  | Announced | Average | Under\tthe |
|  | Program | Price\tPaid | Program |
| Period | (in\tthousands) | per\tShare | (in\tthousands) |
| October\t1,\t2018\t–\tOctober\t31,\t2018 |  | —\t $— | $800,000 |
| November\t1,\t2018\t–\tNovember\t30,\t2018 | 2,354 | $49.40 | $683,694 |
| December\t1,\t2018\t–\tDecember\t31,\t2018 | 1,683 | $50.50 | $598,694 |
| Total\tfor\tthe\tthree\tmonths\tended\tDecember\t31,\t2018 | 4,037 | $49.86 | $598,694 |

# Stock	Performance	Graph

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

The	following	graph	shows	a	comparison	of	the	cumulative	total	return	for	our	ordinary	shares,	the	Standard	&	Poor's	500	Composite	Stock	Index	and	the	Dow	Jones United	States	Travel	and	Leisure	index.	The	Stock	Performance	Graph	assumes	that	$100	was	invested	at	the	closing	price	of	our	ordinary	shares	on	the	Nasdaq	and	in each	index	on	the	last	trading	day	of	fiscal	2013.	Past	performance	is	not	necessarily	an	indicator	of	future	results.	The	stock	prices	used	were	as	of	the	close	of	business on	the	respective	dates.

# Item	6.	Selected	Financial	Data

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

The	consolidated	financial	statements	as	of	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.

| share	data	and	operating	data) | 2018 | 2017 | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Statement\tof\toperations\tdata: |  |  |  |  |  |
| Total\trevenue | $6,055,126 | $5,396,175 | $4,874,340 | $4,345,048 | $3,125,881 |
| Operating\tincome | $1,219,061 | $1,048,819 | $925,464 | $702,486 | $502,941 |
| Net\tincome | $954,843 | $759,872 | $633,085 | $427,137 | $342,601 |
| Net\tincome\tattributable\tto\tnon-controlling\tinterest | $—\t $—\t $—\t $— | $—\t $—\t $—\t $— | $—\t $—\t $—\t $— | $—\t $—\t $—\t $— | $4,249 |
| Net\tincome\tattributable\tto\tNorwegian\tCruise\tLine |  |  |  |  |  |
| Holdings\tLtd. | $954,843 | $759,872 | $633,085 | $427,137 | $338,352 |
| EPS: |  |  |  |  |  |
| Basic | $4.28 | $3.33 | $2.79 | $1.89 | $1.64 |
| Diluted | $4.25 | $3.31 | $2.78 | $1.86 | $1.62 |
| Weighted-average\tshares\toutstanding: |  |  |  |  |  |
| Basic | 223,001,739 | 228,040,825 | 227,121,875 | 226,591,437 | 206,524,968 |
| Diluted | 224,419,205 | 229,418,326 | 227,850,286 | 230,040,132 | 212,017,784 |
| Balance\tsheet\tdata: |  |  |  |  |  |
| Total\tassets | $15,205,970 | $14,094,869 | $12,973,911 | $12,264,757 | $11,468,996 |
| Property\tand\tequipment,\tnet | $12,119,253 | $11,040,488 | $10,117,689 | $9,458,805 | $8,623,773 |
| Long-term\tdebt,\tincluding\tcurrent\tportion | $6,492,091 | $6,307,765 | $6,398,687 | $6,397,537 | $6,080,023 |
| Total\tshareholders'\tequity | $5,963,001 | $5,749,766 | $4,537,726 | $3,780,880 | $3,518,813 |
| Operating\tdata: |  |  |  |  |  |
| Passengers\tcarried | 2,795,101 | 2,519,324 | 2,337,311 | 2,164,404 | 1,933,044 |
| Passenger\tCruise\tDays | 20,276,568 | 18,523,030 | 17,588,707 | 16,027,743 | 13,634,200 |
| Capacity\tDays | 18,841,678 | 17,363,422 | 16,376,063 | 14,700,990 | 12,512,459 |
| Occupancy\tPercentage | 107.6% | 106.7% | 107.4% | 109.0% | 109.0% |

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

# Financial	Presentation

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

We	categorize	revenue	from	our	cruise	and	cruise-related	activities	as	either	"passenger	ticket"	revenue	or	"onboard	and	other"	revenue.	Passenger	ticket	revenue	and onboard	and	other	revenue	vary	according	to	product	offering,	the	size	of	the	ship	in	operation,	the	length	of	cruises	operated	and	the	markets	in	which	the	ship	operates. Our	revenue	is	seasonal	based	on	demand	for	cruises,	which	has	historically	been	strongest	during	the	Northern	Hemisphere's	summer	months.	Passenger	ticket	revenue primarily	consists	of	revenue	for	accommodations,	meals	in	certain	restaurants	on	the	ship,	certain	onboard	entertainment,	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	gaming, beverage	sales,	shore	excursions,	specialty	dining,	retail	sales,	spa	services	and	photo	services.	Our	onboard	revenue	is	derived	from	onboard	activities	we	perform directly	or	that	are	performed	by	independent	concessionaires,	from	which	we	receive	a	share	of	their	revenue.

Our	cruise	operating	expense	is	classified	as	follows:

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

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

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

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

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

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

# Critical	Accounting	Policies

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

# Ship	Accounting

Ships	represent	our	most	significant	assets,	and	we	record	them	at	cost	less	accumulated	depreciation.	Depreciation	of	ships	is	computed	on	a	straight-line	basis	over	the estimated	service	lives	of	primarily	30	years	after	a	15%	reduction	for	the	estimated	residual	value	of	the	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.	Repairs	and	maintenance activities	are	charged	to	expense	as	incurred.	We	account	for	Dry-dock	costs	under	the	direct	expense	method	which	requires	us	to	expense	all	Dry-dock	costs	as incurred.

We	determine	the	useful	life	of	our	ships	based	primarily	on	our	estimates	of	the	average	useful	life	of	the	ships'	major	component	systems,	such	as	cabins,	main diesels,	main	electric,	superstructure	and	hull.	In	addition,	we	consider	the	impact	of	anticipated	changes	in	the	vacation	market	and	technological	conditions	and historical	useful	lives	of	similarly-built	ships.	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	considerable	judgment	and	are	inherently	uncertain.	Should	certain	factors	or	circumstances	cause	us	to	revise	our	estimate of	ship	service	lives	or	projected	residual	values,	depreciation	expense	could	be	materially	lower	or	higher.	If	circumstances	cause	us	to	change	our	assumptions	in making	determinations	as	to	whether	ship	improvements	should	be	capitalized,	the	amounts	we	expense	each	year	as	repairs	and	maintenance	costs	could	increase, partially	offset	by	a	decrease	in	depreciation	expense.	If	we	reduced	our	estimated	average	30-year	ship	service	life	by	one	year,	depreciation	expense	for	the	year	ended December	31,	2018	would	have	increased	by	$13.3	million.	In	addition,	if	our	ships	were	estimated	to	have	no	residual	value,	depreciation	expense	for	the	same	period would	have	increased	by	$65.9	million.	We	believe	our	estimates	for	ship	accounting	are	reasonable	and	our	methods	are	consistently	applied.	We	believe	that depreciation	expense	is	based	on	a	rational	and	systematic	method	to	allocate	our	ships'	costs	to	the	periods	that	benefit	from	the	ships'	usage.

# Asset	Impairment

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

We	evaluate	goodwill	for	impairment	annually	or	more	frequently	when	an	event	occurs	or	circumstances	change	that	indicates	the	carrying	value	of	a	reporting	unit may	not	be	recoverable.	For	our	evaluation	of	goodwill	we	use	the	Step	0	Test	which	allows	us	to	first	assess	qualitative	factors	to	determine	whether	it	is	more	likely than	not	(i.e.,	more	than	50%)	that	the	fair	value	of	a	reporting	unit	is	less	than	its	carrying	value.	In	order	to	make	this	evaluation,	we	consider	whether	any	of	the following	factors	or	conditions	exist:

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

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

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

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

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

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

We	believe	our	estimates	and	judgments	with	respect	to	our	long-lived	assets,	principally	ships,	goodwill,	tradenames	and	other	indefinite-lived	intangible	assets	are reasonable.	Nonetheless,	if	there	was	a	material	change	in	assumptions	used	in	the	determination	of	such	fair	values	or	if	there	is	a	material	change	in	the	conditions	or circumstances	that	influence	such	assets,	we	could	be	required	to	record	an	impairment	charge.	If	a	material	change	occurred,	we	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	the expected	future	cash	flows	and	market	multiples	to	determine	the	fair	value	of	the	reporting	units.

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

# 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.

# Non-GAAP	Financial	Measures

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

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

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

In	addition,	Adjusted	Net	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. Adjusted	Net	Income	and	Adjusted	EPS	are	non-GAAP	financial	measures	that	exclude	certain	amounts	and	are	used	to	supplement	GAAP	net	income	and	EPS.	We use	Adjusted	Net	Income	and	Adjusted	EPS	as	key	performance	measures	of	our	earnings	performance.	We	believe	that	both	management	and	investors	benefit	from referring	to	these	non-GAAP	financial	measures	in	assessing	our	performance	and	when	planning,	forecasting	and	analyzing	future	periods.	These	non-GAAP	financial measures	also	facilitate	management's	internal	comparison	to	our	historical	performance.	In	addition,	management	uses	Adjusted	EPS	as	a	performance	measure	for	our incentive	compensation.	The	amounts	excluded	in	the	presentation	of	these	non-GAAP	financial	measures	may	vary	from	period	to	period;	accordingly,	our	presentation of	Adjusted	Net	Revenue,	Adjusted	Net	Yield,	Adjusted	Net	Income	and	Adjusted	EPS	may	not	be	indicative	of	future	adjustments	or	results.	For	example,	for	the	year ended	December	31,	2017,	we	incurred	an	impairment	of	$2.9	million	related	to	assets	held	for	sale.	A	similar	impairment	was	not	incurred	in	the	years	ended December	31,	2018	or	December	31,	2016.	We	included	this	as	an	adjustment	in	the	reconciliation	of	Adjusted	Net	Income	since	this	impairment	amount	was	not representative	of	our	day-to-day	operations	and	we	have	included	similar	non-representative	adjustments	in	prior	periods.

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

# Summary	of	Significant	2018	Events

In	March	2018,	we	repurchased	approximately	$263.5	million	of	NCLH's	outstanding	ordinary	shares	under	our	previously	authorized	three-year,	$500.0	million	share repurchase	program,	exhausting	the	remaining	authorization	under	the	program.	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.

In	April	2018,	we	redeemed	$135.0	million	principal	amount	of	the	$700.0	million	aggregate	principal	amount	of	outstanding	4.75%	Senior	Notes	due	2021.

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

# Executive	Overview

Total	revenue	increased	12.2%	to	$6.1	billion	for	the	year	ended	December	31,	2018	compared	to	$5.4	billion	for	the	year	ended	December	31,	2017.	Gross	Yield increased	3.4%.	Net	Revenue	for	the	year	ended	December	31,	2018	increased	12.6%	to	$4.7	billion	from	$4.2	billion	in	the	same	period	in	2017	with	an	improvement in	Net	Yield	of	3.7%	and	an	increase	in	Capacity	Days	of	8.5%.

We	had	Adjusted	Net	Income	and	Adjusted	EPS	of	$1.1	billion	and	$4.92,	respectively,	for	the	year	ended	December	31,	2018,	including	$150.1	million	of	adjustments primarily	consisting	of	expenses	related	to	non-cash	share-based	compensation,	amortization	of	intangible	assets,	losses	on	the	extinguishment	of	debt	and	certain	other adjustments,	compared	to	Adjusted	Net	Income	and	Adjusted	EPS	of	$907.7	million	and	$3.96,	respectively,	for	the	year	ended	December	31,	2017.	A	14.5% improvement	in	Adjusted	EBITDA	was	achieved	for	the	same	period,	primarily	due	to	the	increase	in	net	income	and	EBITDA.	We	refer	you	to	our	"Results	of Operations"	below	for	a	calculation	of	Net	Revenue,	Net	Yield,	Adjusted	Net	Income,	Adjusted	EPS	and	Adjusted	EBITDA.

# Results	of	Operations

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

|  |  | Year	Ended	December	31, |  |
| :--- | :--- | :--- | :--- |
|  | 2018 | 2017 | 2016 |
| Total\trevenue | $6,055,126 | $5,396,175 | $4,874,340 |
| Total\tcruise\toperating\texpense | $3,377,076 | $3,063,644 | $2,850,225 |
| Operating\tincome | $1,219,061 | $1,048,819 | $925,464 |
| Net\tincome | $954,843 | $759,872 | $633,085 |
| EPS: |  |  |  |
| Basic | $4.28 | $3.33 | $2.79 |
| Diluted | $4.25 | $3.31 | $2.78 |

|  | 2018 | Year	Ended	December	31,<br>2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Revenue |  |  |  |
| Passenger\tticket | 70.4% | 69.5% | 69.5% |
| Onboard\tand\tother | 29.6% | 30.5% | 30.5% |
| Total\trevenue | 100.0% | 100.0% | 100.0% |
| Cruise\toperating\texpense |  |  |  |
| Commissions,\ttransportation\tand\tother | 16.5% | 16.6% | 16.7% |
| Onboard\tand\tother | 5.8% | 5.9% | 6.1% |
| Payroll\tand\trelated | 14.6% | 14.9% | 15.3% |
| Fuel | 6.5% | 6.7% | 6.9% |
| Food | 3.5% | 3.7% | 4.1% |
| Other | 8.9% | 9.0% | 9.4% |
| Total\tcruise\toperating\texpense | 55.8% | 56.8% | 58.5% |
| Other\toperating\texpense |  |  |  |
| Marketing,\tgeneral\tand\tadministrative | 14.8% | 14.3% | 13.7% |
| Depreciation\tand\tamortization | 9.3% | 9.5% | 8.9% |
| Total\tother\toperating\texpense | 24.1% | 23.8% | 22.6% |
| Operating\tincome | 20.1% | 19.4% | 18.9% |
| Non-operating\tincome\t(expense) |  |  |  |
| Interest\texpense,\tnet | (4.4)% | (4.9)% | (5.7)% |
| Other\tincome\t(expense),\tnet | 0.3% | (0.2)% | (0.1)% |
| Total\tnon-operating\tincome\t(expense) | (4.1)% | (5.1)% | (5.8)% |
| Net\tincome\tbefore\tincome\ttaxes | 16.0% | 14.3% | 13.1% |
| Income\ttax\texpense | (0.2)% | (0.2)% | (0.1)% |
| Net\tincome | 15.8% | 14.1% | 13.0% |

The	following	table	sets	forth	selected	statistical	information:

|  | Year	Ended	December	31, | Year	Ended	December	31, |  |
| :--- | :--- | :--- | :--- |
|  | 2018 | 2017 | 2016 |
| Passengers\tcarried | 2,795,101 | 2,519,324 | 2,337,311 |
| Passenger\tCruise\tDays | 20,276,568 | 18,523,030 | 17,588,707 |
| Capacity\tDays | 18,841,678 | 17,363,422 | 16,376,063 |
| Occupancy\tPercentage | 107.6% | 106.7% | 107.4% |

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

# Year	Ended	December	31,

|  |  | 2018 |  | 2017 |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Constant |  | Constant |  |
|  | 2018 | Currency | 2017 | Currency | 2016 |
| Passenger\tticket\trevenue | $4,259,815 | $4,244,494 | $3,750,030 | $3,760,886 | $3,388,954 |
| Onboard\tand\tother\trevenue | 1,795,311 | 1,795,311 | 1,646,145 | 1,646,145 | 1,485,386 |
| Total\trevenue | 6,055,126 | 6,039,805 | 5,396,175 | 5,407,031 | 4,874,340 |
| Less: |  |  |  |  |  |
| Commissions,\ttransportation\tand\tother\texpense | 998,948 | 995,097 | 894,406 | 896,985 | 813,559 |
| Onboard\tand\tother\texpense | 348,656 | 348,656 | 319,293 | 319,293 | 298,886 |
| Net\tRevenue | 4,707,522 | 4,696,052 | 4,182,476 | 4,190,753 | 3,761,895 |
| Non-GAAP\tAdjustment: |  |  |  |  |  |
| Deferred\trevenue\t(1) | — | — | — | — | 1,057 |
| Adjusted\tNet\tRevenue | $4,707,522 | $4,696,052 | $4,182,476 | $4,190,753 | $3,762,952 |
| Capacity\tDays | 18,841,678 | 18,841,678 | 17,363,422 | 17,363,422 | 16,376,063 |
| Gross\tYield | $321.37 | $320.56 | $310.78 | $311.40 | $297.65 |
| Net\tYield | $249.85 | $249.24 | $240.88 | $241.36 | $229.72 |
| Adjusted\tNet\tYield | $249.85 | $249.24 | $240.88 | $241.36 | $229.78 |
| (1) |  |  |  |  |  |

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

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

|  |  | 2018 |  | 2017 |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Constant |  | Constant |  |
|  | 2018 | Currency | 2017 | Currency | 2016 |
| Total\tcruise\toperating\texpense | $3,377,076 | $3,365,030 | $3,063,644 | $3,064,892 | $2,850,225 |
| Marketing,\tgeneral\tand\tadministrative\texpense | 897,929 | 897,438 | 773,755 | 773,028 | 666,156 |
| Gross\tCruise\tCost | 4,275,005 | 4,262,468 | 3,837,399 | 3,837,920 | 3,516,381 |
| Less: |  |  |  |  |  |
| Commissions,\ttransportation\tand\tother\texpense | 998,948 | 995,097 | 894,406 | 896,985 | 813,559 |
| Onboard\tand\tother\texpense | 348,656 | 348,656 | 319,293 | 319,293 | 298,886 |
| Net\tCruise\tCost | 2,927,401 | 2,918,715 | 2,623,700 | 2,621,642 | 2,403,936 |
| Less:\tFuel\texpense | 392,685 | 392,685 | 361,032 | 361,032 | 335,174 |
| Net\tCruise\tCost\tExcluding\tFuel | 2,534,716 | 2,526,030 | 2,262,668 | 2,260,610 | 2,068,762 |
| Less\tNon-GAAP\tAdjustments: |  |  |  |  |  |
| Non-cash\tdeferred\tcompensation\texpenses\t(1) | 2,167 | 2,167 | 3,292 | 3,292 | 3,167 |
| Non-cash\tshare-based\tcompensation\texpenses\t(2) | 115,983 | 115,983 | 87,039 | 87,039 | 66,414 |
| Secondary\tEquity\tOffering\texpenses\t(3) | 883 | 883 | 949 | 949 | — |
| Severance\tpayments\tand\tother\tfees\t(4) | — | — | 2,912 | 2,912 | 8,223 |
| Acquisition\tof\tPrestige\texpenses\t(5) | — | — | 500 | 500 | 6,395 |
| Contract\trenegotiation\tand\ttermination\texpenses\t(6) | — | — | — | — | 1,000 |
| Other\t(7) | (1,412) | (1,412) | 3,886 | 3,886 | 217 |
| Adjusted\tNet\tCruise\tCost\tExcluding\tFuel | $2,417,095 | $2,408,409 | $2,164,090 | $2,162,032 | $1,983,346 |
| Capacity\tDays | 18,841,678 | 18,841,678 | 17,363,422 | 17,363,422 | 16,376,063 |
| Gross\tCruise\tCost\tper\tCapacity\tDay | $226.89 | $226.23 | $221.00 | $221.03 | $214.73 |
| Net\tCruise\tCost\tper\tCapacity\tDay | $155.37 | $154.91 | $151.11 | $150.99 | $146.80 |
| Net\tCruise\tCost\tExcluding\tFuel\tper\tCapacity\tDay | $134.53 | $134.07 | $130.31 | $130.19 | $126.33 |
| Adjusted\tNet\tCruise\tCost\tExcluding\tFuel\tper\tCapacity |  |  |  |  |  |
| Day | $128.28 | $127.82 | $124.63 | $124.52 | $121.11 |
| (1) |  |  |  |  |  |

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

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

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

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

(5) Acquisition	of	Prestige	expenses	are	included	in	marketing,	general	and	administrative	expense.

