April 23, 2024

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NORWEGIAN CRUISE LINE HOLDINGS LTD. Management’s Discussion and Analysis of Financial Condition and Results of Operations (form 10-K)

NORWEGIAN CRUISE LINE HOLDINGS LTD. Management’s Discussion and Analysis of Financial Condition and Results
of Operations (form 10-K)

Financial Presentation


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

We categorize revenue from our cruise and cruise-related activities as either
"passenger ticket" revenue or "onboard and other" revenue. Passenger ticket
revenue and onboard and other revenue vary according to product offering, the
size of the ship in operation, the length of cruises operated and the markets in
which the ship operates. Our revenue is seasonal based on demand for cruises,
which has historically been strongest during the Northern Hemisphere's summer
months; however, our cruise voyages were completely suspended from March 2020
until July 2021 due to the COVID-19 pandemic and our resumption of cruise
voyages was phased in gradually, with full operation of our fleet resumed in May
2022 as described under "-Update Regarding COVID-19 Pandemic" below. Passenger
ticket revenue primarily consists of revenue for accommodations, meals in
certain restaurants on the ship, certain onboard entertainment, port fees and
taxes and includes revenue for service charges and air and land transportation
to and from the ship to the extent guests purchase these items from us. Onboard
and other revenue primarily consists of revenue from casino, beverage sales,
shore excursions, specialty dining, retail sales, spa services and Wi-Fi
services. Our onboard revenue is derived from onboard activities we perform
directly or that are performed by independent concessionaires, from which we
receive a share of their revenue.

Our cruise operating expense is classified as follows:

Commissions, transportation and other primarily consists of direct costs

associated with passenger ticket revenue. These costs include travel advisor

? commissions, air and land transportation expenses, related credit card fees,

certain port fees and taxes and the costs associated with shore excursions and

hotel accommodations included as part of the overall cruise purchase price.

Onboard and other primarily consists of direct costs incurred in connection

? with onboard and other revenue, including casino, beverage sales and shore

excursions.

Payroll and related consists of the cost of wages and benefits for shipboard

employees and costs of certain inventory items, including food, for a third

? party that provides crew and other hotel services for certain ships. The cost

of crew repatriation, including charters, housing, testing and other costs

related to COVID-19 are also included.

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

costs.

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

? Other consists of repairs and maintenance (including Dry-dock costs), ship

insurance and other ship expenses.

Critical Accounting Policies

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

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critical accounting policies reflect the significant estimates and assumptions
used in the preparation of our consolidated financial statements. These critical
accounting policies, which are presented in detail in our notes to our audited
consolidated financial statements, relate to liquidity, ship accounting and
asset impairment.

Liquidity

We make several critical accounting estimates with respect to our liquidity.

Significant events affecting travel typically have an impact on demand for
cruise vacations, with the full extent of the impact determined by the length of
time the event influences travel decisions. The level of occupancy on our ships
will depend on a number of factors including, but not limited to, the conditions
discussed below under "Macroeconomic Trends and Uncertainties", further
resurgences of COVID-19 or the emergence of other public health crises and any
related governmental regulations and new health and safety protocols, port
availability, travel restrictions, bans and advisories, and our ability to staff
our ships. In addition, as a result of conditions associated with the COVID-19
pandemic and other global events, such as Russia's ongoing invasion of Ukraine
and actions taken by the United States and other governments in response to the
invasion, the global economy, including the financial and credit markets, has
experienced significant volatility and disruptions, including increases in
inflation rates, fuel prices, and interest rates. These conditions have
resulted, and may continue to result, in increased expenses and also have
impacted travel and consumer discretionary spending. We believe the ongoing
effects of the foregoing factors and events on our operations and global
bookings have had, and will continue to have, a significant impact on our
financial results and liquidity.

The estimation of our future cash flow projections includes numerous assumptions
that are subject to various risks and uncertainties. Our principal assumptions
for future cash flow projections include:

? Expected gradual return to historical occupancy levels;

? Expected increase in revenue per passenger cruise day through a combination of

both passenger ticket and onboard revenue as compared to 2019;

? Forecasted cash collections in accordance with the terms of our credit card

processing agreements (see Note 13 – “Commitments and Contingencies”); and

? Expected sustained higher fuel prices and the impact of inflation.