(6) Contract	renegotiation	and	termination	expenses,	net	related	to	the	Acquisition	of	Prestige	are	included	in	other	cruise	operating	expense	and	marketing,	general	and administrative	expense.

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

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

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Net\tincome | $954,843 | $759,872 | $633,085 |
| Non-GAAP\tAdjustments: |  |  |  |
| Non-cash\tdeferred\tcompensation\texpenses\t(1) | 3,453 | 3,292 | 3,167 |
| Non-cash\tshare-based\tcompensation\texpenses\t(2) | 115,983 | 87,039 | 66,414 |
| Secondary\tEquity\tOffering\texpenses\t(3) | 883 | 949 | — |
| Severance\tpayments\tand\tother\tfees\t(4) | — | 2,912 | 8,223 |
| Acquisition\tof\tPrestige\texpenses\t(5) | — | 500 | 6,395 |
| Deferred\trevenue\t(6) | — | — | 1,057 |
| Amortization\tof\tintangible\tassets\t(7) | 24,890 | 30,273 | 21,069 |
| Extinguishment\tof\tdebt\t(8) | 6,346 | 23,859 | 27,962 |
| Derivative\tadjustment\t(9) | — | — | (1,185) |
| Contract\trenegotiation\tand\ttermination\texpenses\t(10) | — | — | 2,502 |
| Deferred\tfinancing\tfees\tand\tother\t(11) | — | — | 11,156 |
| Impairment\ton\tassets\theld\tfor\tsale\t(12) | — | 2,935 | — |
| Tax\tbenefit\t(13) | — | (7,802) | (3,594) |
| Other\t(14) | (1,412) | 3,886 | — |
| Adjusted\tNet\tIncome | $1,104,986 | $907,715 | $776,251 |
| Diluted\tweighted-average\tshares\toutstanding-Net\tincome\tand\tAdjusted\tNet\tIncome | 224,419,205 | 229,418,326 | 227,850,286 |
| Diluted\tEPS | $4.25 | $3.31 | $2.78 |
| Adjusted\tEPS | $4.92 | $3.96 | $3.41 |

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

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

(6) Deferred	revenue	fair	value	adjustments	related	to	the	Acquisition	of	Prestige	that	were	made	pursuant	to	business	combination	accounting	rules	are	primarily included	in	passenger	ticket	revenue.

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

(8) Losses	on	extinguishments	of	debt	are	included	in	interest	expense,	net,	and	legal	expenses	related	to	the	extinguishments	are	included	in	marketing,	general	and administrative	expense.

(9) Losses	and	net	gains	for	the	fair	value	adjustment	of	a	foreign	exchange	collar,	which	did	not	receive	hedge	accounting	treatment	and	losses	due	to	the	dedesignation of	certain	fuel	swaps,	are	included	in	other	income	(expense),	net.

(10)Contract	renegotiation	and	termination	expenses,	net	related	to	the	Acquisition	of	Prestige	are	included	in	other	cruise	operating	expense,	marketing,	general	and administrative	expense	and	depreciation	and	amortization	expense.

(11)Expenses	related	to	the	write-off	of	deferred	financing	fees	and	other	fees	related	to	the	refinancing	of	certain	credit	facilities,	including	a	tax	benefit	adjustment	are included	in	interest	expense,	net.

(12)Impairment	charge	related	to	Hawaii	land-based	operations,	which	is	included	in	depreciation	and	amortization	expense.

(13)Tax	benefits	primarily	due	to	reversal	of	tax	contingency	reserves	in	2017	and	reversal	of	a	valuation	allowance	in	2016.

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

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

|  |  | Year	Ended	December	31, |  |
| :--- | :--- | :--- | :--- |
|  | 2018 | 2017 | 2016 |
| Net\tincome | $954,843 | $759,872 | $633,085 |
| Interest\texpense,\tnet | 270,404 | 267,804 | 276,859 |
| Income\ttax\texpense | 14,467 | 10,742 | 7,218 |
| Depreciation\tand\tamortization\texpense | 561,060 | 509,957 | 432,495 |
| EBITDA | 1,800,774 | 1,548,375 | 1,349,657 |
| Other\t(income)\texpense,\tnet\t(1) | (20,653) | 10,401 | 8,302 |
| Non-GAAP\tAdjustments: |  |  |  |
| Non-cash\tdeferred\tcompensation\texpenses\t(2) | 2,167 | 3,292 | 3,167 |
| Non-cash\tshare-based\tcompensation\texpenses\t(3) | 115,983 | 87,039 | 66,414 |
| Secondary\tEquity\tOffering\texpenses\t(4) | 883 | 949 | — |
| Severance\tpayments\tand\tother\texpenses\t(5) | — | 2,912 | 8,223 |
| Acquisition\tof\tPrestige\texpenses\t(6) | — | 500 | 6,395 |
| Deferred\trevenue\t(7) | — | — | 1,057 |
| Contract\trenegotiation\tand\ttermination\texpenses\t(8) | — | — | 1,000 |
| Other\t(9) | (1,412) | 3,886 | 217 |
| Adjusted\tEBITDA | $1,897,742 | $1,657,354 | $1,444,432 |

(1) Primarily	consists	of	gains	and	losses,	net	for	forward	currency	exchanges.

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

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

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

# Revenue

Total	revenue	increased	12.2%	to	$6.1	billion	in	2018	compared	to	$5.4	billion	in	2017	primarily	due	to	an	increase	in	Capacity	Days	and	improved	pricing.	Gross	Yield increased	3.4%.	Net	Revenue	increased	12.6%	to	$4.7	billion	in	2018,	from	$4.2	billion	in	2017,	due	to	an	increase	in	Capacity	Days	of	8.5%	and	an	increase	in	Net Yield	of	3.7%.		The	increase	in	Capacity	Days	was	primarily	due	to	Norwegian	Joy	and	Norwegian	Bliss	joining	our	fleet	in	the	second	quarter	of	2017	and	2018, respectively.	The	increase	in	Gross	Yield	and	Net	Yield	was	primarily	due	to	an	increase	in	passenger	ticket	revenue	and	Occupancy	Percentage.		On	a	Constant Currency	basis,	Net	Yield	increased	3.5%.

# Expense

Total	cruise	operating	expense	increased	10.2%	in	2018	compared	to	2017,	primarily	due	to	the	increase	in	Capacity	Days.	Gross	Cruise	Cost	increased	11.4%	in	2018 compared	to	2017,	due	to	higher	total	cruise	operating	expense	and,	to	a	lesser	extent,	higher	marketing,	general	and	administrative	expenses.	Total	other	operating expense	increased	13.7%	in	2018	compared	to	2017.	Marketing,	general	and	administrative	expenses	increased	primarily	due	to	higher	incentive	compensation	expense and	higher	advertising	expenses.	Depreciation	and	amortization	expense	increased	primarily	due	to	the	additions	of	Norwegian	Joy	and	Norwegian	Bliss	and	ship improvement	projects.	Net	Cruise	Cost	per	Capacity	Day	increased	2.8%	(2.5%	on	a	Constant	Currency	basis)	due	to	higher	marketing,	general	and	administrative expenses,	higher	commissions	and	transportation	fees,	and,	to	a	lesser	extent,	higher	maintenance	and	repairs,	including	fuel	and	Dry-dock	expenses.	Adjusted	Net	Cruise Cost	Excluding	Fuel	per	Capacity	Day	increased	2.9%	(2.6%	on	a	Constant	Currency	basis).	We	refer	you	to	the	"Results	of	Operations"	above	for	a	reconciliation	of total	cruise	operating	expense	to	Adjusted	Net	Cruise	Cost	Excluding	Fuel.

Interest	expense,	net	was	$270.4	million	in	2018	compared	to	$267.8	million	in	2017.	The	increase	in	interest	expense	primarily	reflects	additional	debt	incurred	in connection	with	the	delivery	of	Norwegian	Joy	and	Norwegian	Bliss	in	the	second	quarter	of	2017	and	2018,	respectively,	Project	Leonardo	financing,	and	higher interest	rates	due	to	an	increase	in	LIBOR.	The	increase	in	interest	expense	was	partially	offset	by	the	benefit	from	the	October	2017	full	redemption	of	our	4.625% Senior	Notes	due	2020	and	the	benefit	from	the	April	2018	partial	$135.0	million	redemption	of	our	4.75%	Senior	Notes	due	2021.	2018	included	$6.3	million	of redemption	premium	and	write-off	of	fees	in	connection	with	the	partial	redemption.	2017	included	losses	on	extinguishment	of	debt	and	debt	modification	costs	of $23.9	million.

Other	income	(expense),	net	was	income	of	$20.7	million	in	2018	compared	to	expense	of	$10.4	million	in	2017.	Other	income	in	2018	was	primarily	due	to	gains	on foreign	currency	exchange.		Other	expense	in	2017	was	primarily	due	to	losses	on	foreign	currency	exchange.

Income	tax	expense	was	$14.5	million	in	2018	compared	to	$10.7	million	in	2017.	The	expense	in	2017	had	benefits	of	$7.7	million	from	the	impact	on	our	net	deferred tax	liabilities	of	a	change	in	both	U.S.	and	U.K.	tax	rates	due	to	tax	reform	and	a	reversal	of	prior	years'	contingency	reserves	of	$11.6	million.

Total	revenue	increased	10.7%	to	$5.4	billion	in	2017	compared	to	$4.9	billion	in	2016	primarily	due	to	an	increase	in	Capacity	Days	and	improved	pricing.	Gross	Yield increased	4.4%.	Net	Revenue	in	2017	increased	11.2%	to	$4.2	billion	from	$3.8	billion	in	2016	due	to	an	increase	in	Capacity	Days	of	6.0%	and	an	increase	in	Net	Yield of	4.9%.	The	increase	in	Capacity	Days	was	primarily	due	to	the	delivery	of	Norwegian	Joy	in	April	2017,	the	delivery	of	Seven	Seas	Explorer	in	June	2016	and	Sirena joining	our	fleet	in	April	2016.	The	increase	in	Net	Yield	was	primarily	due	to	improved	pricing.	Adjusted	Net	Revenue	includes	a	deferred	revenue	fair	value adjustment	of	$1.0	million	in	2016	related	to	the	Acquisition	of	Prestige.	On	a	Constant	Currency	basis,	Net	Yield	and	Adjusted	Net	Yield	increased	5.1%	and	5.0%, respectively,	in	2017	compared	to	2016.

Total	cruise	operating	expense	increased	7.5%	in	2017	compared	to	2016	primarily	due	to	the	increase	in	Capacity	Days	as	discussed	above	and	an	increase	in	marketing, general	and	administrative	expenses.	Gross	Cruise	Cost	increased	9.1%	in	2017	compared	to	2016	due	to	an	increase	in	marketing,	general	and	administrative	expenses and	total	cruise	operating	expense.	Total	other	operating	expense	increased	16.8%	in	2017	compared	to	2016	primarily	due	to	an	increase	in	depreciation	and amortization	expense	and	marketing,	general	and	administrative	expenses.	Depreciation	and	amortization	expense	increased	primarily	due	to	the	ship	additions	and	ship improvement	projects.	The	increase	in	marketing,	general	and	administrative	expense	was	primarily	due	to	pay	for	performance	incentive	expenses.	On	a	Capacity	Day basis,	Net	Cruise	Cost	increased	2.9%	on	an	actual	and	a	Constant	Currency	basis,	due	to	the	increases	in	expenses	discussed	above.	Adjusted	Net	Cruise	Cost	Excluding Fuel	per	Capacity	Day	increased	2.9%	primarily	due	to	the	expenses	discussed	above	(2.8%	on	a	Constant	Currency	basis).	We	refer	you	to	the	"Results	of	Operations" above	for	a	reconciliation	of	total	cruise	operating	expense	to	Adjusted	Net	Cruise	Cost	Excluding	Fuel.

Interest	expense,	net	was	$267.8	million	in	2017	compared	to	$276.9	million	in	2016.		Interest	expense	for	2017	reflects	higher	interest	rates	due	to	an	increase	in LIBOR,	as	well	as	an	increase	in	average	debt	balances	outstanding	primarily	associated	with	the	delivery	of	new	ships	and	newbuild	installments.		In	connection	with the	redemption	of	senior	notes	and	refinancing	of	certain	of	our	credit	facilities,	interest	expense,	net	included	losses	on	extinguishment	of	debt	and	debt	modification costs	of	$23.9	million	in	2017	and	$39.2	million	in	2016.

Other	income	(expense),	net	was	an	expense	of	$10.4	million	in	2017	compared	to	an	expense	of	$8.3	million	in	2016.	In	2017,	the	expense	was	primarily	related	to losses	on	foreign	currency	exchange.	In	2016,	the	expense	was	primarily	related	to	$16.1	million	of	unrealized	and	realized	losses	on	fuel	swap	derivative	hedge contracts	partially	offset	by	$4.5	million	of	gains	on	foreign	currency	exchange	and	$3.9	million	of	gains	on	foreign	currency	exchange	derivative	hedge	contracts.

In	2017,	we	had	an	income	tax	expense	of	$10.7	million	compared	to	$7.2	million	in	2016.	The	expense	in	2017	had	benefits	of	$7.7	million	from	the	impact	on	our	net deferred	tax	liabilities	of	a	change	in	both	U.S.	and	U.K.	tax	rates	due	to	tax	reform	and	a	reversal	of	prior	years'	contingency	reserves	of	$11.6	million.	The	expense	in 2016	had	a	benefit	due	to	the	reversal	of	a	valuation	allowance	of	$3.6	million.

# Liquidity	and	Capital	Resources

# General

As	of	December	31,	2018,	our	liquidity	was	$908.9	million	consisting	of	$163.9	million	in	cash	and	cash	equivalents	and	$745.0	million	available	under	our	Revolving Loan	Facility.	Our	primary	ongoing	liquidity	requirements	are	to	finance	working	capital,	capital	expenditures	and	debt	service.

As	of	December	31,	2018,	we	had	a	working	capital	deficit	of	$2.6	billion.	This	deficit	included	$1.6	billion	of	advance	ticket	sales,	which	represents	the	total	revenue we	collect	in	advance	of	sailing	dates	and	accordingly	are	substantially	more	like	deferred	revenue	balances	rather	than	actual	current	cash	liabilities.	Our	business model,	along	with	our	Revolving	Loan	Facility,	allows	us	to	operate	with	a	working	capital	deficit	and	still	meet	our	operating,	investing	and	financing	needs.

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

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

In	January	2019,	we	(a)	reduced	the	pricing	of	our	existing	$875.0	million	Revolving	Loan	Facility,	(b)	reduced	the	pricing	and	increased	the	approximately	$1.3	billion principal	amount	outstanding	under	the	term	loan	A	facility	to	$1.6	billion,	and	(c)	extended	the	maturity	dates	for	our	Revolving	Loan	Facility	and	our	term	loan	A facility	to	2024,	subject	to	certain	conditions.	We	used	the	proceeds	from	the	increase	in	our	term	loan	A	facility	to	prepay	all	of	the	then	outstanding	amounts	under	the term	loan	B	facility.

# Sources	and	Uses	of	Cash

Net	cash	provided	by	operating	activities	was	$2.1	billion	in	2018	compared	to	$1.6	billion	in	2017	and	$1.3	billion	in	2016.	The	net	cash	provided	by	operating	activities in	2018	included	net	income	of	$954.8	million,	an	increase	in	advance	ticket	sales	of	$262.6	million	and	timing	differences	in	cash	receipts	and	payments	relating	to various	operating	assets	and	liabilities.	Without	the	adoption	of	Topic	606,	advance	ticket	sales	would	have	increased	by	$250.6	million	in	2018.	We	refer	you	to	Note	3 —	"Revenue	and	Expense	from	Contracts	with	Customers"	in	the	notes	to	consolidated	financial	statements	for	a	discussion	of	the	effects	of	the	adoption	of	Topic	606. The	change	in	net	cash	provided	by	operating	activities	in	2017	includes	net	income	of	$759.9	million	compared	to	net	income	of	$633.1	million	in	2016,	as	well	as timing	differences	in	cash	receipts	and	payments	relating	to	various	operating	assets	and	liabilities,	including	advance	ticket	sales	of	$154.0	million	in	2017	and	$135.0 million	in	2016.

Net	cash	used	in	investing	activities	was	$1.5	billion	in	2018,	primarily	related	to	payments	for	the	delivery	of	Norwegian	Bliss,	ships	under	construction,	ship improvement	projects,	and	shoreside	projects.	Net	cash	used	in	investing	activities	was	$1.4	billion	in	2017,	primarily	related	to	payments	for	the	delivery	of	Norwegian Joy,	ship	improvements,	ships	under	construction	and	shoreside	projects.	Net	cash	used	in	investing	activities	was	$1.1	billion	in	2016,	primarily	related	to	payments	for the	delivery	of	Seven	Seas	Explorer,	ship	improvements,	ships	under	construction	and	shoreside	projects.

Net	cash	used	in	financing	activities	was	$584.8	million	in	2018,	reflecting	the	net	repayment	of	our	Revolving	Loan	Facility,	repayments	on	other	loan	facilities,	the repurchase	of	NCLH's	ordinary	shares	and	deferred	financing	fees	and	other,	partially	offset	by	the	proceeds	from	borrowings	on	newbuild	loan	facilities.	Net	cash	used in	financing	activities	was	$148.5	million	in	2017,	reflecting	the	repayment	of	our	4.625%	senior	unsecured	notes,	our	net	repayment	of	our	Revolving	Loan	Facility, repayments	on	other	loan	facilities	and	deferred	financing	fees	and	other,	partially	offset	by	the	proceeds	from	our	Breakaway	four	loan	facility.	Net	cash	used	in financing	activities	was	$122.8	million	in	2016,	reflecting	the	repayments	of	our	5.25%	senior	unsecured	notes,	net	repayments	of	our	then	existing	revolving	loan facility,	repayments	on	other	loan	facilities,	the	repurchase	of	NLCH's	ordinary	shares	and	deferred	financing	fees	and	other,	partially	offset	by	issuance	of	our	$700.0 million	4.750%	senior	unsecured	notes.

# Future	Capital	Commitments

Future	capital	commitments	consist	of	contracted	commitments,	including	ship	construction	contracts,	and	future	expected	capital	expenditures	necessary	for	operations as	well	as	our	ship	refurbishment	projects.	As	of	December	31,	2018,	anticipated	capital	expenditures	were	$1.6	billion,	$1.2	billion	and	$0.7	billion	for	the	years	ending December	31,	2019,	2020	and	2021,	respectively.	We	have	export	credit	financing	in	place	for	the	anticipated	expenditures	related	to	ship	construction	contracts	of	$0.6 billion,	$0.5	billion	and	$0.2	billion	for	the	years	ending	December	31,	2019,	2020	and	2021,	respectively.	These	future	expected	capital	expenditures	will	significantly increase	our	depreciation	and	amortization	expense	as	we	take	delivery	of	the	ships.

Project	Leonardo	will	introduce	an	additional	six	ships,	each	approximately	140,000	Gross	Tons	with	approximately	3,300	Berths,	with	expected	delivery	dates	from 2022	through	2027,	subject	to	certain	conditions.	We	have	a	Breakaway	Plus	Class	Ship,	Norwegian	Encore,	with	approximately	168,000	Gross	Tons	with	4,000	Berths, 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.	Each	of	the	Explorer	Class	Ships	will	be	approximately	55,000	Gross	Tons	and	750	Berths.	For	the	Oceania	Cruises	brand,	we	have orders	for	two	Allura	Class	Ships	to	be	delivered	in	2022	and	2025.	Each	of	the	Allura	Class	Ships	will	be	approximately	67,000	Gross	Tons	and	1,200	Berths.

The	combined	contract	prices	of	the	11	ships	on	order	for	delivery	was	approximately	€7.9	billion,	or	$9.1	billion	based	on	the	euro/U.S.	dollar	exchange	rate	as	of December	31,	2018.	We	have	obtained	export	credit	financing	which	is	expected	to	fund	approximately	80%	of	the	contract	price	of	each	ship,	subject	to	certain conditions.	We	do	not	anticipate	any	contractual	breaches	or	cancellations	to	occur.	However,	if	any	such	events	were	to	occur,	it	could	result	in,	among	other	things,	the forfeiture	of	prior	deposits	or	payments	made	by	us	and	potential	claims	and	impairment	losses	which	may	materially	impact	our	business,	financial	condition	and results	of	operations.