Our projected liquidity requirements also reflect our principal assumptions
surrounding ongoing operating costs, as well as liquidity requirements for
financing costs and necessary capital expenditures. We cannot make assurances
that our assumptions used to estimate our liquidity requirements will not change
materially due to the dynamic nature of the current economic landscape.
Accordingly, the full effect of the COVID-19 pandemic and other global events
impacting macroeconomic conditions and travel and consumer discretionary
spending, including Russia's ongoing invasion of Ukraine, on our financial
performance and financial condition cannot be quantified at this time. We have
made reasonable estimates and judgments of the impact of these events within our
financial statements; however, there may be material changes to those estimates
in future periods. We have taken actions to improve our liquidity, including
completing various capital market and financing transactions and making capital
expenditure and operating expense reductions, and we expect to continue to
pursue further opportunities to improve our liquidity.

Ship Accounting


Ships represent our most significant assets, and we record them at cost less
accumulated depreciation. Depreciation of ships is computed on a straight-line
basis over the weighted average useful lives of primarily 30 years after a 15{6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}
reduction for the estimated residual value of the ship. Our residual value is
established based on our long-term estimates of the expected remaining future
benefit at the end of the ships' weighted average useful lives. In the third
quarter of 2022, the Company took delivery of Norwegian's first Prima Class
Ship. Based on the design, structure and technological advancements made to this
new class of ship and the analysis of its major components, which is generally
performed upon the introduction of a new class of ship, we have assigned the
Prima Class Ships a weighted-average

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useful life of 35 years with a residual value of 10{6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}. Ship improvement costs
that we believe add value to our ships are capitalized to the ship and
depreciated over the shorter of the improvements' estimated useful lives or the
remaining useful life of the ship. When we record the retirement of a ship
component included within the ship's cost basis, we estimate the net book value
of the component being retired and remove it from the ship's cost basis. Repairs
and maintenance activities are charged to expense as incurred. We account for
Dry-dock costs under the direct expense method which requires us to expense all
Dry-dock costs as incurred.

We determine the weighted average useful lives of our ships based primarily on
our estimates of the costs and useful lives of the ships' major component
systems on the date of acquisition, such as cabins, main diesels, main electric,
superstructure and hull, and their related proportional weighting to the ship as
a whole. The useful lives of components of new ships and ship improvements are
estimated based on the economic lives of the new components. In addition, to
determine the useful lives of the major components of new ships and ship
improvements, we consider the impact of the historical useful lives of similar
assets, manufacturer recommended lives, planned maintenance programs and
anticipated changes in technological conditions. Given the large and complex
nature of our ships, our accounting estimates related to ships and
determinations of ship improvement costs to be capitalized require judgment and
are uncertain. Should certain factors or circumstances cause us to revise our
estimate of ship service lives or projected residual values, depreciation
expense could be materially lower or higher. In 2020, one ship had significant
improvements that extended the remaining weighted average useful life of the
vessel. Accordingly, we updated our estimate of both its useful life and
residual value based on the new weighted average useful life of its current
components. The impact of the change in estimate was accounted on a prospective
basis and was not material.

If circumstances cause us to change our assumptions in making determinations as
to whether ship improvements should be capitalized, the amounts we expense each
year as repairs and maintenance costs could increase, partially offset by a
decrease in depreciation expense. If we reduced our estimated weighted average
ship service life by one year, depreciation expense for the year ended
December 31, 2022 would have increased by $18.8 million. In addition, if our
ships were estimated to have no residual value, depreciation expense for the
same period would have increased by $82.8 million. We believe our estimates for
ship accounting are reasonable and our methods are consistently applied. We
believe that depreciation expense is based on a rational and systematic method
to allocate our ships' costs to the periods that benefit from the ships' usage.