Capitalized	interest	for	the	years	ended	December	31,	2018,	2017	and	2016	was	$30.4	million,	$29.0	million	and	$33.7	million,	respectively,	primarily	associated	with the	construction	of	our	newbuild	ships.

# Off-Balance	Sheet	Transactions

# Contractual	Obligations

As	of	December	31,	2018,	our	contractual	obligations	with	initial	or	remaining	terms	in	excess	of	one	year,	including	interest	payments	on	long-term	debt	obligations, were	as	follows	(in	thousands):

|  |  | Less	than |  |  | More	than |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | Total | 1\tyear | 1-3\tyears | 3-5\tyears | 5\tyears |
| Long-term\tdebt\t(1) | $6,609,866 | $681,218 | $3,232,177 | $929,088 | $1,767,383 |
| Operating\tleases\t(2) | 128,550 | 16,651 | 31,420 | 27,853 | 52,626 |
| Ship\tconstruction\tcontracts\t(3) | 5,141,441 | 912,858 | 662,687 | 1,976,223 | 1,589,673 |
| Port\tfacilities\t(4) | 1,738,036 | 62,388 | 151,682 | 157,330 | 1,366,636 |
| Interest\t(5) | 974,444 | 222,427 | 404,380 | 165,172 | 182,465 |
| Other\t(6) | 1,381,518 | 248,107 | 433,161 | 354,454 | 345,796 |
| Total\t(7) | $15,973,855 | $2,143,649 | $4,915,507 | $3,610,120 | $5,304,579 |

(1) Long-term	debt	includes	discount	and	premiums	aggregating	$0.4	million	and	capital	leases.	Long-term	debt	excludes	deferred	financing	fees	which	are	a	direct deduction	from	the	carrying	value	of	the	related	debt	liability	in	the	consolidated	balance	sheets.

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

(3) Ship	construction	contracts	are	for	our	newbuild	ships	based	on	the	euro/U.S.	dollar	exchange	rate	as	of	December	31,	2018.	Export	credit	financing	is	in	place from	syndicates	of	banks.	The	amount	does	not	include	the	two	Project	Leonardo	ships,	one	Explorer	Class	Ship	and	two	Allura	Class	Ships	which	were	still	subject to	financing	and	certain	Italian	government	approvals	as	of	December	31,	2018.	We	refer	you	to	Note	17—	"Subsequent	Events"	in	the	notes	to	consolidated financial	statements	for	details	regarding	the	financing	for	certain	ships.

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

(5) Interest	includes	fixed	and	variable	rates	with	LIBOR	held	constant	as	of	December	31,	2018.

(6) Other	includes	future	commitments	for	service,	maintenance	and	other	Business	Enhancement	Capital	Expenditure	contracts.

(7) Total	excludes	$0.5	million	of	unrecognized	tax	benefits	as	of	December	31,	2018,	because	an	estimate	of	the	timing	of	future	tax	settlements	cannot	be	reasonably determined.

# Other

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

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

# Funding	Sources

Certain	of	our	debt	agreements	contain	covenants	that,	among	other	things,	require	us	to	maintain	a	minimum	level	of	liquidity,	as	well	as	limit	our	net	funded	debt-to- capital	ratio,	and	maintain	certain	other	ratios	and	restrict	our	ability	to	pay	dividends.	Substantially	all	of	our	ships	and	other	property	and	equipment	are	pledged	as collateral	for	certain	of	our	debt.	We	believe	we	were	in	compliance	with	these	covenants	as	of	December	31,	2018.

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

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

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

# Item	7A.	Quantitative	and	Qualitative	Disclosures	about	Market	Risk

We	are	exposed	to	market	risk	attributable	to	changes	in	interest	rates,	foreign	currency	exchange	rates	and	fuel	prices.	We	attempt	to	minimize	these	risks	through	a combination	of	our	normal	operating	and	financing	activities	and	through	the	use	of	derivatives.	The	financial	impacts	of	these	derivative	instruments	are	primarily offset	by	corresponding	changes	in	the	underlying	exposures	being	hedged.	We	achieve	this	by	closely	matching	the	notional,	term	and	conditions	of	the	derivatives	with the	underlying	risk	being	hedged.	We	do	not	hold	or	issue	derivatives	for	trading	or	other	speculative	purposes.	Derivative	positions	are	monitored	using	techniques including	market	valuations	and	sensitivity	analyses.

# Interest	Rate	Risk

As	of	December	31,	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.	As	of	December	31,	2018,	72%	of	our	debt	was	fixed	and	28%	was	variable,	which	includes	the	effects	of	the	interest	rate	swaps.	The	notional amount	of	our	outstanding	debt	associated	with	the	interest	rate	swap	agreements	was	$1.0	billion	as	of	December	31,	2018.	As	of	December	31,	2017,	54%	of	our	debt was	fixed	and	46%	was	variable,	which	includes	the	effects	of	the	interest	rate	swaps.	The	notional	amount	of	outstanding	debt	associated	with	the	interest	rate	swap agreements	was	$218.6	million	as	of	December	31,	2017.	The	change	from	December	31,	2017	to	December	31,	2018	was	due	to	additional	interest	rate	swaps	executed and	the	repayment	of	variable	rate	debt.

Based	on	our	December	31,	2018	outstanding	variable	rate	debt	balance,	a	one	percentage	point	increase	in	annual	LIBOR	interest	rates	would	increase	our	annual interest	expense	by	approximately	$18.4	million	excluding	the	effects	of	capitalization	of	interest.

# Foreign	Currency	Exchange	Rate	Risk

As	of	December	31,	2018,	we	had	foreign	currency	derivatives	to	hedge	the	exposure	to	volatility	in	foreign	currency	exchange	rates	related	to	our	ship	construction contracts	denominated	in	euros.	These	derivatives	hedge	the	foreign	currency	exchange	rate	risk	on	a	portion	of	the	payments	on	our	ship	construction	contracts.	The payments	not	hedged	aggregate	€2.2	billion,	or	$2.5	billion	based	on	the	euro/U.S.	dollar	exchange	rate	as	of	December	31,	2018.	As	of	December	31,	2017,	the payments	not	hedged	aggregated	€3.3	billion,	or	$4.0	billion,	based	on	the	euro/U.S.	dollar	exchange	rate	as	of	December	31,	2017.	The	change	from	December	31, 2017	to	December	31,	2018	was	due	to	the	delivery	of	a	ship	in	April	2018	and	additional	foreign	exchange	derivatives	executed.	We	estimate	that	a	10%	change	in	the euro	as	of	December	31,	2018	would	result	in	a	$0.3	billion	change	in	the	U.S.	dollar	value	of	the	foreign	currency	denominated	remaining	payments.

# Fuel	Price	Risk

Our	exposure	to	market	risk	for	changes	in	fuel	prices	relates	to	the	forecasted	purchases	of	fuel	on	our	ships.	Fuel	expense,	as	a	percentage	of	our	total	cruise	operating expense,	was	11.6%	for	the	year	ended	December	31,	2018	and	11.8%	for	each	of	the	years	ended	December	31,	2017	and	2016.	We	use	fuel	derivative	agreements	to mitigate	the	financial	impact	of	fluctuations	in	fuel	prices	and	as	of	December	31,	2018,	we	had	hedged	approximately	57%,	53%	and	33%	of	our	2019,	2020	and	2021 projected	metric	tons	of	fuel	purchases,	respectively.	As	of	December	31,	2017,	we	had	hedged	approximately	65%,	48%	and	26%	of	our	2018,	2019	and	2020	projected metric	tons	of	fuel	purchases,	respectively.	The	change	in	fuel	price	risk	from	December	31,	2017	to	December	31,	2018	was	due	to	additional	fuel	hedges	executed.

We	estimate	that	a	10%	increase	in	our	weighted-average	fuel	price	would	increase	our	anticipated	2019	fuel	expense	by	$40.5	million.	This	increase	would	be	partially offset	by	an	increase	in	the	fair	value	of	our	fuel	swap	agreements	of	$20.1	million.	Fair	value	of	our	derivative	contracts	is	derived	using	valuation	models	that	utilize the	income	valuation	approach.	These	valuation	models	take	into	account	the	contract	terms	such	as	maturity,	as	well	as	other	inputs	such	as	fuel	types,	fuel	curves, creditworthiness	of	the	counterparty	and	the	Company,	as	well	as	other	data	points.

# Item	8.	Financial	Statements	and	Supplementary	Data

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

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

# Item	9A.	Controls	and	Procedures

# Evaluation	of	Disclosure	Controls	and	Procedures

Our	management	has	evaluated,	with	the	participation	of	our	Chief	Executive	Officer	and	Chief	Financial	Officer,	the	effectiveness	of	our	disclosure	controls	and procedures,	as	such	term	is	defined	in	Exchange	Act	Rule	13a-15(e),	as	of	December	31,	2018.	There	are	inherent	limitations	to	the	effectiveness	of	any	system	of disclosure	controls	and	procedures,	including	the	possibility	of	human	error	and	the	circumvention	or	overriding	of	the	controls	and	procedures.	Accordingly,	even effective	disclosure	controls	and	procedures	can	only	provide	reasonable	assurance	of	achieving	their	control	objectives.	Based	upon	management's	evaluation,	our Chief	Executive	Officer	and	Chief	Financial	Officer	concluded	that	our	disclosure	controls	and	procedures	were	effective	as	of	December	31,	2018,	to	provide reasonable	assurance	that	the	information	required	to	be	disclosed	by	us	in	the	reports	we	file	or	submit	under	the	Exchange	Act	is	recorded,	processed,	summarized	and reported	within	the	time	periods	specified	in	the	rules	and	forms	of	the	SEC,	and	that	it	is	accumulated	and	communicated	to	our	management,	including	our	Chief Executive	Officer	and	Chief	Financial	Officer,	as	appropriate	to	allow	timely	decisions	regarding	required	disclosure.

# Management's	Annual	Report	on	Internal	Control	over	Financial	Reporting

Our	management	is	responsible	for	establishing	and	maintaining	adequate	internal	control	over	financial	reporting,	as	such	term	is	defined	in	Exchange	Act	Rule	13a- 15(f).	Under	the	supervision	and	with	the	participation	of	our	management,	including	our	Chief	Executive	Officer	and	Chief	Financial	Officer,	we	conducted	an evaluation	of	the	effectiveness	of	our	internal	control	over	financial	reporting	based	on	the	2013	Internal	Control-Integrated	Framework	issued	by	the	Committee	of Sponsoring	Organizations	of	the	Treadway	Commission	("COSO	Framework").	Based	on	this	evaluation	under	the	COSO	Framework,	management	concluded	that	our internal	control	over	financial	reporting	was	effective	as	of	December	31,	2018.

The	effectiveness	of	the	Company's	internal	control	over	financial	reporting	as	of	December	31,	2018	has	been	audited	by	PricewaterhouseCoopers	LLP,	an independent	registered	public	accounting	firm,	as	stated	in	their	report,	which	is	included	on	page	F-1.

# Changes	in	Internal	Control	Over	Financial	Reporting

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

# Limitations	on	the	Effectiveness	of	Controls

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

# Item	9B.	Other	Information

# PART	III

# Item	10.	Directors,	Executive	Officers	and	Corporate	Governance

Except	for	information	concerning	executive	officers	(called	for	by	Item	401(b)	of	Regulation	S-K),	which	is	included	in	Part	I	of	this	Annual	Report	and	except	as disclosed	below	with	respect	to	our	Code	of	Ethical	Business	Conduct,	the	information	required	under	Item	10	is	incorporated	herein	by	reference	to	our	definitive proxy	statement	to	be	filed	with	the	SEC	within	120	days	after	the	end	of	our	fiscal	year	ended	December	31,	2018	in	connection	with	our	2019	Annual	General	Meeting of	Shareholders.

# Code	of	Ethical	Business	Conduct

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

# Item	11.	Executive	Compensation

The	information	required	under	Item	11	is	incorporated	herein	by	reference	to	our	definitive	proxy	statement	to	be	filed	with	the	SEC	within	120	days	after	the	end	of our	fiscal	year	ended	December	31,	2018	in	connection	with	our	2019	Annual	General	Meeting	of	Shareholders.

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

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

# Item	14.	Principal	Accounting	Fees	and	Services

# PART	IV

# Item	15.	Exhibits,	Financial	Statement	Schedules

# (1)	Financial	Statements

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

# (2)	Financial	Statement	Schedules

Schedule	II:	Valuation	and	Qualifying	Accounts	for	the	three	years	ended	December	31,	2018	are	included	on	page	61.

# (3)	Exhibits

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

10.2 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	by	NCL	Corporation	Ltd.	(incorporated	herein	by	reference	to	Exhibit	10.5	to	Norwegian	Cruise	Line	Holdings	Ltd.'s	Form	10-K	filed	on February	29,	2016	(File	No.	001-35784))

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

10.16 Amendment	No.	1	to	Amended	and	Restated	Shareholders'	Agreement	of	Norwegian	Cruise	Line	Holdings	Ltd.,	dated	as	of	November	19,	2014,	by and	among	Norwegian	Cruise	Line	Holdings	Ltd.,	Genting	Hong	Kong	Limited,	STAR	NCLC	Holdings	Ltd.,	AAA	Guarantor	Co-Invest	VI	(B), L.P.,	AIF	VI	NCL	(AIV),	L.P.,	AIF	VI	NCL	(AIV	II),	L.P.,	AIF	VI	NCL	(AIV	III),	L.P.,	AIF	VI	NCL	(AIV	IV),	L.P.,	Apollo	Overseas	Partners (Delaware)	VI,	L.P.,	Apollo	Overseas	Partners	(Delaware	892)	VI,	L.P.,	Apollo	Overseas	Partners	VI,	L.P.,	Apollo	Overseas	Partners	(Germany)	VI, L.P.,	TPG	Viking,	L.P.,	TPG	Viking	AIV	I,	L.P.,	TPG	Viking	AIV	II,	L.P.,	TPG	Viking	AIV	III,	L.P.,	AIF	VI	Euro	Holdings,	L.P.,	AAA	Guarantor –	Co-Invest	VII,	L.P.,	AIF	VII	Euro	Holdings,	L.P.,	Apollo	Alternative	Assets,	L.P.,	Apollo	Management	VI,	L.P.	and	Apollo	Management	VII, L.P.	(incorporated	herein	by	reference	to	Exhibit	10.1	to	Norwegian	Cruise	Line	Holdings	Ltd.'s	Form	8-K	filed	on	November	20,	2014	(File	No. 001-35784))

10.17** Termination	Agreement,	dated	as	of	December	3,	2018,	by	and	among	Norwegian	Cruise	Line	Holdings	Ltd.,	Genting	Hong	Kong	Limited,	STAR NCLC	Holdings	Ltd.,	NCL	Athene	LLC,	AAA	Guarantor	–	Co-Invest	VII,	L.P.,	Apollo	Alternative	Assets,	L.P.,	AIF	VI	NCL	(AIV),	L.P.,	AIF	VI NCL	(AIV	II),	L.P.,	AIF	VI	NCL	(AIV	III),	L.P.,	AIF	VI	NCL	(AIV	IV),	L.P.,	AIF	VI	Euro	Holdings,	L.P.,	AIF	VII	Euro	Holdings,	L.P.,	Apollo Management	VI,	L.P.,	Apollo	Management	VII,	L.P.,	Apollo	Overseas	Partners	VI,	L.P.,	Apollo	Overseas	Partners	(Delaware	892)	VI,	L.P.,	Apollo Overseas	Partners	(Delaware)	VI,	L.P.,	Apollo	Overseas	Partners	(Germany)	VI,	L.P.	and	AAA	Guarantor	Co-Invest	VI	(B),	L.P.

10.27 Supplemental	Agreement,	dated	December	22,	2015,	to	€665.9	million	Seahawk	Two	Credit	Agreement,	dated	July	14,	2014,	by	and	among Seahawk	Two,	Ltd.	and	various	other	lenders	therein	defined	and	a	related	guarantee	by	NCL	Corporation	Ltd.	(incorporated	herein	by	reference	to Exhibit	10.35	to	Norwegian	Cruise	Line	Holdings	Ltd.'s	Form	10-K	filed	on	February	29,	2016	(File	No.	001-35784))+†

Table	of	Contents 10.28 Amendment	and	Restatement	Agreement,	dated	October	31,	2014,	but	effective	as	of	November	19,	2014,	relating	to	the	loan	agreement	originally dated	July	18,	2008,	among	Riviera	New	Build,	LLC,	as	borrower,	the	banks	and	financial	institutions	listed	in	Schedule	1	as	lenders,	Crédit Agricole	Corporate	and	Investment	Bank	and	Société	Générale,	as	mandated	lead	arrangers	and	Crédit	Agricole	Corporate	and	Investment	Bank	as agent	and	SACE	agent	(incorporated	herein	by	reference	to	Exhibit	10.72	to	Norwegian	Cruise	Line	Holdings	Ltd.'s	Form		10-K	filed	on	February 27,	2015	(File	No.	001-35784))+†

10.30 Amendment	and	Restatement	Agreement,	dated	October	31,	2014,	but	effective	as	of	November	19,	2014,	relating	to	the	loan	agreement	originally dated	July	18,	2008,	among	Marina	New	Build,	LLC,	as	borrower,	the	banks	and	financial	institutions	listed	in	Schedule	1	as	lenders,	Crédit Agricole	Corporate	and	Investment	Bank	and	Société	Générale,	as	mandated	lead	arrangers	and	Crédit	Agricole	Corporate	and	Investment	Bank	as agent	and	SACE	agent	(incorporated	herein	by	reference	to	Exhibit	10.74	to	Norwegian	Cruise	Line	Holdings	Ltd.'s	Form	10-K	filed	on	February 27,	2015	(File	No.	001-35784))+†

10.32 Amendment	and	Restatement	Agreement,	dated	October	31,	2014,	but	effective	as	of	November	19,	2014,	relating	to	the	loan	agreement	originally dated	July	31,	2013,	among	Explorer	New	Build,	LLC,	as	borrower,	the	banks	and	financial	institutions	listed	in	Schedule	1	as	lenders,	Crédit Agricole	Corporate	and	Investment	Bank,	Société	Générale,	HSBC	Bank	plc,	KFW	IPEX-Bank	GmbH,	as	joint	mandated	lead	arrangers	and	Crédit Agricole	Corporate	and	Investment	Bank	as	agent,	SACE	agent	and	security	trustee	(incorporated	herein	by	reference	to	Exhibit	10.76	to	Norwegian Cruise	Line	Holdings	Ltd.'s	Form	10-K	filed	on	February	27,	2015	(File	No.	001-35784))+†

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

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

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

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

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

10.44** Leonardo	Five	Loan	Agreement,	dated	as	of	December	19,	2018,	but	effective	as	of	January	8,	2019,	among	Leonardo	Five,	Ltd.,	as	borrower,	the banks	and	financial	institutions	listed	in	Schedule	1	as	lenders,	Crédit	Agricole	Corporate	and	Investment	Bank,	BNP	Paribas	Fortis	S.A./N.V., HSBC	Bank	plc,	KFW	IPEX-Bank	GmbH,	Cassa	Depositi	E	Prestiti	S.P.A.,	Banco	Santander,	S.A.	and	Société	Générale,	as	joint	mandated	lead arrangers,	BNP	Paribas	as	agent	and	HSBC	Corporate	Trustee	Company	(UK)	Limited	as	security	trustee#

10.45** Guarantee	relating	to	the	Leonardo	Five	Loan	Agreement,	dated	as	of	December	19,	2018,	but	effective	as	of	January	8,	2019,	among	NCL Corporation	Ltd.,	as	guarantor,	and	HSBC	Corporate	Trustee	Company	(UK)	Limited	as	security	trustee#

10.46** Leonardo	Six	Loan	Agreement,	dated	as	of	December	19,	2018,	but	effective	as	of	January	8,	2019,	among	Leonardo	Six,	Ltd.,	as	borrower,	the banks	and	financial	institutions	listed	in	Schedule	1	as	lenders,	Crédit	Agricole	Corporate	and	Investment	Bank,	BNP	Paribas	Fortis	S.A./N.V., HSBC	Bank	plc,	KFW	IPEX-Bank	GmbH,	Cassa	Depositi	E	Prestiti	S.P.A.,	Banco	Santander,	S.A.	and	Société	Générale,	as	joint	mandated	lead arrangers,	BNP	Paribas	as	agent	and	HSBC	Corporate	Trustee	Company	(UK)	Limited	as	security	trustee#

10.47** Guarantee	relating	to	the	Leonardo	Six	Loan	Agreement,	dated	as	of	December	19,	2018,	but	effective	as	of	January	8,	2019,	among	NCL Corporation	Ltd.,	as	guarantor,	and	HSBC	Corporate	Trustee	Company	(UK)	Limited	as	security	trustee#

10.48** O	Class	Plus	One	Loan	Agreement,	dated	as	of	December	19,	2018,	but	effective	as	of	January	8,	2019,	among	O	Class	Plus	One,	LLC,	as borrower,	the	banks	and	financial	institutions	listed	in	Schedule	1	as	lenders,	Crédit	Agricole	Corporate	and	Investment	Bank,	BNP	Paribas	Fortis S.A./N.V.,	HSBC	Bank	plc,	KFW	IPEX-Bank	GmbH,	Cassa	Depositi	E	Prestiti	S.P.A.,	Banco	Santander,	S.A.	and	Société	Générale,	as	joint mandated	lead	arrangers,	BNP	Paribas	as	agent	and	HSBC	Corporate	Trustee	Company	(UK)	Limited	as	security	trustee#

10.49** Guarantee	relating	to	the	O	Class	Plus	One	Loan	Agreement,	dated	as	of	December	19,	2018,	but	effective	as	of	January	8,	2019,	among	NCL Corporation	Ltd.,	as	guarantor,	and	HSBC	Corporate	Trustee	Company	(UK)	Limited	as	security	trustee#

10.50** O	Class	Plus	Two	Loan	Agreement,	dated	as	of	December	19,	2018,	but	effective	as	of	January	8,	2019,	among	O	Class	Plus	Two,	LLC,	as borrower,	the	banks	and	financial	institutions	listed	in	Schedule	1	as	lenders,	Crédit	Agricole	Corporate	and	Investment	Bank,	BNP	Paribas	Fortis S.A./N.V.,	HSBC	Bank	plc,	KFW	IPEX-Bank	GmbH,	Cassa	Depositi	E	Prestiti	S.P.A.,	Banco	Santander,	S.A.	and	Société	Générale,	as	joint mandated	lead	arrangers,	BNP	Paribas	as	agent	and	HSBC	Corporate	Trustee	Company	(UK)	Limited	as	security	trustee#

10.51** Guarantee	relating	to	the	O	Class	Plus	Two	Loan	Agreement,	dated	as	of	December	19,	2018,	but	effective	as	of	January	8,	2019,	among	NCL Corporation	Ltd.,	as	guarantor,	and	HSBC	Corporate	Trustee	Company	(UK)	Limited	as	security	trustee#

10.52** $230	million	Credit	Agreement,	dated	January	10,	2019,	among	NCL	Corporation	Ltd.,	as	borrower,	Nordea	Bank	ABP,	New	York	Branch,	as administrative	agent	and	collateral	agent	and	the	other	lenders	party	thereto	as	joint	bookrunners,	arrangers,	co-documentation	agents	and	lenders#

10.53** Explorer	III	New	Build	Loan	Agreement,	dated	as	of	December	19,	2018,	but	effective	as	of	January	15,	2019,	among	Explorer	III	New	Build, LLC,	as	borrower,	the	banks	and	financial	institutions	listed	in	Schedule	1	as	lenders,	Crédit	Agricole	Corporate	and	Investment	Bank,	BNP	Paribas Fortis	S.A./N.V.,	HSBC	Bank	plc,	KFW	IPEX-Bank	GmbH,	Cassa	Depositi	E	Prestiti	S.P.A.,	Banco	Santander,	S.A.	and	Société	Générale,	as	joint mandated	lead	arrangers,	BNP	Paribas	as	agent	and	HSBC	Corporate	Trustee	Company	(UK)	Limited	as	security	trustee#

10.59 Employment	Agreement	by	and	between	NCL	(Bahamas)	Ltd.	and	T.	Robin	Lindsay,	entered	into	on	October	18,	2015	(incorporated	herein	by reference	to	Exhibit	10.2	to	Norwegian	Cruise	Line	Holdings	Ltd.'s	Form	10-Q	filed	on	May	10,	2017	(File	No.	001-35784))* 10.60 Employment	Agreement	by	and	between	Prestige	Cruise	Services,	LLC	and	Jason	Montague,	entered	into	on	September	16,	2016	(incorporated herein	by	reference	to	Exhibit	10.3	to	Norwegian	Cruise	Line	Holdings	Ltd.'s	Form	8-K	filed	on	September	19,	2016	(File	No.	001-35784))* 10.61 Amended	and	Restated	Executive	Employment	Agreement	by	and	between	Oceania	Cruises,	Inc.	and	Frank	J.	Del	Rio,	entered	into	on	June	5,	2014 (incorporated	herein	by	reference	to	Exhibit	10.1	to	Seven	Seas	Cruises	S.	DE	R.L.'s	Form	8-K	filed	on	June	10,	2014	(File	No.	333-178244))*

10.75 Form	of	Norwegian	Cruise	Line	Holdings	Ltd.	Time-based	Restricted	Share	Unit	Award	Agreement	(2017)	(incorporated	herein	by	reference	to Exhibit	10.52	to	Norwegian	Cruise	Line	Holdings	Ltd.'s	Form	10-K	filed	on	February	27,	2017	(File	No.	001-35784))*

23.1** Consent	of	PricewaterhouseCoopers	LLP,	independent	registered	public	accounting	firm

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

31.1** Certification	of	the	Annual	Report	Pursuant	to	Section	302	of	the	Sarbanes-Oxley	Act	of	2002	by	the	President	and	Chief	Executive	Officer

31.2** Certification	of	the	Annual	Report	Pursuant	to	Section	302	of	the	Sarbanes-Oxley	Act	of	2002	by	the	Executive	Vice	President	and	Chief	Financial Officer

32.1*** Certification	of	the	Annual	Report	Pursuant	to	Section	906	of	the	Sarbanes-Oxley	Act	of	2002	by	the	Chief	Executive	Officer	and	Chief	Financial Officer

101** The	following	materials	from	Norwegian	Cruise	Line	Holdings	Ltd.'s	Annual	Report	on	Form	10-K	formatted	in	Extensible	Business	Reporting Language	(XBRL),	as	follows:	(i)	Consolidated	Statements	of	Operations	of	NCLH	for	the	years	ended	December	31,	2018,	2017	and	2016;	(ii) Consolidated	Statements	of	Comprehensive	Income	of	NCLH	for	the	years	ended	December	31,	2018,	2017	and	2016;	(iii)	Consolidated	Balance Sheets	of	NCLH	as	of	December	31,	2018	and	2017;	(iv)	Consolidated	Statements	of	Cash	Flows	of	NCLH	for	the	years	ended	December	31,	2018, 2017	and	2016;	(v)	Consolidated	Statements	of	Changes	in	Shareholders'	Equity	of	NCLH	for	the	years	ended	December	31,	2018,	2017	and	2016; (vi)	the	Notes	to	the	Consolidated	Financial	Statements;	and	(vii)	Schedule	II	Valuation	and	Qualifying	Accounts	tagged	in	summary	and	detail.

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

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

† Agreement	restates	previous	versions	of	agreement.

* Management	contract	or	compensatory	plan.

** Filed	herewith.

*** Furnished	herewith.

# SIGNATURES

Pursuant	to	the	requirements	of	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934,	as	amended,	the	registrant	has	duly	caused	this	annual	report	on	Form 10-K	to	be	signed	on	its	behalf	by	the	undersigned,	thereunto	duly	authorized,	in	Miami,	Florida,	on	February	27,	2019.

Name: Frank	J.	Del	Rio

Title: Director,	President	and	Chief	Executive	Officer

# POWER	OF	ATTORNEY

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

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

| Signature | Title | Date |
| :--- | :--- | :--- |
| /s/\tFrank\tJ.\tDel\tRio | Director,\tPresident\tand\tChief\tExecutive\tOfficer | February\t27,\t2019 |
| Frank\tJ.\tDel\tRio | (Principal\tExecutive\tOfficer) |  |
| /s/\tMark\tA.\tKempa | Executive\tVice\tPresident\tand\tChief\tFinancial\tOfficer | February\t27,\t2019 |
| Mark\tA.\tKempa | (Principal\tFinancial\tOfficer) |  |
| /s/\tFaye\tL.\tAshby | Senior\tVice\tPresident\tand\tChief\tAccounting\tOfficer | February\t27,\t2019 |
| Faye\tL.\tAshby | (Principal\tAccounting\tOfficer) |  |
| /s/\tAdam\tM.\tAron | Director | February\t27,\t2019 |
| Adam\tM.\tAron |  |  |
| /s/\tJohn\tChidsey | Director | February\t27,\t2019 |
| John\tChidsey |  |  |
| /s/\tChad\tA.\tLeat | Director | February\t27,\t2019 |
| Chad\tA.\tLeat |  |  |
| /s/\tSteve\tMartinez | Director | February\t27,\t2019 |
| Steve\tMartinez |  |  |
| /s/\tDavid\tM.\tAbrams | Director | February\t27,\t2019 |
| David\tM.\tAbrams |  |  |
| /s/\tStella\tDavid | Director | February\t27,\t2019 |
| Stella\tDavid |  |  |
| /s/\tRussell\tW.\tGalbut | Director | February\t27,\t2019 |
| Russell\tW.\tGalbut |  |  |
| /s/\tPamela\tThomas-Graham | Director | February\t27,\t2019 |

# Schedule	II	Valuation	and	Qualifying	Accounts	(in	thousands)

|  | Schedule	II	Valuation	and	Qualifying	Accounts	(in	thousands) | Norwegian	Cruise	Line	Holdings	Ltd. |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Description | Balance\n12/31/15 | Additions\nCharged\tto\ncosts\tand\nexpenses | Charged\tto\nother\taccounts | Deductions\t(a) | Balance\n12/31/16 |
| Valuation\tallowance\ton\tdeferred\ttax\tassets | $61,437 | $— | $9,382 | $(6,246) | $64,573 |

| Description | Balance<br>12/31/16 | Charged	to<br>costs	and<br>expenses | Charged	to<br>other	accounts | Deductions	(a) | Balance<br>12/31/17 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Valuation\tallowance\ton\tdeferred\ttax\tassets | $64,573 | $— | $— | $(22,419) | $42,154 |

| Description | Balance<br>12/31/17 | Charged	to<br>costs	and<br>expenses | Charged	to<br>other	accounts | Deductions	(a) | Balance<br>12/31/18 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Valuation\tallowance\ton\tdeferred\ttax\tassets | $42,154 | $— | $276 | $(506) | $41,924 |

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

# Index	to	Consolidated	Financial	Statements

# Report	of	Independent	Registered	Public	Accounting	Firm

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

# Opinions	on	the	Financial	Statements	and	Internal	Control	over	Financial	Reporting

We	have	audited	the	accompanying	consolidated	balance	sheets	of	Norwegian	Cruise	Line	Holdings	Ltd.	and	its	subsidiaries	(the	"Company")	as	of	December	31,	2018 and	2017,	and	the	related	consolidated	statements	of	operations,	comprehensive	income,	changes	in	shareholders'	equity,	and	cash	flows	for	each	of	the	three	years	in the	period	ended	December	31,	2018,	including	the	related	notes	and	financial	statement	schedule	listed	in	the	index	appearing	under	Item	15(2)	(collectively	referred	to as	the	"consolidated	financial	statements").	We	also	have	audited	the	Company's	internal	control	over	financial	reporting	as	of	December	31,	2018,	based	on	criteria established	in	Internal	Control	-	Integrated	Framework	(2013)	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	(COSO).

In	our	opinion,	the	consolidated	financial	statements	referred	to	above	present	fairly,	in	all	material	respects,	the	financial	position	of	the	Company	as	of	December	31, 2018	and	2017,	and	the	results	of	its	operations	and	its	cash	flows	for	each	of	the	three	years	in	the	period	ended	December	31,	2018	in	conformity	with	accounting principles	generally	accepted	in	the	United	States	of	America.	Also	in	our	opinion,	the	Company	maintained,	in	all	material	respects,	effective	internal	control	over financial	reporting	as	of	December	31,	2018,	based	on	criteria	established	in	Internal	Control	-	Integrated	Framework	(2013)	issued	by	the	COSO.

# Basis	for	Opinions

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

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

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

# Definition	and	Limitations	of	Internal	Control	over	Financial	Reporting

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

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

/s/	PricewaterhouseCoopers	LLP

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

# Consolidated	Statements	of	Operations

# (in	thousands,	except	share	and	per	share	data)

|  | 2018 | Year	Ended	December	31,<br>2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Revenue |  |  |  |
| Passenger\tticket | $4,259,815 | $3,750,030 | $3,388,954 |
| Onboard\tand\tother | 1,795,311 | 1,646,145 | 1,485,386 |
| Total\trevenue | 6,055,126 | 5,396,175 | 4,874,340 |
| Cruise\toperating\texpense |  |  |  |
| Commissions,\ttransportation\tand\tother | 998,948 | 894,406 | 813,559 |
| Onboard\tand\tother | 348,656 | 319,293 | 298,886 |
| Payroll\tand\trelated | 881,606 | 803,632 | 746,142 |
| Fuel | 392,685 | 361,032 | 335,174 |
| Food | 216,031 | 198,357 | 200,071 |
| Other | 539,150 | 486,924 | 456,393 |
| Total\tcruise\toperating\texpense | 3,377,076 | 3,063,644 | 2,850,225 |
| Other\toperating\texpense |  |  |  |
| Marketing,\tgeneral\tand\tadministrative | 897,929 | 773,755 | 666,156 |
| Depreciation\tand\tamortization | 561,060 | 509,957 | 432,495 |
| Total\tother\toperating\texpense | 1,458,989 | 1,283,712 | 1,098,651 |
| Operating\tincome | 1,219,061 | 1,048,819 | 925,464 |
| Non-operating\tincome\t(expense) |  |  |  |
| Interest\texpense,\tnet | (270,404) | (267,804) | (276,859) |
| Other\tincome\t(expense),\tnet | 20,653 | (10,401) | (8,302) |
| Total\tnon-operating\tincome\t(expense) | (249,751) | (278,205) | (285,161) |
| Net\tincome\tbefore\tincome\ttaxes | 969,310 | 770,614 | 640,303 |
| Income\ttax\texpense | (14,467) | (10,742) | (7,218) |
| Net\tincome | $954,843 | $759,872 | $633,085 |
| Weighted-average\tshares\toutstanding |  |  |  |
| Basic | 223,001,739 | 228,040,825 | 227,121,875 |
| Diluted | 224,419,205 | 229,418,326 | 227,850,286 |
| Earnings\tper\tshare |  |  |  |
| Basic | $4.28 | $3.33 | $2.79 |
| Diluted | $4.25 | $3.31 | $2.78 |

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

# Consolidated	Statements	of	Comprehensive	Income

# (in	thousands)

|  | 2018 | Year	Ended	December	31,<br>2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Net\tincome | $954,843 | $759,872 | $633,085 |
| Other\tcomprehensive\tincome\t(loss): |  |  |  |
| Shipboard\tRetirement\tPlan | 2,697 | (40) | 497 |
| Cash\tflow\thedges: |  |  |  |
| Net\tunrealized\tgain\t(loss)\trelated\tto\tcash\tflow\thedges | (161,214) | 304,684 | 1,711 |
| Amount\trealized\tand\treclassified\tinto\tearnings | (30,096) | 36,795 | 95,969 |
| Total\tother\tcomprehensive\tincome\t(loss) | (188,613) | 341,439 | 98,177 |
| Total\tcomprehensive\tincome | $766,230 | $1,101,311 | $731,262 |

# Consolidated	Balance	Sheets

# (in	thousands,	except	share	data)

|  | December	31,<br>2018 | 2017 |
| :--- | :--- | :--- |
| Assets |  |  |
| Current\tassets: |  |  |
| Cash\tand\tcash\tequivalents | $163,851 | $176,190 |
| Accounts\treceivable,\tnet | 55,249 | 43,961 |
| Inventories | 90,202 | 82,121 |
| Prepaid\texpenses\tand\tother\tassets | 241,011 | 216,065 |
| Total\tcurrent\tassets | 550,313 | 518,337 |
| Property\tand\tequipment,\tnet | 12,119,253 | 11,040,488 |
| Goodwill | 1,388,931 | 1,388,931 |
| Tradenames | 817,525 | 817,525 |
| Other\tlong-term\tassets | 329,948 | 329,588 |
| Total\tassets | $15,205,970 | $14,094,869 |
| Liabilities\tand\tshareholders'\tequity |  |  |
| Current\tliabilities: |  |  |
| Current\tportion\tof\tlong-term\tdebt | $681,218 | $619,373 |
| Accounts\tpayable | 159,564 | 53,433 |
| Accrued\texpenses\tand\tother\tliabilities | 716,499 | 513,717 |
| Advance\tticket\tsales | 1,593,219 | 1,303,498 |
| Total\tcurrent\tliabilities | 3,150,500 | 2,490,021 |
| Long-term\tdebt | 5,810,873 | 5,688,392 |
| Other\tlong-term\tliabilities | 281,596 | 166,690 |
| Total\tliabilities | 9,242,969 | 8,345,103 |
| Commitments\tand\tcontingencies\t(Note\t12) |  |  |
| Shareholders'\tequity: |  |  |
| outstanding\tat\tDecember\t31,\t2018\tand\t233,840,523\tshares\tissued\tand\t228,528,562\tshares\toutstanding\tat\tDecember |  |  |
| 31,\t2017 | 235 | 233 |
| Additional\tpaid-in\tcapital | 4,129,639 | 3,998,694 |
| Accumulated\tother\tcomprehensive\tincome\t(loss) | (161,647) | 26,966 |
| Retained\tearnings | 2,898,840 | 1,963,128 |
| Treasury\tshares\t(17,833,969\tordinary\tshares\tat\tDecember\t31,\t2018\tand\t5,311,961\tordinary\tshares\tat\tDecember\t31, |  |  |
| 2017\tat\tcost) | (904,066) | (239,255) |
| Total\tshareholders'\tequity | 5,963,001 | 5,749,766 |
| Total\tliabilities\tand\tshareholders'\tequity | $15,205,970 | $14,094,869 |