Asset Impairment

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

We evaluate goodwill and trade names for impairment on December 31 or more
frequently when an event occurs or circumstances change that indicates the
carrying value of a reporting unit may not be recoverable. For our evaluation of
goodwill, we use a qualitative assessment which allows us to first assess
qualitative factors to determine whether it is more likely than not (i.e., more
than 50{6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}) that the estimated fair value of a reporting unit is less than its
carrying value. For trade names we also provide a qualitative assessment to
determine if there is any indication of impairment.

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

Changes in general macroeconomic conditions, such as a deterioration in general

? economic conditions; limitations on accessing capital; fluctuations in foreign

   exchange rates; or other developments in equity and credit markets;


   Changes in industry and market conditions such as a deterioration in the

environment in which an entity operates; an increased competitive environment;

? a decline in market-dependent multiples or metrics (in both absolute terms and

relative to peers); a change in the market for an entity’s products or

services; or a regulatory or political development;

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

? Decline in overall financial performance (for both actual and expected

performance);

Entity and reporting unit specific negative events such as changes in

? management, key personnel, strategy, or customers; litigation; or a change in

the composition or carrying amount of net assets; and

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



We believe our estimates and judgments with respect to our long-lived assets,
principally ships, goodwill, tradenames and other indefinite-lived intangible
assets are reasonable. Nonetheless, if there was a material change in
assumptions used in the determination of such fair values or if there is a
material change in the conditions or circumstances that influence such assets,
we could be required to record an impairment charge. If a material change
occurred or the result of the qualitative assessment indicated it is more likely
than not that the estimated fair value of the asset is less than its carrying
value, we would conduct a quantitative assessment comparing the fair value to
its carrying value.

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

For our annual impairment evaluation, we performed a qualitative assessment for
the Regent Seven Seas reporting unit and of each brand's trade names. As part of
our analysis, we performed an assessment of current factors compared to key
assumptions impacting the quantitative tests performed in 2020. As of
December 31, 2022, there was $98.1 million of goodwill remaining for the Regent
Seven Seas reporting unit. Trade names were $500.5 million as of
December 31, 2022. As of December 31, 2022, our annual impairment reviews
support the carrying values of these assets.

Non-GAAP Financial Measures

We use certain non-GAAP financial measures, such as Adjusted Gross Margin, Net
Cruise Cost, Adjusted Net Cruise Cost Excluding Fuel, Adjusted EBITDA, Adjusted
Net Loss and Adjusted EPS, to enable us to analyze our performance. See "Terms
Used in this Annual Report" for the definitions of these and other non-GAAP
financial measures. We utilize Adjusted Gross Margin to manage our business on a
day-to-day basis because it reflects revenue earned net of certain direct
variable costs. We also utilize Net Cruise Cost and Adjusted Net Cruise Cost
Excluding Fuel to manage our business on a day-to-day basis. In measuring our
ability to control costs in a manner that positively impacts our results of
operations, we believe changes in Adjusted Gross Margin, Net Cruise Cost and
Adjusted Net Cruise Cost Excluding Fuel to be the most relevant indicators of
our performance.

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

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Currency basis, whereby current period revenue and expenses denominated in
foreign currencies are converted to U.S. dollars using currency exchange rates
of the comparable period. We believe that presenting these non-GAAP measures on
both a reported and Constant Currency basis is useful in providing a more
comprehensive view of trends in our business.

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

In addition, Adjusted Net Loss and Adjusted EPS are non-GAAP financial measures
that exclude certain amounts and are used to supplement GAAP net loss and EPS.
We use Adjusted Net Loss and Adjusted EPS as key performance measures of our
earnings performance. We believe that both management and investors benefit from
referring to these non-GAAP financial measures in assessing our performance and
when planning, forecasting and analyzing future periods. These non-GAAP
financial measures also facilitate management's internal comparison to our
historical performance. In addition, management uses Adjusted EPS as a
performance measure for our incentive compensation during normal operations. The
amounts excluded in the presentation of these non-GAAP financial measures may
vary from period to period; accordingly, our presentation of Adjusted Net Loss
and Adjusted EPS may not be indicative of future adjustments or results. For
example, for the year ended December 31, 2022, we incurred $12.1 million related
to restructuring costs or charges. We included this as an adjustment in the
reconciliation of Adjusted Net Loss since the expenses are not representative of
our day-to-day operations; however, this adjustment did not occur and is not
included in the comparative period presented within this Form 10-K.

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

Update Regarding COVID-19 Pandemic

Safe Resumption of Operations


Due to the impact of COVID-19, travel restrictions and limited access to ports
around the world, in March 2020, we implemented a voluntary suspension of all
cruise voyages across our three brands. In the third quarter of 2021, we began a
phased relaunch of certain cruise voyages with ships initially operating at
reduced occupancy levels. In early May 2022, we completed the phased relaunch of
our entire fleet with all ships now in operation with guests on board. Occupancy
levels have sequentially increased in recent quarters, most recently averaging
87{6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667} in the fourth quarter 2022, with the Company expecting to return to
historical Occupancy levels for the second quarter of 2023.

During 2022, we benefitted from significant improvements in the public health
environment which allowed for the removal of most COVID-19 related health and
safety protocols by year-end, unless required by local jurisdictions. For
example, in July 2022, the CDC announced that its voluntary COVID-19 Program for
Cruise Ships Operating in U.S. Waters was no longer in effect. We will continue
to modify and evolve our health and safety protocols as needed along with the
broader public health and regulatory environments. We continue to prioritize the
health and safety of our guests, crew and communities we visit and follow
applicable travel guidelines and local protocols as required by the ports and
destinations we visit.

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The relaxation of protocols, continued easing of travel restrictions and
reopening of most ports around the globe to cruise ships has improved travel
experiences, expanded the addressable cruise market, allowed us to expand the
variety of our itineraries and provided additional catalysts on the road to
recovery.

Modified Policies


We have launched cancellation policies for certain sailings booked during
certain time periods to permit certain guests to cancel cruises which were not
part of a temporary suspension of voyages up to 15 days prior to embarkation for
cruises embarking prior to December 31, 2022 or in the event of a positive
COVID-19 test and receive a refund in the form of a credit to be applied toward
a future cruise. Standard payment schedules and cancellation penalties apply for
all sailings after December 31, 2022. The future cruise credits that have been
issued as face value reimbursement for cancelled bookings due to COVID-19 are
generally valid for any sailing through June 30, 2023, and we may further extend
the length of time these future cruise credits may be redeemed. The use of such
credits may prevent us from garnering certain future cash collections as
staterooms booked by guests with such credits will not be available for sale,
resulting in less cash collected from bookings to new guests. We may incur
incremental commission expense for the use of these future cruise credits.

Financing Transactions


In 2022 and 2023, we continued to take actions to bolster our financial
condition as part of our long-term post-pandemic financial recovery strategy. In
February 2022, we received additional financing through various debt financings,
collectively totaling $2.1 billion in gross proceeds, which was used to redeem
all of the outstanding 2024 Senior Secured Notes and 2026 Senior Secured Notes
and to make scheduled principal payments on debt maturing in 2022, including, in
each case, to pay any accrued and unpaid interest thereon, as well as related
premiums, fees and expenses.

In December 2022, we amended the Senior Secured Credit Facility to extend
approximately $1.4 billion of maturities by one year to January 2025. The
amendment also updated certain financial covenants and increased our ability to
incur additional debt. Each of our export-credit backed facilities were also
amended to conform the financial covenants with the Senior Secured Credit
Facility. In February 2023, a commitment of $82.5 million in aggregate principal
amount of the Revolving Loan Facility that was not previously extended was
obtained to assign the commitment to a new lender under the same terms as the
extending lenders.

In February 2023, NCLC issued $600 million aggregate principal amount of 8.375{6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}
senior secured notes due 2028. The proceeds from the notes were used to repay
the loans outstanding under our Term Loan A Facility that otherwise would have
become due in January 2024, including to pay any accrued and unpaid interest
thereon, as well as related premiums, fees and expenses.