# Consolidated	Statements	of	Cash	Flows

|  | 2018 | Year	Ended	December	31,<br>2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Cash\tflows\tfrom\toperating\tactivities |  |  |  |
| Net\tincome | $954,843 | $759,872 | $633,085 |
| Adjustments\tto\treconcile\tnet\tincome\tto\tnet\tcash\tprovided\tby\toperating\tactivities: |  |  |  |
| Depreciation\tand\tamortization | 566,972 | 521,484 | 445,635 |
| (Gain)\tloss\ton\tderivatives | — | (103) | 79 |
| Deferred\tincome\ttaxes,\tnet | 1,508 | 9,153 | (2,448) |
| Loss\ton\textinguishment\tof\tdebt | 6,346 | 22,211 | 38,180 |
| Provision\tfor\tbad\tdebts\tand\tinventory | 5,570 | 2,431 | 3,866 |
| Share-based\tcompensation\texpense | 115,983 | 87,039 | 66,414 |
| Net\tforeign\tcurrency\tadjustments | (5,537) | — | — |
| Changes\tin\toperating\tassets\tand\tliabilities: |  |  |  |
| Accounts\treceivable,\tnet | (15,886) | 15,050 | (20,983) |
| Inventories | (9,052) | (17,129) | (9,184) |
| Prepaid\texpenses\tand\tother\tassets | (29,519) | (22,714) | (13,363) |
| Accounts\tpayable | 106,387 | 14,047 | (5,755) |
| Accrued\texpenses\tand\tother\tliabilities | 114,953 | 55,894 | (6,410) |
| Advance\tticket\tsales | 262,603 | 154,012 | 134,971 |
| Net\tcash\tprovided\tby\toperating\tactivities | 2,075,171 | 1,601,247 | 1,264,087 |
| Cash\tflows\tfrom\tinvesting\tactivities |  |  |  |
| Additions\tto\tproperty\tand\tequipment,\tnet | (1,566,796) | (1,372,214) | (1,092,091) |
| Net\tproceeds\tfrom\tsale\tof\tHawaii\tland-based\toperations | — | 499 | — |
| Promissory\tnote\treceipts | 1,011 | 165 | — |
| Cash\treceived\ton\tsettlement\tof\tderivatives | 64,796 | 2,346 | 131 |
| Cash\tpaid\ton\tsettlement\tof\tderivatives | (1,719) | (35,694) | (36,954) |
| \t\t\t\tNet\tcash\tused\tin\tinvesting\tactivities | (1,502,708) | (1,404,898) | (1,128,914) |
| Cash\tflows\tfrom\tfinancing\tactivities |  |  |  |
| Repayments\tof\tlong-term\tdebt | (1,716,244) | (1,916,885) | (3,744,029) |
| Repayments\tto\tAffiliate | — | — | (18,522) |
| Proceeds\tfrom\tlong-term\tdebt | 1,904,865 | 1,816,390 | 3,753,928 |
| Proceeds\tfrom\temployee\trelated\tplans | 28,819 | 30,032 | 9,169 |
| Net\tshare\tsettlement\tof\trestricted\tshare\tunits | (13,855) | (6,342) | — |
| Purchases\tof\ttreasury\tshares | (664,811) | — | (49,999) |
| Early\tredemption\tpremium | (5,154) | (15,506) | (19,250) |
| Deferred\tfinancing\tfees\tand\tother | (118,422) | (56,195) | (54,060) |
| \t\t\tNet\tcash\tused\tin\tfinancing\tactivities | (584,802) | (148,506) | (122,763) |
| \t\t\t\tNet\tincrease\t(decrease)\tin\tcash\tand\tcash\tequivalents | (12,339) | 47,843 | 12,410 |
| Cash\tand\tcash\tequivalents\tat\tbeginning\tof\tyear | 176,190 | 128,347 | 115,937 |
| Cash\tand\tcash\tequivalents\tat\tend\tof\tyear | $163,851 | $176,190 | $128,347 |

# Consolidated	Statements	of	Changes	in	Shareholders'	Equity

|  |  |  | Accumulated |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Additional | Other |  |  | Total |
|  | Ordinary | Paid-in | Comprehensive | Retained | Treasury | Shareholders' |
|  | Shares | Capital | Income\t(Loss) | Earnings | Shares | Equity |
| Balance,\tDecember\t31,\t2015 | $232 | $3,814,536 | $(412,650) | $568,018 | $(189,256) | $3,780,880 |
| Share-based\tcompensation | — | 66,414 | — | — | — | 66,414 |
| Issuance\tof\tshares\tunder\temployee\trelated\tplans | — | 9,169 | — | — | — | 9,169 |
| Treasury\tshares | — | — | — | — | (49,999) | (49,999) |
| Other\tcomprehensive\tincome,\tnet | — | — | 98,177 | — | — | 98,177 |
| Net\tincome | — | — | — | 633,085 | — | 633,085 |
| Balance,\tDecember\t31,\t2016 | 232 | 3,890,119 | (314,473) | 1,201,103 | (239,255) | 4,537,726 |
| Share-based\tcompensation | — | 87,039 | — | — | — | 87,039 |
| Issuance\tof\tshares\tunder\temployee\trelated\tplans | 1 | 30,031 | — | — | — | 30,032 |
| Net\tshare\tsettlement\tof\trestricted\tshare\tunits | — | (6,342) | — | — | — | (6,342) |
| Cumulative\tchange\tin\taccounting\tpolicy | — | (2,153) | — | 2,153 | — | — |
| Other\tcomprehensive\tincome,\tnet | — | — | 341,439 | — | — | 341,439 |
| Net\tincome | — | — | — | 759,872 | — | 759,872 |
| Balance,\tDecember\t31,\t2017 | 233 | 3,998,694 | 26,966 | 1,963,128 | (239,255) | 5,749,766 |
| Share-based\tcompensation | — | 115,983 | — | — | — | 115,983 |
| Issuance\tof\tshares\tunder\temployee\trelated\tplans | 2 | 28,817 | — | — | — | 28,819 |
| Repurchase\tof\tshares | — | — | — | — | (664,811) | (664,811) |
| Net\tshare\tsettlement\tof\trestricted\tshare\tunits | — | (13,855) | — | — | — | (13,855) |
| Cumulative\tchange\tin\taccounting\tpolicy | — | — | (12) | (19,131) | — | (19,143) |
| Other\tcomprehensive\tincome,\tnet | — | — | (188,601) | — | — | (188,601) |
| Net\tincome | — | — | — | 954,843 | — | 954,843 |
| Balance,\tDecember\t31,\t2018 | $235 | $4,129,639 | $(161,647) | $2,898,840 | $(904,066) | $5,963,001 |

# Notes	to	the	Consolidated	Financial	Statements

# 1. Description	of	Business	and	Organization

We	are	a	leading	global	cruise	company	which	operates	the	Norwegian	Cruise	Line,	Oceania	Cruises	and	Regent	Seven	Seas	Cruises	brands.	As	of	December	31,	2018, we	had	26	ships	with	approximately	54,400	Berths	and	had	orders	for	eight	additional	ships	to	be	delivered	through	2027,	subject	to	certain	conditions.	These	eight orders	consist	of	Norwegian	Encore,	a	Breakaway	Plus	Class	Ship,	for	delivery	in	the	fall	of	2019;	Seven	Seas	Splendor,	an	Explorer	Class	Ship,	for	delivery	in	the winter	of	2020;	and	Project	Leonardo,	which	will	introduce	an	additional	six	ships	with	expected	delivery	dates	through	2027.	We	also	plan	to	introduce	three	additional ships	(we	refer	you	to	Note	17—	"Subsequent	Events").	The	addition	of	these	11	ships	to	our	fleet	will	increase	our	total	Berths	to	approximately	82,000.

Norwegian	commenced	operations	from	Miami	in	1966.	In	February	2011,	NCLH,	a	Bermuda	limited	company,	was	formed	with	the	issuance	to	the	Sponsors	of,	in aggregate,	10,000	ordinary	shares,	with	a	par	value	of	$.001	per	share.	In	January	2013,	NCLH	completed	its	IPO	and	the	ordinary	shares	of	NCLC,	all	of	which	were owned	by	the	Sponsors,	were	exchanged	for	the	ordinary	shares	of	NCLH,	and	NCLH	became	the	owner	of	100%	of	the	ordinary	shares	and	parent	company	of	NCLC (the	"Corporate	Reorganization").	At	the	same	time,	NCLH	contributed	$460.0	million	to	NCLC	and	the	historical	financial	statements	of	NCLC	became	those	of NCLH.	The	Corporate	Reorganization	was	affected	solely	for	the	purpose	of	reorganizing	our	corporate	structure.

# 2. Summary	of	Significant	Accounting	Policies

# Basis	of	Presentation

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

# Reclassifications

Certain	amounts	in	prior	periods	have	been	reclassified	to	conform	to	the	current	period	presentation.

In	August	2016,	the	Financial	Accounting	Standards	Board	("FASB")	issued	Accounting	Standards	Update	("ASU")	No.	2016-15,	Statement	of	Cash	Flows	(Topic	230) Classification	of	Certain	Cash	Receipts	and	Cash	Payments,	to	eliminate	discrepancies	in	presenting	and	classifying	certain	cash	receipts	and	payments	in	the	statement of	cash	flows.	Effective	January	1,	2018,	the	Company	adopted	the	update	using	a	retrospective	transition	method,	which	required	an	adjustment	to	cash	flows	from operating	activities	and	financing	activities	in	our	consolidated	statements	of	cash	flows	for	the	years	ended	December	31,	2017	and	2016.	Cash	payments	for	debt prepayment	or	debt	extinguishment	costs,	including	third-party	costs,	other	fees	paid	to	lenders	and	premiums	paid	that	are	directly	related	to	debt	prepayment	or	debt extinguishment,	excluding	accrued	interest,	are	required	to	be	classified	as	cash	outflows	from	financing	activities.

The	effects	of	the	change	on	our	consolidated	statements	of	cash	flows	were	as	follows	(in	thousands):

|  | As<br>Reported | 2017<br>Previously<br>Reported | Effect	of<br>Change | As<br>Reported | 2016<br>Previously<br>Reported | Effect	of<br>Change |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Cash\tflows\tfrom\toperating\tactivities |  |  |  |  |  |  |
| Adjustments\tto\treconcile\tnet\tincome\tto\tnet\tcash\tprovided\tby |  |  |  |  |  |  |
| operating\tactivities: |  |  |  |  |  |  |
| Loss\ton\textinguishment\tof\tdebt\t(previously\twrite-off\tof |  |  |  |  |  |  |
| financing\tfees) | $22,211 | $6,705 | $15,506 | $38,180 | $18,930 | $19,250 |
| Changes\tin\toperating\tassets\tand\tliabilities: |  |  |  |  |  |  |
| Prepaid\texpenses\tand\tother\tassets | $(22,714) | $(22,714) | $— | $(13,363) | $(18,534) | $5,171 |
| Net\tcash\tprovided\tby\toperating\tactivities | $1,601,247 | $1,585,741 | $15,506 | $1,264,087 | $1,239,666 | $24,421 |
| Cash\tflows\tfrom\tfinancing\tactivities |  |  |  |  |  |  |
| Early\tredemption\tpremium | $(15,506) | $— | $(15,506) | $(19,250) | $— | $(19,250) |
| Deferred\tfinancing\tfees\tand\tother | $(56,195) | $(56,195) | $— | $(54,060) | $(48,889) | $(5,171) |
| Net\tcash\tused\tin\tfinancing\tactivities | $(148,506) | $(133,000) | $(15,506) | $(122,763) | $(98,342) | $(24,421) |

# Cash	and	Cash	Equivalents

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

# Accounts	Receivable,	Net

Accounts	receivable	are	shown	net	of	an	allowance	for	doubtful	accounts	of	$9.6	million	and	$5.9	million	as	of	December	31,	2018	and	2017,	respectively.

# Inventories

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

# Advertising	Costs

Advertising	costs	are	expensed	as	incurred	except	for	those	that	result	in	tangible	assets,	including	brochures,	which	are	treated	as	prepaid	expenses	and	charged	to expense	as	consumed.	Advertising	costs	of	$0.8	million	and	$2.4	million	as	of	December	31,	2018	and	2017,	respectively,	are	included	in	prepaid	expenses	and	other assets.	Expenses	related	 to	advertising	costs	 totaled	$327.3	million,	$289.1	million	and	$270.5	million	for	 the	years	ended	December	31,	2018,	2017	and	2016, respectively.

# Earnings	Per	Share

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

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

|  |  | Year	Ended	December	31, |  |
| :--- | :--- | :--- | :--- |
|  | 2018 | 2017 | 2016 |
| Net\tincome | $954,843 | $759,872 | \t $633,085 |
| Basic\tweighted-average\tshares\toutstanding | 223,001,739 | 228,040,825 | 227,121,875 |
| Dilutive\teffect\tof\tshare\tawards | 1,417,466 | 1,377,501 | 728,411 |
| Diluted\tweighted-average\tshares\toutstanding | 224,419,205 | 229,418,326 | 227,850,286 |
| Basic\tearnings\tper\tshare | $4.28 | $3.33 | \t $2.79 |
| Diluted\tearnings\tper\tshare | $4.25 | $3.31 | \t $2.78 |

For	the	years	ended	December	31,	2018,	2017	and	2016,	a	total	of	4.7	million,	5.6	million	and	7.1	million	shares,	respectively,	have	been	excluded	from	diluted weighted-average	shares	outstanding	because	the	effect	of	including	them	would	have	been	anti-dilutive.

# Property	and	Equipment,	Net

Property	and	equipment	are	recorded	at	cost.	Major	renewals	and	improvements	that	we	believe	add	value	to	our	ships	are	capitalized	as	a	cost	of	the	ship	while	costs	of repairs	and	maintenance,	including	Dry-dock	costs,	are	charged	to	expense	as	incurred.	During	ship	construction,	certain	interest	is	capitalized	as	a	cost	of	the	ship. Gains	or	losses	on	the	sale	of	property	and	equipment	are	recorded	as	a	component	of	operating	income	(expense)	in	our	consolidated	statements	of	operations.

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

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

# Goodwill	and	Tradenames

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

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

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

We	have	concluded	that	our	business	has	three	reporting	units.	Each	brand,	Norwegian,	Regent	and	Oceania	Cruises,	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.

# Revenue	and	Expense	Recognition

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

# Disaggregation	of	Revenue

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

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

|  |  | Year	Ended	December	31, |  |
| :--- | :--- | :--- | :--- |
|  | 2018 | 2017 | 2016 |
| North\tAmerica | $3,543,282 | $3,285,903 | \t $3,132,208 |
| Europe | 1,462,698 | 1,347,381 | 1,148,403 |
| Asia-Pacific | 721,404 | 394,631 | 196,978 |
| Other | 327,742 | 368,260 | 396,751 |
| Total\tRevenues | $6,055,126 | $5,396,175 | \t $4,874,340 |

# Segment	Reporting

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

Although	we	sell	cruises	on	an	international	basis,	our	passenger	ticket	revenue	is	primarily	attributed	to	U.S.-sourced	guests	who	make	reservations	in	the	U.S.	Revenue attributable	to	U.S.-sourced	guests	was	77%,	77%	and	81%	for	the	years	ended	December	31,	2018,	2017	and	2016,	respectively.	No	other	individual	country's	revenues exceeded	10%	in	any	of	our	last	three	years.

Substantially	all	of	our	long-lived	assets	are	located	outside	of	the	U.S.	and	consist	primarily	of	our	ships.	We	had	18	ships	with	Bahamas	registry	with	a	carrying	value of	$9.1	billion	as	of	December	31,	2018	and	17	ships	with	Bahamas	registry	with	a	carrying	value	of	$8.0	billion	as	of	December	31,	2017.	We	had	seven	ships	with Marshall	Island	registry	with	a	carrying	value	of	$1.9	billion	as	of	December	31,	2018	and	2017.	We	also	had	one	ship	with	U.S.	registry	with	a	carrying	value	of	$0.3 billion	as	of	December	31,	2018	and	2017.

# Debt	Issuance	Costs

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

# Foreign	Currency

The	majority	of	our	transactions	are	settled	in	U.S.	dollars.	Gains	or	losses	resulting	from	transactions	denominated	in	other	currencies	are	recognized	in	income	at	each balance	 sheet	 date.	We	 recognized	 (gains)	 losses	 of	 $(19.8)	 million,	 $14.2	 million	 and	 $(4.5)	 million	 for	 the	 years	 ended	 December	 31,	 2018,	 2017	 and	 2016, respectively.

# Derivative	Instruments	and	Hedging	Activity

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

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

# Concentrations	of	Credit	Risk

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

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

# Income	Taxes

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

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

# Share-Based	Compensation

We	recognize	expense	for	our	share-based	compensation	awards	using	a	fair-value-based	method.	Share-based	compensation	expense	is	recognized	over	the	requisite service	period	for	awards	that	are	based	on	a	service	period	and	not	contingent	upon	any	future	performance.	We	refer	you	to	Note	10—	"Employee	Benefits	and	Share- Based	Compensation."

# Recently	Issued	and	Adopted	Accounting	Guidance

In	 August	 2018, the	 FASB issued	 ASU	 No.	 2018-15, Intangibles—Goodwill	 and	 Other—Internal-Use	 Software	 (Subtopic	 350-40):	 Customer's	 Accounting	 for Implementation	Costs	Incurred	in	a	Cloud	Computing	Arrangement	That	is	a	Service	Contract	(a	consensus	of	the	FAS	Emerging	Issues	Task	Force),	 which	is	designed to	align	the	accounting	for	costs	of	implementing	a	cloud	computing	service	arrangement,	regardless	of	whether	the	hosting	arrangement	conveys	a	license	to	the	hosted software.	The	update	requires	that	for	hosting	arrangements	considered	to	be	a	service	contract,	the	criteria	for	capitalization	of	developing	or	obtaining	internal-use software	shall	be	applied.	The	update	is	effective	for	annual	periods,	including	interim	periods	within	those	annual	periods,	beginning	after	December	15,	2020,	with early	adoption	permitted,	including	adoption	in	any	interim	period.	A	prospective	or	retrospective	transition	approach	must	be	elected.	The	Company	is	evaluating	the impact	of	this	guidance	on	the	Company's	consolidated	financial	statements.

On	January	1,	2018,	the	Company	adopted	ASU	No.	2017-12,	Derivatives	and	Hedging	(Topic	815)	—	Targeted	Improvements	to	Accounting	for	Hedging	Activities, which	simplifies	the	accounting	for	derivatives.	For	derivative	instruments	that	are	designated	and	qualify	as	cash	flow	hedges,	the	gain	or	loss	on	the	derivative instrument	is	reported	as	a	component	of	other	comprehensive	income	(loss),	reclassified	into	earnings	in	the	same	period	or	periods	during	which	the	hedged	transaction affects	earnings	and	presented	in	the	same	income	statement	line	item	as	the	earnings	effect	of	the	hedged	item.	The	Company	recorded	a	cumulative	effect	adjustment to	accumulated	other	comprehensive	income	(loss)	with	a	corresponding	adjustment	to	the	opening	balance	of	retained	earnings	related	to	the	elimination	of	the	separate measurement	of	ineffectiveness	for	its	cash	flow	hedges,	upon	adoption.	The	adjustments	were	not	material	to	the	Company's	consolidated	financial	statements.	We	refer you	to	Note	9—	"Fair	Value	Measurements	and	Derivatives"	in	these	notes	to	consolidated	financial	statements.

On	January	1,	2018,	the	Company	adopted	ASU	No.	2016-16,	Income	Taxes	(Topic	740)	—	Intra-Entity	Transfers	of	Assets	Other	Than	Inventory,	which	requires companies	to	recognize	the	income-tax	consequences	of	an	intra-entity	transfer	of	an	asset	other	than	inventory	when	the	transfer	occurs,	rather	than	when	the	asset	has been	sold	to	an	outside	party.	The	Company	recorded,	upon	adoption,	a	cumulative-effect	adjustment	to	retained	earnings	of	$19.1	million,	which	captures	the	write-off of	previously	unamortized	deferred	income	tax	expense	from	past	intra-entity	transfers	involving	assets	other	than	inventory	not	previously	recognized	under	accounting principles	generally	accepted	in	the	U.S.

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

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

In	February	2016,	the	FASB	issued	ASU	No.	2016-02,	Leases	(Topic	842),	which	sets	out	the	principles	for	the	recognition,	measurement,	presentation	and	disclosure	of leases.	The	update	was	issued	to	increase	transparency	and	comparability	among	organizations	by	recognizing	rights	and	obligations	resulting	from	leases	as	lease	assets and	liabilities	on	the	balance	sheet	and	disclosing	key	information	about	leasing	arrangements	for	leases	with	a	term	of	12	months	or	more.	The	update	modifies	lessors' classification	criteria	for	leases	and	the	accounting	for	sales-type	and	direct	financing	leases.	The	update	requires	qualitative	and	quantitative	disclosures	designed	to	give financial	statement	users	additional	information	on	the	amount,	timing,	and	uncertainty	of	cash	flows	arising	from	leases.	The	update	is	effective	for	annual	reporting periods,	and	interim	periods	within	those	annual	periods,	beginning	after	December	15,	2018.	The	Company	has	engaged	a	third	party	to	assist	in	reviewing	the Company's	existing	leases	and	evaluating	the	Company's	existing	contracts	to	identify	those	that	are	considered	to	be	leases	under	the	new	guidance.	The	Company	will elect	to	combine	lease	and	non-lease	components	as	a	lessee,	to	keep	leases	with	an	initial	term	of	12	months	or	less	off	the	balance	sheet,	and,	if	any	non-lease component	associated	with	the	lease	component	is	the	predominant	component,	the	Company	will	account	for	the	combined	component	in	accordance	with	FASB	ASU No.	2014-09,	Revenue	from	Contracts	with	Customers	(Topic	606)	("Topic	606"),	as	the	lessor.	The	update	is	to	be	applied	retrospectively	with	a	cumulative-effect adjustment	on	January	1,	2019.	The	Company	continues	to	evaluate	the	effect	that	the	update	will	have	on	the	Company's	consolidated	financial	statements.	The Company	expects	the	update	to	have	a	material	effect	on	the	Company's	assets	and	liabilities,	which	will	result	in	a	balance	sheet	presentation	that	is	not	comparable	to the	prior	period	in	the	first	year	of	adoption.	The	Company	does	not	expect	the	update	to	have	a	material	impact	on	the	Company's	annual	results	of	operations	and/or cash	flows.

# 3. Revenue	and	Expense	from	Contracts	with	Customers

On	January	1,	2018,	we	adopted	Topic	606,	which	supersedes	the	revenue	recognition	requirements	in	Accounting	Standards	Codification	605—Revenue	Recognition (Topic	605)	("Topic	605").	Using	the	modified	retrospective	method,	we	applied	the	new	requirements	to	those	contracts	which	were	not	completed	as	of	January	1, 2018.	Results	for	reporting	periods	beginning	after	January	1,	2018	are	presented	below	under	"—	Financial	Statement	Presentation"	and	"—	Impacts	on	Financial Statements,"	while	prior	period	amounts	are	not	adjusted	and	continue	to	be	reported	in	accordance	with	our	historic	accounting	under	Topic	605.

# Nature	of	Goods	and	Services

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

During	the	voyage,	we	generate	onboard	and	other	revenue	for	additional	products	and	services	which	are	not	included	in	the	cruise	fare,	including	casino	operations, certain	food	and	beverage,	gift	shop	purchases,	spa	services,	photo	services	and	other	similar	items.	Food	and	beverage,	casino	operations	and	shore	excursions	are generally	managed	directly	by	us	while	retail	shops,	spa	services,	art	auctions	and	internet	services	may	be	managed	through	contracts	with	third-party	concessionaires. These	contracts	generally	entitle	us	to	a	fixed	percentage	of	the	gross	sales	derived	from	these	concessions,	which	is	recognized	on	a	net	basis.	While	some	onboard goods	and	services	may	be	prepaid	prior	to	the	voyage,	we	utilize	point-of-sale	systems	for	discrete	purchases	made	onboard.	Certain	of	our	product	offerings	are bundled	and	we	allocate	the	value	of	the	bundled	goods	and	services	between	passenger	ticket	revenue	and	onboard	and	other	revenue	based	upon	the	relative	standalone selling	prices	of	those	goods	and	services.

# Timing	of	Satisfaction	of	Performance	Obligations	and	Significant	Payment	Terms

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

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

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

# Contract	Balances

Receivables	from	customers	are	included	within	accounts	receivables,	net.	As	of	December	31,	2018	and	January	1,	2018,	our	receivables	from	customers	were	$17.3 million	and	$13.8	million,	respectively.

Contract	liabilities	represent	the	Company's	obligation	to	transfer	goods	and	services	to	a	customer.	A	customer	deposit	held	for	a	future	cruise	is	generally	considered	a contract	liability	only	when	final	payment	is	both	due	and	paid	by	the	customer	and	is	usually	recognized	in	earnings	within	180	days	of	becoming	a	contract.	Other deposits	held	and	included	within	advance	ticket	sales	or	other	long-term	liabilities	are	not	considered	contract	liabilities	as	they	are	largely	cancelable	and	refundable. Our	contract	liabilities	are	included	within	advance	ticket	sales.	As	of	December	31,	2018	and	January	1,	2018,	our	contract	liabilities	were	$1.2	billion	and	$1.0	billion, respectively.	Of	the	amounts	included	within	contract	liabilities,	approximately	50%	were	refundable	in	accordance	with	our	cancellation	policies.	Approximately	$1.0 billion	of	the	January	1,	2018	contract	liability	balance	has	been	recognized	in	revenue	for	the	year	ended	December	31,	2018.

Our	revenue	is	seasonal	and	based	on	the	demand	for	cruises.	Historically,	the	seasonality	of	the	North	American	cruise	industry	generally	results	in	the	greatest	demand for	cruises	during	the	Northern	Hemisphere's	summer	months.	This	predictable	seasonality	in	demand	has	resulted	in	fluctuations	by	quarter	in	our	revenue	and	results	of operations.	The	seasonality	of	our	results	is	increased	due	to	ships	being	taken	out	of	service	for	regularly	scheduled	Dry-docks,	which	we	typically	schedule	during	non- peak	demand	periods.	This	seasonality	will	result	in	higher	contract	liability	balances	as	a	result	of	an	increased	number	of	reservations	preceding	these	peak	demand periods.	The	addition	of	new	ships	also	increases	the	contract	liability	balances	prior	to	a	new	ship's	delivery,	as	staterooms	are	usually	made	available	for	reservation prior	to	the	inaugural	cruise.	Norwegian	Bliss,	with	approximately	4,000	Berths,	was	delivered	on	April	19,	2018	and	added	8%	capacity	to	our	fleet.

# Practical	Expedients	and	Exemptions

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

# Contract	Costs

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

# Financial	Statement	Presentation

As	of	January	1,	2018,	in	connection	with	the	adoption	of	Topic	606,	we	reclassified	$51.6	million	of	deferred	costs	associated	with	obtaining	customer	contracts	to prepaid	expenses	and	other	assets	from	advance	ticket	sales.

# Impacts	on	Financial	Statements

The	adoption	of	Topic	606	does	not	change	the	timing,	classification	or	amount	of	revenue	recognized	from	customers	in	our	consolidated	financial	statements	nor	does it	change	the	timing,	classification	or	amount	of	incremental	costs	to	obtain	and	fulfill	those	contracts	with	customers.	Therefore,	the	adoption	had	no	impact	on	our consolidated	statement	of	operations	or	consolidated	statement	of	comprehensive	income.

The	following	table	summarizes	the	impact	of	the	adoption	of	Topic	606	on	our	consolidated	balance	sheet,	which	has	been	adjusted	for	deferred	contract	costs	that would	have	been	included,	net,	in	advance	ticket	sales,	as	of	December	31,	2018	(in	thousands):

|  |  |  | Balances	Without |
| :--- | :--- | :--- | :--- |
|  |  |  | Adoption\tof |
|  | As\tReported | Adjustments | Topic\t606 |
| Prepaid\texpenses\tand\tother\tassets | \t $241,011 | \t $(63,628) \t $ | 177,383 |
| Total\tassets | \t $15,205,970 | \t $(63,628) \t $ | 15,142,342 |
| Advance\tticket\tsales | \t $1,593,219 | \t $(63,628) \t $ | 1,529,591 |
| Total\tliabilities\tand\tshareholders'\tequity | \t $15,205,970 | \t $(63,628) \t $ | 15,142,342 |

The	following	table	summarizes	the	impact	of	the	adoption	of	Topic	606	on	our	consolidated	statement	of	cash	flows	for	the	year	ended	December	31,	2018	(in thousands):

|  | As	Reported | Adjustments | Topic	606 |
| :--- | :--- | :--- | :--- |
| Changes\tin\toperating\tassets\tand\tliabilities: |  |  |  |
| Prepaid\texpenses\tand\tother\tassets | \t $(29,519) \t $ | 12,029 | \t $(17,490) |
| Advance\tticket\tsales | \t $262,603 | \t $(12,029) \t $ | 250,574 |
| Net\tcash\tprovided\tby\toperating\tactivities | \t $2,075,171 | \t $—\t\t $2,075,171 | \t $—\t\t $2,075,171 |

# 4. Goodwill	and	Intangible	Assets

Goodwill	and	tradenames	are	not	subject	to	amortization.	As	of	December	31,	2018	and	2017,	the	carrying	values	were	$1.4	billion	for	goodwill	and	$0.8	billion	for tradenames.

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

|  | Gross	Carrying | Accumulated | Net	Carrying | Amortization |
| :--- | :--- | :--- | :--- | :--- |
|  | Amount | Amortization | Amount | Period\t(in\tyears) |
| Customer\trelationship | \t $120,000 | \t $(66,866) \t $ | 53,134 | 6.0 |
| Licenses | 3,368 | (1,601) | 1,767 | 5.6 |
| Non-compete\tagreements | 660 | (660) | — | 1.0 |
| Total\tintangible\tassets\tsubject\tto\tamortization | \t $124,028 | \t $(69,127) \t $ | 54,901 |  |

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

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

|  | Amortization |
| :--- | :--- |
| Year\tEnded\tDecember\t31, | Expense |
| 2019 | \t $18,489 |
| 2020 | \t $9,906 |
| 2021 | \t $75 |
| 2022 | \t $75 |
| 2023 | \t $75 |

# 5. Accumulated	Other	Comprehensive	Income	(Loss)

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

|  |  |  | Change |
| :--- | :--- | :--- | :--- |
|  | Accumulated | Change | Related\tto |
|  | Other | Related\tto | Shipboard |
|  | Comprehensive | Cash\tFlow | Retirement |
|  | Income\t(Loss) | Hedges | Plan |
| Accumulated\tother\tcomprehensive\tincome\t(loss)\tat\tbeginning\tof\tperiod | $26,966 | $33,861 | $(6,895) |
| Current\tperiod\tother\tcomprehensive\tincome\t(loss)\tbefore\treclassifications | (158,943) | (161,214) | 2,271 |
| Amounts\treclassified\tinto\tearnings | (29,670) | (30,096)(1) | 426(2) |
| Accumulated\tother\tcomprehensive\tincome\t(loss)\tat\tend\tof\tperiod | $(161,647) | $(157,449)(3) | $(4,198) |

|  |  |  | Change |
| :--- | :--- | :--- | :--- |
|  | Accumulated | Change | Related\tto |
|  | Other | Related\tto | Shipboard |
|  | Comprehensive | Cash\tFlow | Retirement |
|  | Income\t(Loss) | Hedges | Plan |
| Accumulated\tother\tcomprehensive\tincome\t(loss)\tat\tbeginning\tof\tperiod | $(314,473) | $(307,618) | $(6,855) |
| Current\tperiod\tother\tcomprehensive\tincome\t(loss)\tbefore\treclassifications | 304,226 | 304,684 | (458) |
| Amounts\treclassified\tinto\tearnings | 37,213 | 36,795(1) | 418(4) |
| Accumulated\tother\tcomprehensive\tincome\t(loss)\tat\tend\tof\tperiod | $26,966 | $33,861 | $(6,895) |

|  |  |  | Change |
| :--- | :--- | :--- | :--- |
|  | Accumulated | Change | Related\tto |
|  | Other | Related\tto | Shipboard |
|  | Comprehensive | Cash\tFlow | Retirement |
|  | Income\t(Loss) | Hedges | Plan |
| Accumulated\tother\tcomprehensive\tincome\t(loss)\tat\tbeginning\tof\tperiod | $(412,650) | $(405,298) | $(7,352) |
| Current\tperiod\tother\tcomprehensive\tincome\tbefore\treclassifications | 1,776 | 1,711 | 65 |
| Amounts\treclassified\tinto\tearnings | 96,401 | 95,969(1) | 432(4) |
| Accumulated\tother\tcomprehensive\tincome\t(loss)\tat\tend\tof\tperiod | $(314,473) | $(307,618) | $(6,855) |

(1) We	refer	you	to	Note	9—	"Fair	Value	Measurements	and	Derivatives"	in	these	notes	to	consolidated	financial	statements	for	the	affected	line	items	in	the consolidated	statements	of	operations.

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

(3) Includes	$21.1	million	of	loss	expected	to	be	reclassified	into	earnings	in	the	next	12	months.

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

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

|  | December	31, | December	31, |
| :--- | :--- | :--- |
|  | 2018 | 2017 |
| Ships | $13,032,555 | \t $11,814,409 |
| Ships\timprovements | 1,407,989 | 1,060,049 |
| Ships\tunder\tconstruction | 491,632 | 521,597 |
| Land\tand\tland\timprovements | 34,936 | 37,535 |
| Other | 558,052 | 487,921 |
|  | 15,525,164 | 13,921,511 |
| Less:\taccumulated\tdepreciation | (3,405,911) | (2,881,023) |
| Property\tand\tequipment,\tnet | $12,119,253 | \t $11,040,488 |

The	increase	in	ships	was	primarily	due	to	the	addition	of	Norwegian	Bliss.	Depreciation	expense	for	the	years	ended	December	31,	2018,	2017	and	2016	was	$534.9 million,	$478.7	million	and	$411.4	million,	respectively.	Repairs	and	maintenance	expenses	including	Dry-dock	expenses	were	$199.5	million,	$157.2	million	and $155.4	million	for	the	years	ended	December	31,	2018,	2017	and	2016,	respectively,	and	were	recorded	within	other	cruise	operating	expense.

Ships	under	construction	include	progress	payments	to	the	shipyard,	planning	and	design	fees	and	other	associated	costs.	Capitalized	interest	costs	which	were	primarily associated	with	the	construction	or	revitalization	of	ships	amounted	to	$30.4	million,	$29.0	million	and	$33.7	million	for	the	years	ended	December	31,	2018,	2017	and 2016,	respectively.

# 7. Long-Term	Debt

Long-term	debt	consisted	of	the	following:

|  | Interest	Rate<br>December	31, |  | Maturities | Balance<br>December	31, |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2018 | 2017 | Through | 2018 | 2017 |
|  |  |  |  | (in\tthousands) |  |
| $875.0\tmillion\tsenior\tsecured\trevolving\tcredit\tfacility | 3.96% | 3.27% | 2021 | $130,000 | $78,000 |
| Term\tLoan\tA | 4.01% | 3.32% | 2021 | 1,256,167 | 1,385,196 |
| $375.0\tmillion\tTerm\tLoan\tB\t(1) | 4.26% | 3.18% | 2021 | 368,982 | 371,914 |
| $700.0\tmillion\t4.750%\tsenior\tunsecured\tnotes | 4.75% | 4.75% | 2021 | 561,021 | 693,413 |
| €662.9\tmillion\tNorwegian\tEpic\tterm\tloan\t(2) | 4.58% | 3.44% | 2022 | 259,394 | 328,646 |
| €308.1\tmillion\tPride\tof\tHawai'i\tloan\t(2) | — | 2.31% | 2018 | — | 18,438 |
| €529.8\tmillion\tBreakaway\tone\tloan\t(2) | 4.09% | 2.97% | 2025 | 360,680 | 415,039 |
| €529.8\tmillion\tBreakaway\ttwo\tloan\t(2) | 4.50% | 4.50% | 2026 | 426,503 | 482,133 |
| €590.5\tmillion\tBreakaway\tthree\tloan\t(2) | 2.98% | 2.98% | 2027 | 537,223 | 595,494 |
| €729.9\tmillion\tBreakaway\tfour\tloan\t(2) | 2.98% | 2.98% | 2029 | 694,536 | 758,595 |
| €666\tmillion\tSeahawk\t1\tterm\tloan\t(2) | 3.92% | 3.92% | 2030 | 756,061 | 184,837 |
| €666\tmillion\tSeahawk\t2\tterm\tloan\t(2) | 3.92% | 3.92% | 2031 | 187,612 | 90,351 |
| Leonardo\tnewbuild\tone\tloan | 2.68% | — | 2034 | 48,009 | — |
| Leonardo\tnewbuild\ttwo\tloan | 2.77% | — | 2035 | 48,009 | — |
| Leonardo\tnewbuild\tthree\tloan | 1.22% | — | 2036 | 43,667 | — |
| Leonardo\tnewbuild\tfour\tloan | 1.31% | — | 2037 | 43,667 | — |
| Sirena\tloan | 2.75% | 2.75% | 2019 | 13,856 | 27,344 |
| Explorer\tnewbuild\tloan | 3.43% | 3.43% | 2028 | 268,970 | 295,093 |
| Marina\tnewbuild\tloan\t(3) | 3.07% | 2.00% | 2023 | 201,007 | 245,706 |
| Riviera\tnewbuild\tloan\t(4) | 3.32% | 2.11% | 2024 | 247,203 | 292,183 |
| Capital\tlease\tand\tlicense\tobligations | Various | Various | 2028 | 39,524 | 45,383 |
| Total\tdebt |  |  |  | 6,492,091 | 6,307,765 |
| Less:\tcurrent\tportion\tof\tlong-term\tdebt |  |  |  | (681,218) | (619,373) |
| Total\tlong-term\tdebt |  |  |  | $5,810,873 | $5,688,392 |

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

On	April	19,	2018,	we	took	delivery	of	Norwegian	Bliss.	To	finance	the	payment	due	upon	delivery,	we	had	export	financing	in	place	for	80%	of	the	contract	price.	The associated	$850.0	million	 term	 loan	bears	 interest	at	a	fixed	rate	of	3.92%	with	a	maturity	date	of	April	19,	2030.	Principal	and	 interest	payments	are	payable semiannually.

On	April	4,	2018,	we	redeemed	$135.0	million	principal	amount	of	the	$700.0	million	aggregate	principal	amount	of	outstanding	4.75%	Senior	Notes	due	2021	(the "Notes")	at	a	price	equal	to	100%	of	the	principal	amount	of	the	Notes	being	redeemed	and	paid	the	premium	of	$5.1	million	and	accrued	interest	of	$1.9	million.	The redemption	also	resulted	in	a	write	off	of	$1.2	million	of	certain	fees.	Following	the	partial	redemption,	$565.0	million	aggregate	principal	amount	of	Notes	remained outstanding.

Interest	expense,	net	for	the	year	ended	December	31,	2018	was	$270.4	million	which	included	$31.4	million	of	amortization	of	deferred	financing	fees	and	a	$6.3 million	loss	on	extinguishment	of	debt.	Interest	expense,	net	for	the	year	ended	December	31,	2017	was	$267.8	million	which	included	$32.5	million	of	amortization	of deferred	financing	fees	and	a	$23.9	million	loss	on	extinguishment	of	debt.	Interest	expense,	net	for	the	year	ended	December	31,	2016	was	$276.9	million	which included	$34.7	million	of	amortization	of	deferred	financing	fees	and	a	$27.7	million	loss	on	extinguishment	of	debt.

Certain	of	our	debt	agreements	contain	covenants	that,	among	other	things,	require	us	to	maintain	a	minimum	level	of	liquidity,	as	well	as	limit	our	net	funded	debt-to- capital	ratio,	and	maintain	certain	other	ratios	and	restrict	our	ability	to	pay	dividends.	Substantially	all	of	our	ships	and	other	property	and	equipment	are	pledged	as collateral	for	certain	of	our	debt.	We	believe	we	were	in	compliance	with	our	covenants	as	of	December	31,	2018.

The	following	are	scheduled	principal	repayments	on	long-term	debt	including	capital	lease	obligations	as	of	December	31,	2018	for	each	of	the	next	five	years	(in thousands):

| Year | Amount |
| :--- | :--- |
| 2019 | $681,218 |
| 2020 | 682,556 |
| 2021 | 2,549,621 |
| 2022 | 494,186 |
| 2023 | 434,902 |
| Thereafter | 1,767,383 |
| \t\t\t\t\tTotal | $6,609,866 |

# 8. Related	Party	Disclosures

# Transactions	with	Genting	HK	and	Apollo

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

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

In	June	2012,	we	exercised	our	option	with	Genting	HK	to	purchase	Norwegian	Sky.	We	paid	the	total	amount	of	$259.3	million	to	Genting	HK	in	connection	with	the Norwegian	Sky	Purchase	Agreement	as	of	December	31,	2016	and	no	further	payments	are	due.

# 9. Fair	Value	Measurements	and	Derivatives

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

# Fair	Value	Hierarchy

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

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

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

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

# Derivatives

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

As	of	December	31,	2018,	we	had	fuel	swaps,	which	are	used	to	mitigate	the	financial	impact	of	volatility	of	fuel	prices	pertaining	to	approximately	1.3	million	metric tons	of	our	projected	fuel	purchases,	maturing	through	December	31,	2021.