In July 2022, we amended our $1 billion commitment, which provided additional
liquidity to the Company through March 31, 2023. In February 2023, the
commitment was further extended through February 2024, with an option for NCLC
to further extend the commitments through February 2025 at its election.
Simultaneously, the amount of the commitment was reduced to $650 million, which
may be drawn in up to two draws, and in connection with the execution of the
amended commitment letter, NCLC issued $250 million aggregate principal amount
of senior secured notes due 2028. NCLC will use the net proceeds for general
corporate purposes.

In February 2023, NCLC entered into a Backstop Agreement with MS, pursuant to
which MS has agreed to provide backstop committed financing to refinance and/or
repay in whole or in part up to $300 million of amounts outstanding under the
Senior Secured Credit Facility.

Refer to Note 8 - "Long-Term Debt" for further details about the above
transactions.

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Update on Bookings

The Company entered the year with a record cumulative booked position of
approximately 62{6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667} for full year 2023, in line with previously outlined
expectations and within the Company's optimal 60{6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667} to 65{6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667} range, and at higher
prices than 2019 at a similar point in time. Booking volumes have accelerated in
recent months buoyed by strong WAVE season demand. The Company's brands achieved
several booking records in recent months including at Norwegian Cruise Line
which reached an all-time record booking month in November, boosted by Black
Friday and Cyber Monday, which was subsequently exceeded in January 2023. As a
result, full year 2023 cumulative booked position is ahead of 2019 levels
inclusive of the Company's approximately 19{6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667} increase in capacity, at continued
higher pricing. Net booking volumes continue to be at the pace needed to reach
historical Occupancy levels for the second quarter of 2023 and beyond; however,
our full fleet may not achieve historical Occupancy levels on our expected
schedule and as a result, current booking data may not be informative. In
addition, because of our cancellation policies, bookings may not be
representative of actual cruise revenues.

There are uncertainties about when our full fleet will be back at historical
occupancy levels and, accordingly, we cannot estimate the impact on our
business, financial condition or near- or longer-term financial or operational
results with certainty; however, we will report a net loss for the first quarter
of 2023.

Macroeconomic Trends and Uncertainties


As a result of conditions associated with global events, including the
downstream effects of the COVID-19 pandemic and Russia's ongoing invasion of
Ukraine and actions taken by the United States and other governments in response
to the invasion, the global economy, including the financial and credit markets,
has experienced significant volatility and disruptions, including increases in
inflation rates, fuel prices, and interest rates. Our costs have been, and are
expected to continue to be, adversely impacted by these increases. We have used,
and may continue to use, derivative instruments to attempt to mitigate the risk
of adverse changes in fuel prices and interest expense. In an attempt to
mitigate risks related to inflation, our supply chain department has negotiated
contracts with varying terms, with a goal of providing us with the ability to
take advantage of cost declines when they occur, and diversified our sourcing
options. These strategies may not fully offset the impact of current
macroeconomic conditions. Furthermore, we are exposed to fluctuations in the
euro exchange rate for certain portions of ship construction contracts that have
not been hedged. See "Item 1A-Risk Factors" for additional information.

Climate Change


We believe the increasing focus on climate change and evolving regulatory
requirements will materially impact our future capital expenditures and results
of operations. We expect to incur significant expenses related to these
regulatory requirements, which may include expenses related to greenhouse gas
emissions reduction initiatives and the purchase of emissions allowances, among
other things. If requirements become more stringent, we may be required to
change certain operating procedures, for example slowing the speed of our ships,
which could adversely impact our operations. We are evaluating the effects of
global climate change related requirements, which are still evolving, including
our ability to mitigate certain future expenses through initiatives to reduce
greenhouse gas emissions; consequently, the full impact to the Company is not
yet known. Additionally, our ships, port facilities, corporate offices and
island destinations have in the past and may again be adversely affected by an
increase in the frequency and intensity of adverse weather conditions caused by
climate change. For example, certain ports have become temporarily unavailable
to us due to hurricane damage and other destinations have either considered or
implemented restrictions on cruise operations due to environmental concerns. See
Item 1A, "Risk Factors" for additional information.

Executive Overview

Total revenue increased 647.5{6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667} to $4.8 billion for the year ended
December 31, 2022 compared to $0.6 billion for the year ended December 31, 2021.
Capacity Days increased by 420.2{6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}.