As	of	December	31,	2018,	we	had	foreign	currency	forward	contracts,	matured	foreign	currency	options	and	matured	foreign	currency	collars	which	are	used	to	mitigate the	financial	impact	of	volatility	in	foreign	currency	exchange	rates	related	to	our	ship	construction	contracts	denominated	in	euros.	The	notional	amount	of	our	foreign currency	forward	contracts	was	€2.1	billion,	or	$2.4	billion	based	on	the	euro/U.S.	dollar	exchange	rate	as	of	December	31,	2018.

As	of	December	31,	2018,	we	had	interest	rate	swap	agreements	which	are	used	to	hedge	our	exposure	to	interest	rate	movements	and	manage	our	interest	expense.	The notional	amount	of	our	outstanding	debt	associated	with	the	interest	rate	swap	agreements	was	$1.0	billion	as	of	December	31,	2018.

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

|  |  | Assets | Assets | Liabilities | Liabilities |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Derivative\tContracts\tDesignated\tas |  | December\t31, |  | December\t31, | December\t31, |
| Hedging\tInstruments | Balance\tSheet\tLocation | 2018 | 2017 | 2018 | 2017 |
| Fuel\tcontracts |  |  |  |  |  |
|  | Prepaid\texpenses\tand\tother\tassets | $2,583 | $19,220 | $1 | $2,406 |
|  | \t Other\tlong-term\tassets | 197 | 19,854 | 29 | 3,469 |
|  | \t Accrued\texpenses\tand\tother\tliabilities | 1,173 | — | 19,547 | 3,348 |
|  | \t Other\tlong-term\tliabilities | 933 | 576 | 51,184 | 2,148 |
| Foreign\tcurrency\tcontracts |  |  |  |  |  |
|  | Prepaid\texpenses\tand\tother\tassets | 5,285 | 52,300 | 1,497 | 730 |
|  | \t Other\tlong-term\tassets | 3,514 | 85,081 | — | — |
|  | \t Accrued\texpenses\tand\tother\tliabilities | 112 | — | 5,145 | — |
|  | \t Other\tlong-term\tliabilities | 2,874 | — | 40,476 | — |
| Interest\trate\tcontracts |  |  |  |  |  |
|  | Prepaid\texpenses\tand\tother\tassets | 519 | — | — | — |
|  | \t Other\tlong-term\tassets | 27 | — | — | — |
|  | \t Accrued\texpenses\tand\tother\tliabilities | — | — | — | 1,020 |
| Total\tderivative\tcontracts\tdesignated\tas\thedging\ninstruments |  | $17,217 | $177,031 | $117,879 | $13,121 |

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

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

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

The	effects	of	cash	flow	hedge	accounting	on	accumulated	other	comprehensive	income	(loss)	include	the	following	(in	thousands):

|  |  |  |  | Location	of	Gain |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  |  | (Loss)\tReclassified |  |  |  |
|  |  | Amount\tof\tGain\t(Loss) |  | from\tAccumulated |  | Amount\tof\tGain\t(Loss) |  |
|  |  | Recognized\tin\tOther |  | Other\tComprehensive | Reclassified\tfrom\tAccumulated\tOther | Reclassified\tfrom\tAccumulated\tOther | Reclassified\tfrom\tAccumulated\tOther |
| Derivatives |  | Comprehensive\tIncome |  | Income\t(Loss)\tinto\tIncome | Comprehensive\tIncome\t(Loss)\tinto\tIncome | Comprehensive\tIncome\t(Loss)\tinto\tIncome | Comprehensive\tIncome\t(Loss)\tinto\tIncome |
|  | Year\tEnded\tDecember\t31, | Year\tEnded\tDecember\t31, |  |  |  | Year\tEnded\tDecember\t31, |  |
|  | 2018 | 2017 | 2016 |  | 2018 | 2017 | 2016 |
| Fuel\tcontracts | $(52,949) | $50,263 | $127,470 | Fuel | $34,410 | $(29,721) | $(88,442) |
| Foreign\tcurrency\tcontracts |  |  |  | Depreciation\tand |  |  |  |
|  | (108,911) | 254,070 | (124,058) | amortization | (3,463) | (4,077) | (3,581) |
| Interest\trate\tcontracts | 646 | 351 | (1,701) | Interest\texpense,\tnet | (851) | (2,997) | (3,946) |
| Total\tgain\t(loss)\trecognized\tin\tother |  |  |  |  |  |  |  |
| comprehensive\tincome | $(161,214) | $304,684 | $1,711 |  | $30,096 | $(36,795) | $(95,969) |

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

|  | Fuel | Year	Ended	December	31,	2018<br>Depreciation<br>and<br>Amortization | Interest<br>Expense,	net | Fuel | Year	Ended	December	31,	2017<br>Depreciation<br>and<br>Amortization | Interest<br>Expense,	net |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Total\tamounts\tof\tincome\tand\texpense\tline\titems |  |  |  |  |  |  |
| presented\tin\tthe\tconsolidated\tstatements\tof\toperations\tin |  |  |  |  |  |  |
| which\tthe\teffects\tof\tcash\tflow\thedges\tare\trecorded | $392,685 | $561,060 | $270,404 | $361,032 | $509,957 | $267,804 |
| Amount\tof\tgain\t(loss)\treclassified\tfrom\taccumulated |  |  |  |  |  |  |
| other\tcomprehensive\tincome\t(loss)\tinto\tincome |  |  |  |  |  |  |
| Fuel\tcontracts | $34,410 | $— | $— | $(29,721) | $— | $— |
| Foreign\tcurrency\tcontracts | $— | $(3,463) | $— | $— | $(4,077) | $— |
| Interest\trate\tcontracts | $— | $— | $(851) | $— | $— | $(2,997) |

|  |  | Year	Ended	December	31,	2016 | Year	Ended	December	31,	2016 |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Fuel | Depreciation\nand\nAmortization | Interest\nExpense,\tnet | Other\n(Income)\nExpense,\tnet |
| Total\tamounts\tof\tincome\tand\texpense\tline\titems\tpresented\tin\tthe |  |  |  |  |
| consolidated\tstatements\tof\toperations\tin\twhich\tthe\teffects\tof\tcash\tflow |  |  |  |  |
| hedges\tare\trecorded | $335,174 | $432,495 | $276,859 | $8,302 |
| Amount\tof\tloss\treclassified\tfrom\taccumulated\tother\tcomprehensive\tincome |  |  |  |  |
| (loss)\tinto\tincome |  |  |  |  |
| Fuel\tcontracts | $(85,448) | $— | $— | $— |
| Foreign\tcurrency\tcontracts | $— | $(3,581) | $— | $— |
| Interest\trate\tcontracts | $— | $— | $(3,946) | $— |
| Amount\tof\tloss\treclassified\tfrom\taccumulated\tother\tcomprehensive\tincome |  |  |  |  |
| (loss)\tinto\tincome\tas\ta\tresult\tthat\ta\tforecasted\ttransaction\tis\tno\tlonger |  |  |  |  |
| probable\tof\toccurring |  |  |  |  |
| Fuel\tcontracts | $— | $— | $— | $(2,994) |

The	effects	on	the	consolidated	financial	statements	of	the	foreign	currency	contracts	which	were	not	designated	as	hedging	instruments	were	as	follows	(in	thousands):

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

As	of	December	31,	2018	and	2017,	the	fair	value	of	our	long-term	debt,	including	the	current	portion,	was	$6,601.9	million	and	$6,448.6	million,	respectively,	which was	$8.4	million	higher	and	$23.5	million	higher,	respectively,	than	the	carrying	values.	The	difference	between	the	fair	value	and	carrying	value	of	our	long-term	debt is	due	to	our	fixed	and	variable	rate	debt	obligations	carrying	interest	rates	that	are	above	or	below	market	rates	at	the	measurement	dates.	Market	risk	associated	with our	long-term	variable	rate	debt	is	the	potential	increase	in	interest	expense	from	an	increase	in	interest	rates.	The	fair	value	of	our	long-term	debt	was	calculated	based on	estimated	rates	for	the	same	or	similar	instruments	with	similar	terms	and	remaining	maturities,	which	represent	Level	2	inputs	in	the	fair	value	hierarchy.

# Non-Recurring	Measurements	of	Non-Financial	Assets

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

We	believe	our	estimates	and	judgments	with	respect	to	our	long-lived	assets,	principally	ships,	and	goodwill	and	other	indefinite-lived	intangible	assets	are	reasonable. Nonetheless,	if	there	was	a	material	change	in	assumptions	used	in	the	determination	of	such	fair	values	or	if	there	is	a	material	change	in	the	conditions	or	circumstances that	influence	such	assets,	we	could	be	required	to	record	an	impairment	charge.	We	estimate	fair	value	based	on	the	best	information	available	utilizing	estimates, judgments	and	projections	as	necessary.	As	of	December	31,	2018,	our	annual	review	supports	the	carrying	value	of	these	assets.

# 10. Employee	Benefits	and	Share-Based	Compensation

As	a	result	of	NCLH's	adoption	of	ASU	No.	2016-09,	beginning	in	the	first	quarter	of	2017,	NCLH	began	accounting	for	forfeitures	as	they	occur,	rather	than	estimating expected	forfeitures.	Pursuant	to	the	modified-retrospective	application,	the	net	cumulative	effect	of	this	change	was	recognized	as	a	$2.2	million	increase	to	retained earnings	as	of	January	1,	2017.	We	refer	you	to	our	consolidated	statements	of	changes	in	shareholders'	equity.

# Amended	and	Restated	2013	Performance	Incentive	Plan

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

# Share	Option	Awards

No	time-based	share	option	awards	were	granted	for	the	years	ended	December	31,	2018	or	2017.	The	fair	value	of	each	time-based	option	award	is	estimated	on	the date	of	grant	using	the	Black-Scholes	option-pricing	model.	The	estimated	fair	value	of	the	share	options	is	amortized	over	the	vesting	period	using	the	straight-line method.	The	assumptions	used	within	the	option-pricing	model	for	the	time-based	awards	are	as	follows:

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

The	performance-based	options	awarded	to	our	President	and	Chief	Executive	Officer	in	August	2015	are	subject	to	performance	conditions	such	that	the	number	of awards	that	ultimately	vest	depends	on	the	adjusted	earnings	per	share	("Adjusted	EPS")	and	adjusted	return	on	invested	capital	("Adjusted	ROIC")	achieved	by	the Company	 during	 the	 performance	 period	 compared	 to	 targets	 established	 at	 the	 award	 date.	Although	 the	 terms	 of	 the	 performance-based	 awards	 provide	 the compensation	committee	with	the	discretion	to	make	certain	adjustments	to	the	performance	calculation,	it	was	determined	that	a	mutual	understanding	of	the	key	terms and	conditions	of	the	awards	has	been	ascertained.	In	2018,	the	grant	date	was	therefore	established	for	performance-based	awards	granted	in	prior	years.	The	fair	value of	each	performance-based	option	award	is	estimated	on	the	date	of	grant	using	the	Black-Scholes	option-pricing	model.	The	estimated	fair	value	of	the	share	options	is amortized	over	the	requisite	service	period	using	the	straight-line	method.	The	assumptions	used	within	the	option-pricing	model	for	the	performance-based	awards	are as	follows:

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Dividend\tyield | —% | —% | —% |
| Expected\tshare\tprice\tvolatility | 31.50%-32.20% | 25.97% | 25.97%-30.21% |
| Risk-free\tinterest\trate | 2.48-2.58% | 1.81% | 1.01%-1.93% |
| Expected\tterm | 3.72-4.22\tyears | 4.20\tyears | 4.38-5.13\tyears |

The	following	table	sets	forth	a	summary	of	option	activity	under	NCLH's	Restated	2013	Plan,	including	208,335	previously	awarded	performance-based	share	option awards,	for	which	a	grant	date	was	established	in	2018,	for	the	period	presented:

|  | Time-<br>Based<br>Awards | Number	of	Share	Option	Awards<br>Performance-<br>Based<br>Awards | Market-<br>Based<br>Awards | Time-<br>Based<br>Awards | Weighted-Average	Exercise	Price<br>Performance-<br>Based<br>Awards | Market-<br>Based<br>Awards | Weighted-<br>Average<br>Contractual<br>Term<br>(in	years) | Aggregate<br>Intrinsic	Value<br>(in	thousands) |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Outstanding\tas\tof\tJanuary\t1, |  |  |  |  |  |  |  |  |
| 2018 | 6,580,898 | 373,969 | 208,333 | $49.18 | $31.39 | $59.43 | 6.99 | $50,021 |
| Granted | — | 208,335 |  | —\t $— | $59.43 | $— |  |  |
| Exercised | (674,272) | (115,785) | — | $35.00 | $19.00 | $— |  |  |
| Forfeited\tand\tcancelled | (219,833) | (56,020) | — | $54.76 | $56.59 | $— |  |  |
| Outstanding\tas\tof\tDecember |  |  |  |  |  |  |  |  |
| 31,\t2018 | 5,686,793 | 410,499 | 208,333 | $50.65 | $45.67 | $59.43 | 6.22 | $13,946 |
| Vested\tand\tExpected\tto\tvest\tof\nDecember\t31,\t2018 | 5,686,793 | 254,249 | — | $50.65 | $37.22 | $— | 6.19 | 13,946 |
| Exercisable\tas\tof\tDecember\t31,\n2018 | 5,022,818 | 254,249 | — | $50.18 | $37.22 | $— | 6.11 | 13,928 |

The	weighted-average	grant-date	fair	value	of	time-based	options	granted	during	2016	was	$17.11.	The	weighted-average	grant-date	fair	value	of	performance-based options	granted	(or	where	a	grant	date	had	not	been	previously	established,	the	fair	value	recognized)	during	the	years	ended	December	31,	2018,	2017	and	2016	was $15.20,	$8.55	and	$8.67,	respectively.	The	total	intrinsic	value	of	share	options	exercised	during	2018,	2017	and	2016	was	$16.7	million,	$18.9	million	and	$5.2	million and	 total	 cash	 received	 by	 the	 Company	 from	 exercises	 was	 $25.8	 million,	 $27.4	 million	 and	 $7.6	 million,	 respectively.	As	 of	 December	 31,	 2018,	 there	 was approximately	$2.9	million,	$0	and	$0	of	total	unrecognized	compensation	cost,	related	to	time-based,	performance-based	and	market-based	options,	respectively, granted	under	our	share-based	incentive	plans	which	is	expected	to	be	recognized	over	a	weighted-average	period	of	0.4	years,	0	years	and	0	years,	respectively.

# Restricted	Ordinary	Share	Awards

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

| The	following	is	a	summary	of	NCLH's	restricted	ordinary	share	activity	for	the	period	presented: |  |  |
| :--- | :--- | :--- |
|  | Number\tof |  |
|  | Time- | Weighted- |
|  | Based | Average\tGrant |
|  | Awards | Date\tFair\tValue |
| Non-vested\tas\tof\tJanuary\t1,\t2018 | 858 | \t $58.33 |
| Vested | (429) \t $ | 58.25 |
| Non-vested\tas\tof\tDecember\t31,\t2018 | 429 | \t $58.41 |

The	restricted	shares	vest	in	substantially	equal	installments	over	four	years	and	are	expected	to	vest	on	January	1,	2019.	The	total	fair	value	of	shares	vested	during	the years	ended	December	31,	2017	and	2016	was	$0.1	million	and	$1.1	million,	respectively.

# Restricted	Share	Unit	("RSU")	Awards

On	March	1,	2018,	NCLH	granted	to	certain	employees	1.6	million	time-based	RSU	awards	which	vest	equally	over	three	years.	Also	on	March	1,	2018,	NCLH	granted to	certain	members	of	our	management	team	0.5	million	performance-based	RSU	awards,	which	vest	upon	the	achievement	of	certain	pre-established	performance targets	and	which	amount	assumes	the	maximum	level	of	achievement.

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

The	following	table	sets	forth	a	summary	of	RSU	activity	and	includes	0.3	million	previously	awarded	performance-based	RSU	awards	for	which	the	grant	date	was established	in	2018	(the	number	of	RSUs	reported	assumes	the	maximum	level	of	achievement),	for	the	period	presented:

|  | Number	of | Weighted- | Number	of | Weighted- | Number	of | Weighted- |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Time-Based\nAwards | Average\tGrant\nDate\tFair\tValue | Performance-\nBased\tAwards | Average\tGrant\nDate\tFair\tValue | Market-\nBased\tAwards | Average\tGrant\nDate\tFair\tValue |
| Non-vested\tas\tof\tJanuary\t1,\t2018 | 2,555,477 | $50.86 |  | —\t $— | 50,000 | $59.43 |
| Granted | 1,613,077 | $56.73 | 843,998 | $56.58 |  | —\t $— |
| Vested | (1,032,927) | $50.66 |  | —\t $— |  | —\t $— |
| Forfeited\tor\texpired | (162,595) | $53.40 | (18,384) | $56.43 |  | —\t $— |
| Non-vested\tas\tof\tDecember\t31,\t2018 | 2,973,032 | $53.98 | 825,614 | $56.58 | 50,000 | $59.43 |
| Non-vested\tand\texpected\tto\tvest\tas\tof\tDecember\t31, |  |  |  |  |  |  |
| 2018 | 2,973,032 | $53.98 | 788,114 | $56.59 | — | $— |

As	of	December	31,	2018,	there	was	total	unrecognized	compensation	costs	related	to	non-vested	time-based,	non-vested	performance-based	and	market-based	RSUs	of $97.7	million,	$25.8	million	and	$0,	respectively.	The	costs	are	expected	 to	be	recognized	over	a	weighted-average	period	of	1.8	years,	1.9	years	and	0	years, respectively,	for	the	time-based,	performance-based	and	market-based	RSUs.	Taxes	paid	pursuant	to	net	share	settlements	in	2018	and	2017	were	$13.9	million	and	$6.3 million,	respectively.

# Employee	Stock	Purchase	Plan	("ESPP")

In	April	2014,	NCLH's	shareholders	approved	the	ESPP.	The	purpose	of	the	ESPP	is	to	provide	eligible	employees	with	an	opportunity	to	purchase	NCLH's	ordinary shares	at	a	favorable	price	and	upon	favorable	terms	in	consideration	of	the	participating	employees'	continued	services.	A	maximum	of	2,000,000	of	NCLH's	ordinary shares	may	be	purchased	under	the	ESPP.	To	be	eligible	to	participate	in	an	offering	period,	on	the	grant	date	of	that	period,	an	individual	must	be	customarily employed	by	the	Company	or	a	participating	subsidiary	for	more	than	twenty	hours	per	week	and	for	more	than	five	months	per	calendar	year.	Participation	in	the	ESPP is	also	subject	to	certain	limitations.	The	ESPP	is	considered	to	be	compensatory	based	on:	a)	the	15%	purchase	price	discount	and	b)	the	look-back	purchase	price feature.	Since	the	plan	is	compensatory,	compensation	expense	must	be	recorded	in	the	consolidated	statements	of	operations	on	a	straight-line	basis	over	the	six-month withholding	period.	As	of	December	31,	2018	and	2017,	we	had	a	liability	for	payroll	withholdings	received	of	$1.9	million	and	$1.5	million,	respectively.

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

| Classification	of	expense | 2018 | Share-Based	Compensation	Expense<br>2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Payroll\tand\trelated\t(1) | \t $15,629 | \t $9,455 | \t $7,793 |
| Marketing,\tgeneral\tand\tadministrative\t(2) | 100,354 | 77,584 | 58,621 |
| Total\tshare-based\tcompensation\texpense | \t $115,983 | \t $87,039 | \t $66,414 |

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

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

# Employee	Benefit	Plans

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

Certain	employees	are	employed	pursuant	to	agreements	that	provide	for	severance	payments.	Severance	is	generally	only	payable	upon	an	involuntary	termination	of the	employment	by	us	without	cause	or	a	termination	by	the	employee	for	good	reason.	Severance	generally	includes	a	series	of	cash	payments	based	on	the	employee's base	salary	(and	in	some	cases,	bonus),	and	our	payment	of	the	employee's	continued	medical	benefits	for	the	applicable	severance	period.

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

Our	matching	contributions	are	reduced	by	amounts	forfeited	by	those	employees	who	leave	the	401(k)	Plan	prior	to	vesting	fully	in	the	matching	contributions. Forfeited	contributions	of	$0.3	million,	$0.3	million	and	$0.1	million	were	utilized	in	the	years	ended	December	31,	2018,	2017	and	2016,	respectively.

We	maintained	a	Supplemental	Executive	Retirement	Plan	("SERP"),	which	is	a	legacy	unfunded	defined	contribution	plan	for	certain	executives	who	were	employed by	the	Company	in	an	executive	capacity	prior	to	2008.	The	SERP	was	frozen	to	future	participation	following	that	date.	The	SERP	provided	for	Company	contributions on	behalf	of	the	participants	to	compensate	them	for	the	benefits	that	are	limited	under	the	401(k)	Plan.	We	credited	participants	under	the	SERP	for	amounts	that	would have	been	contributed	by	us	to	the	Company's	previous	Defined	Contribution	Retirement	Plan	and	the	former	401(k)	Plan	without	regard	to	any	limitations	imposed	by the	Code.	Participants	did	not	make	any	elective	contributions	under	this	plan.	We	discontinued	this	plan	following	the	2015	contributions	and	paid	the	previously deferred	contributions	to	participants	in	early	2017	following	the	expiration	of	the	required	12	month	waiting	period.

We	recorded	combined	total	expenses	related	to	the	above	401(k)	Plan	and	SERP	of	$9.3	million,	$7.3	million	and	$6.4	million	for	the	years	ended	December	31,	2018, 2017	and	2016,	respectively.

Effective	January	2009,	we	implemented	the	Shipboard	Retirement	Plan	which	computes	benefits	based	on	years	of	service,	subject	to	eligibility	requirements.	The Shipboard	Retirement	Plan	is	unfunded	with	no	plan	assets.	The	current	portion	of	the	projected	benefit	obligation	of	$1.0	million	and	$1.1	million	was	included	in accrued	expenses	and	other	liabilities	as	of	December	31,	2018	and	2017,	respectively,	and	$23.3	million	and	$23.5	million	was	included	in	other	long-term	liabilities	in our	consolidated	balance	sheets	as	of	December	31,	2018	and	2017,	respectively.

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

|  | 2018 | For	the	Year	Ended	December	31,<br>2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Amounts\trecognized\tin\taccumulated\tother\tcomprehensive\tincome\t(loss): |  |  |  |
| Prior\tservice\tcost | \t $(4,159) \t $ | (4,537) \t $ | (4,915) |
| Accumulated\tactuarial\tloss | (1,105) | (3,426) | (3,008) |
| Accumulated\tother\tcomprehensive\tincome\t(loss) | \t $(5,264) \t $ | (7,963) \t $ | (7,923) |

The	discount	rates	used	in	the	net	periodic	benefit	cost	calculation	for	the	years	ended	December	31,	2018,	2017	and	2016	were	3.6%,	4.0%	and	4.3%,	respectively,	and the	actuarial	loss	is	amortized	over	18.93	years.	The	discount	rate	is	used	to	measure	and	recognize	obligations,	including	adjustments	to	other	comprehensive	income (loss),	and	to	determine	expense	during	the	periods.	It	is	determined	by	using	bond	indices	which	reflect	yields	on	a	broad	maturity	and	industry	universe	of	high-quality corporate	bonds.

On	January	1,	2018,	NCLH	adopted	ASU	No.	2017-07,	Compensation	–	Retirement	Benefits	(Topic	715),	which	requires	the	components	of	pension	expense	not associated	with	service	costs	to	be	recognized	separately	from	the	service	cost	component	and	outside	operating	income.	For	the	year	ended	December	31,	2018, services	costs	are	recognized	in	payroll	and	related	expense	while	non-service	cost	components	are	recognized	in	other	income	(expense),	net.	For	the	years	ended December	31,	2017	and	2016,	services	costs	and	non-service	cost	components	are	both	recognized	in	payroll	and	related	expense.

The	pension	benefits	expected	to	be	paid	in	each	of	the	next	five	years	and	in	aggregate	for	the	five	years	thereafter	are	as	follows	(in	thousands):

| Year | Amount |
| :--- | :--- |
| 2019 | $986 |
| 2020 | $971 |
| 2021 | $1,076 |
| 2022 | $1,179 |
| 2023 | $1,333 |
| Next\tfive\tyears | $9,810 |

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

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

|  |  | Year	Ended	December	31, |  |
| :--- | :--- | :--- | :--- |
|  | 2018 | 2017 | 2016 |
| Bermuda | $—\t $—\t\t $— | $—\t $—\t\t $— | $—\t $—\t\t $— |
| Foreign\t-\tOther | 969,310 | 770,614 | 640,303 |
| Net\tincome\tbefore\tincome\ttaxes | $969,310 | $770,614 | \t $640,303 |

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

| Bermuda | $—	 $—		 $— | $—	 $—		 $— | $—	 $—		 $— |
| :--- | :--- | :--- | :--- |
| United\tStates | (7,409) | 1,828 | (8,736) |
| Foreign\t-\tOther | (5,371) | (4,617) | (2,166) |
| Total\tcurrent: | (12,780) | (2,789) | (10,902) |
| Deferred: |  |  |  |
| Bermuda | — | — | — |
| United\tStates | (1,912) | (8,439) | 3,684 |
| Foreign\t-\tOther | 225 | 486 | — |
| Total\tdeferred: | (1,687) | (7,953) | 3,684 |
| Income\ttax\texpense | $(14,467) | $(10,742) \t $ | (7,218) |

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

|  | Year	Ended	December	31, | Year	Ended	December	31, |  |
| :--- | :--- | :--- | :--- |
|  | 2018 | 2017 | 2016 |
| Tax\tat\tBermuda\tstatutory\trate | $—\t $—\t\t $— | $—\t $—\t\t $— | $—\t $—\t\t $— |
| Foreign\tincome\ttaxes\tat\tdifferent\trates | (17,540) | (28,188) | (10,721) |
| Tax\tcontingencies | (5) | 11,184 | (533) |
| Return\tto\tprovision\tadjustments | 2,961 | (1,397) | 418 |
| Benefit\tfrom\tchange\tin\ttax\trate | 117 | 7,659 | 24 |
| Valuation\tallowance | — | — | 3,594 |
| Income\ttax\texpense | $(14,467) | $(10,742) \t $ | (7,218) |

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

|  | As	of	December	31,<br>2018 | 2017 |
| :--- | :--- | :--- |
| Deferred\ttax\tassets: |  |  |
| Loss\tcarryforwards | $63,201 | \t $58,789 |
| Other | 2,535 | 2,106 |
| Valuation\tallowance | (41,924) | (42,154) |
| Total\tnet\tdeferred\tassets | 23,812 | 18,741 |
| Deferred\ttax\tliabilities: |  |  |
| Property\tand\tequipment | (37,448) | (30,869) |
| Total\tdeferred\ttax\tliabilities | (37,448) | (30,869) |
| Net\tdeferred\ttax\tliability | $(13,636) | \t $(12,128) |

We	have	U.S.	net	operating	loss	carryforwards	of	$278.3	million	and	$254.8	million	for	the	years	ended	December	31,	2018	and	2017,	respectively,	which	begin	to expire	in	2023.	We	have	state	net	operating	loss	carryforwards	of	$4.8	million	and	$8.9	million	for	the	years	ended	December	31,	2018	and	2017,	respectively,	which expire	between	2025	through	2035.

Included	above	are	deferred	tax	assets	associated	with	our	operations	in	Norway	for	which	we	have	provided	a	full	valuation	allowance.	We	have	Norway	net	operating loss	carryforwards	of	$13.9	million	for	the	years	ended	December	31,	2018	and	2017,	which	can	be	carried	forward	indefinitely.

Included	above	are	deferred	tax	assets	associated	with	our	branch	operations	in	the	U.K.	for	which	we	have	provided	a	full	valuation	allowance.	We	have	U.K.	net operating	loss	carryforwards	of	$7.5	million	and	$8.3	million	for	the	years	ended	December	31,	2018	and	2017,	respectively,	which	can	be	carried	forward	indefinitely.

Included	above	are	deferred	tax	assets	associated	with	Prestige	for	which	we	have	provided	a	full	valuation	allowance.	We	have	U.S.	net	operating	loss	carryforwards	of $177.5	million	and	$177.8	million	for	the	years	ended	December	31,	2018	and	2017,	respectively,	which	begin	to	expire	in	2023.	Utilization	of	the	Prestige	net	operating loss	carryforwards	may	be	subject	to	a	substantial	annual	limitation	due	to	ownership	change	limitations	that	have	occurred	previously	and/or	that	could	occur	in	the future,	as	provided	by	Section	382	of	the	Internal	Revenue	Code	of	1986	("Section	382").	Ownership	changes	may	limit	the	amount	of	net	operating	loss	carryforwards that	can	be	utilized	to	offset	future	taxable	income	and	tax,	respectively.	In	general,	an	ownership	change,	as	defined	by	Section	382,	results	from	transactions	increasing the	ownership	of	certain	shareholders	or	public	groups	in	the	stock	of	a	corporation	by	more	than	50	percentage	points	over	a	three-year	period.	If	we	have	experienced an	ownership	change,	utilization	of	Prestige's	net	operating	loss	carryforwards	would	be	subject	to	an	annual	limitation	under	Section	382.	Any	limitation	may	result	in expiration	of	a	portion	of	the	net	operating	loss	carryforwards	before	utilization.	Subsequent	ownership	changes	could	further	impact	the	limitation	in	future	years. During	2018,	we	implemented	certain	tax	restructuring	that	created	the	potential	to	utilize	the	net	operating	loss	carryforwards	referred	to	above.	We	are	currently undergoing	a	Section	382	study	to	determine	the	amount	of	the	Prestige	net	operating	loss	carryforwards	that	can	be	utilized	against	future	taxable	income,	the	result	of which	could	potentially	result	in	the	reversal	of	all	or	a	portion	of	the	valuation	allowance.	We	expect	the	study	to	be	complete	in	the	first	half	of	2019.

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

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

|  | As	of	December	31, | As	of	December	31, |
| :--- | :--- | :--- |
|  | 2018 | 2017 |
| Unrecognized\ttax\tbenefits,\tbeginning\tof\tthe\tyear | \t $532 | \t $11,144 |
| Gross\tincreases\tin\ttax\tpositions\tfrom\tprior\tperiods | — | 300 |
| Settlement\tof\ttax\tpositions | — | (250) |
| Lapse\tof\tstatute\tof\tlimitations | — | (10,662) |
| Unrecognized\ttax\tbenefits,\tend\tof\tyear | \t $532 | \t $532 |

In	2017,	$10.7	million	of	unrecognized	tax	benefits	were	reversed	due	to	the	expiration	of	the	statute	of	limitations.	If	the	$0.5	million	of	unrecognized	tax	benefits	at December	31,	2018	were	recognized,	our	effective	tax	rate	would	be	minimally	affected.	We	believe	that	there	will	not	be	a	significant	increase	or	decrease	to	the	tax positions	within	12	months	of	the	reporting	date.	We	recognize	interest	and	penalties	related	to	unrecognized	tax	benefits	in	income	tax	expense.

We	file	income	tax	returns	in	the	U.S.	federal	jurisdiction,	various	U.S.	state	jurisdictions	and	foreign	jurisdictions.	We	are	generally	no	longer	subject	to	U.S.	federal, state	and	local,	or	non-U.S.	income	tax	examinations	by	authorities	for	years	prior	to	2015,	except	for	years	in	which	NOLs	generated	prior	to	2015	are	utilized.

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

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

# 12. Commitments	and	Contingencies

# Operating	Leases

Total	expense	under	non-cancelable	operating	lease	commitments,	primarily	for	offices,	motor	vehicles	and	office	equipment	was	$16.9	million,	$17.0	million	and	$15.0 million	for	the	years	ended	December	31,	2018,	2017	and	2016,	respectively.	As	of	December	31,	2018,	minimum	annual	rentals	for	non-cancelable	leases	with	initial or	remaining	terms	in	excess	of	one	year	were	as	follows	(in	thousands):

| Year | Amount |
| :--- | :--- |
| 2019 | $16,651 |
| 2020 | 16,105 |
| 2021 | 15,315 |
| 2022 | 14,391 |
| 2023 | 13,462 |
| Thereafter | 52,626 |
| Total\tminimum\tannual\trentals | $128,550 |

Rental	payments	applicable	to	such	operating	leases	are	recognized	on	a	straight-line	basis	over	the	term	of	the	lease.

# Ship	Construction	Contracts

Project	Leonardo	will	introduce	an	additional	six	ships,	each	approximately	140,000	Gross	Tons	with	approximately	3,300	Berths,	with	expected	delivery	dates	from 2022	through	2027,	subject	to	certain	conditions.	The	effectiveness	of	the	contracts	to	construct	two	of	the	ships,	expected	to	be	delivered	in	2026	and	2027,	is contingent	upon	certain	Italian	government	approvals.	We	have	a	Breakaway	Plus	Class	Ship,	Norwegian	Encore,	with	approximately	168,000	Gross	Tons	with	4,000 Berths,	on	order	for	delivery	in	the	fall	of	2019,	and	an	Explorer	Class	Ship,	Seven	Seas	Splendor,	with	approximately	55,000	Gross	Tons	and	750	Berth,	on	order	for delivery	in	the	winter	of	2020.	We	also	plan	to	introduce	three	additional	ships,	one	for	Regent	and	two	for	Oceania	Cruises	(we	refer	you	to	Note	17—	"Subsequent Events").

The	combined	contract	prices	of	the	eight	ships	on	order	for	delivery	was	approximately	€6.3	billion,	or	$7.2	billion	based	on	the	euro/U.S.	dollar	exchange	rate	as	of December	31,	2018.

We	have	obtained	export	credit	financing	for	the	ships	on	order	which	is	expected	to	fund	approximately	80%	of	each	contract	price,	subject	to	certain	conditions.	We refer	you	to	Note	17—	"Subsequent	Events"	for	details	regarding	the	financing	for	certain	ships.	We	do	not	anticipate	any	contractual	breaches	or	cancellation	to	occur. However,	if	any	such	events	were	to	occur,	it	could	result	in,	among	other	things,	the	forfeiture	of	prior	deposits	or	payments	made	by	us	and	potential	claims	and impairment	losses	which	may	materially	impact	our	business,	financial	condition	and	results	of	operations.

As	of	December	31,	2018,	minimum	annual	payments	for	non-cancelable	ship	construction	contracts	with	initial	or	remaining	terms	in	excess	of	one	year	were	as follows	(in	thousands):

| Year | Amount |
| :--- | :--- |
| 2019 | $912,858 |
| 2020 | 474,869 |
| 2021 | 187,818 |
| 2022 | 1,029,328 |
| 2023 | 946,895 |
| Thereafter | 1,589,673 |
| Total\tminimum\tannual\tpayments | $5,141,441 |

# Port	Facility	Commitments

As	of	December	31,	2018,	future	commitments	to	pay	for	usage	of	certain	port	facilities	were	as	follows	(in	thousands):

| Year | Amount |
| :--- | :--- |
| 2019 | $62,388 |
| 2020 | 73,853 |
| 2021 | 77,829 |
| 2022 | 77,546 |
| 2023 | 79,784 |
| Thereafter | 1,366,636 |
| Total\tport\tfacility\tfuture\tcommitments | $1,738,036 |

# Other	Commitments

The	FMC	requires	evidence	of	financial	responsibility	for	those	offering	transportation	on	passenger	ships	operating	out	of	U.S.	ports	to	indemnify	passengers	in	the event	of	non-performance	of	the	transportation.	Accordingly,	each	of	our	three	brands	are	required	to	maintain	a	$30.0	million	third-party	performance	guarantee	in respect	of	liabilities	for	non-performance	of	transportation	and	other	obligations	to	passengers.	The	guarantee	requirements	are	subject	to	additional	consumer	price index-based	adjustments.	Also,	each	of	our	brands	have	a	legal	requirement	to	maintain	a	security	guarantee	based	on	cruise	business	originated	from	the	U.K.	As	of December	31,	2018,	approximately	British	Pound	Sterling	30.5	million	was	in	place	to	support	our	security	guarantees.	We	also	are	required	by	other	jurisdictions	to establish	financial	responsibility	to	meet	liability	in	the	event	of	non-performance	of	our	obligations	to	passengers	from	those	jurisdictions.

# Litigation

# 13. Other	Income	(Expense),	Net

Other	income	(expense),	net	was	a	gain	of	$20.7	million,	loss	of	$10.4	million,	and	loss	of	$8.3	million	for	the	years	ended	December	31,	2018,	2017	and	2016, respectively.	In	2018,	the	income	was	primarily	due	to	foreign	currency	exchange	gains.	In	2017,	the	expense	was	primarily	due	to	foreign	currency	exchange	losses.	In 2016,	the	expense	was	primarily	related	to	$16.1	million	of	unrealized	and	realized	losses	on	fuel	swap	derivative	hedge	contracts	partially	offset	by	$4.5	million	of gains	on	foreign	currency	exchange	and	$3.9	million	of	gains	on	foreign	currency	exchange	derivative	hedge	contracts.

# 14. Concentration	Risk

We	contract	with	a	single	vendor	to	provide	many	of	our	hotel	and	restaurant	services	including	both	food	and	labor	costs.	We	incurred	expenses	of	$153.7	million, $152.3	million	and	$137.2	million	for	the	years	ended	December	31,	2018,	2017	and	2016,	respectively,	which	are	recorded	in	payroll	and	related	in	our	consolidated statements	of	operations.

# 15. Supplemental	Cash	Flow	Information

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

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

For	the	year	ended	December	31,	2016,	we	had	non-cash	investing	activities	in	connection	with	property	and	equipment	of	$26.7	million.	For	the	year	ended	December 31,	2016,	we	paid	income	taxes	of	$8.8	million	and	interest	and	related	fees,	net	of	capitalized	interest,	of	$269.5	million.

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

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

# 17. Subsequent	Events

In	January	2019,	we	(a)	reduced	the	pricing	of	our	existing	$875.0	million	Revolving	Loan	Facility,	(b)	reduced	the	pricing	and	increased	the	approximately	$1.3	billion principal	amount	outstanding	under	the	term	loan	A	facility	to	$1.6	billion,	and	(c)	extended	the	maturity	dates	for	our	Revolving	Loan	Facility	and	our	term	loan	A facility	to	2024,	subject	to	certain	conditions.	The	applicable	margin	under	the	Revolving	Loan	Facility	and	term	loan	A	facility	and	was	reduced	by	25	basis	points	from the	prior	facility.	We	used	the	proceeds	from	the	increase	in	our	term	loan	A	facility	to	prepay	all	of	the	then	outstanding	amounts	under	the	term	loan	B	facility.

In	January	2019,	we	obtained	financing	for	five	additional	ships	with	expected	delivery	dates	through	2027,	subject	to	certain	Italian	government	approvals.	Two	of	such ships	are	Project	Leonardo	ships	which	were	ordered	for	delivery	in	2026	and	2027	and	each	have	a	contract	price	which	is	approximately	€800.0	million,	or	$917.4 million	based	on	the	exchange	rate	as	of	December	31,	2018.	We	have	ordered	an	additional	Explorer	Class	Ship	to	be	delivered	in	2023.	The	contract	price	for	this	ship is	approximately	€473.5	million,	or	$543.0	million	based	on	the	exchange	rate	as	of	December	31,	2018.	We	also	have	ordered	two	Allura	Class	Ships	to	be	delivered	in 2022	and	2025.	The	contract	price	for	each	of	these	ships	is	approximately	€578.7	million,	or	$663.6	million	based	on	the	exchange	rate	as	of	December	31,	2018.	We have	obtained	export	credit	financing	which	is	expected	to	fund	approximately	80%	of	the	contract	price	of	each	ship	expected	to	be	delivered	through	2027,	subject	to certain	conditions.



Question: what is the percentage change in capitalized interest from 2017 to 2018?
Calculation: capitalized_interest_2018 = 30.4
capitalized_interest_2017 = 29.0
percent_change = (capitalized_interest_2018 - capitalized_interest_2017) / capitalized_interest_2017
answer = percent_change * 100
Answer: 4.8%