For the year ended December 31, 2022, we had net loss and diluted EPS of $(2.3)
billion and $(5.41), respectively. For the year ended December 31, 2021, we had
net loss and diluted EPS of $(4.5) billion and $(12.33), respectively.

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Operating loss decreased 39.2{6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667} to $(1.6) billion for the year ended
December 31, 2022 from $(2.6) billion for the year ended December 31, 2021.


We had Adjusted Net Loss and Adjusted EPS of $(1.9) billion and $(4.64),
respectively, for the year ended December 31, 2022, including $0.3 billion of
adjustments primarily consisting of losses on the extinguishment and
modification of debt and share-based compensation, compared to Adjusted Net Loss
and Adjusted EPS of $(2.9) billion and $(8.07), respectively, for the year ended
December 31, 2021. A 60.9{6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667} improvement in Adjusted EBITDA was incurred for the
same period. We refer you to our "Results of Operations" below for a calculation
of Adjusted Net Loss, Adjusted EPS and Adjusted EBITDA.

Results of Operations

The discussion below compares the results of operations for the year ended
December 31, 2022 to the year ended December 31, 2021. You should read this
discussion in conjunction with the consolidated financial statements and the
notes thereto included elsewhere in this annual report. For a comparison of the
Company's results of operations for the fiscal years ended December 31, 2021 to
the year ended December 31, 2020, see "Item 7, Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the Company's
Annual Report on Form 10-K for the year ended December 31, 2021, which was filed
with the U.S. Securities and Exchange Commission on March 1, 2022.

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


                                     Year Ended December 31,
                                      2022             2021
Total revenue                     $   4,843,760    $     647,986
Total cruise operating expense    $   4,267,086    $   1,608,037
Operating loss                    $ (1,551,757)    $ (2,552,348)
Net loss                          $ (2,269,909)    $ (4,506,587)
EPS:
Basic                             $      (5.41)    $     (12.33)
Diluted                           $      (5.41)    $     (12.33)


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

                                          Year Ended December 31,
                                           2022           2021
Revenue
Passenger ticket                              67.2 {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}         60.6 {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}
Onboard and other                             32.8 {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}         39.4 {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}
Total revenue                                100.0 {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}        100.0 {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}
Cruise operating expense
Commissions, transportation and other         21.4 {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}         22.2 {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}
Onboard and other                              7.4 {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}          8.3 {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}
Payroll and related                           22.5 {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}         82.9 {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}
Fuel                                          14.2 {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}         46.6 {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}
Food                                           5.4 {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}          9.7 {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}
Other                                         17.2 {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}         78.4 {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}
Total cruise operating expense                88.1 {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}        248.1 {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}

Other operating expense
Marketing, general and administrative 28.5 {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667} 137.6 {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}
Depreciation and amortization

                 15.5 {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}        108.2 {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}
Total other operating expense                 44.0 {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}        245.8 {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}
Operating loss                              (32.1) {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}      (393.9) {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}
Non-operating income (expense)
Interest expense, net                       (16.5) {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}      (319.9) {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}
Other income (expense), net                    1.6 {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}         19.1 {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}
Total non-operating income (expense)        (14.9) {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}      (300.8) {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}
Net loss before income taxes                (47.0) {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}      (694.7) {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}
Income tax benefit (expense)                   0.1 {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}        (0.8) {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}
Net loss                                    (46.9) {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}      (695.5) {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}

The following table sets forth selected statistical information:

                       Year Ended December 31,
                         2022          2021
Passengers carried      1,663,275      232,448
Passenger Cruise Days  12,791,773    1,778,899
Capacity Days (1)      17,566,069    3,376,703
Occupancy Percentage         72.8 {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}       52.7 {6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}

(1) Excludes certain capacity on Pride of America which was temporarily

    unavailable.


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Adjusted Gross Margin was calculated as follows (in thousands):

                                           Year Ended December 31,
                                                    2022
                                                  Constant
                                      2022        Currency          2021
Total revenue                     $ 4,843,760    $ 4,891,222    $     647,986
Less:
Total cruise operating expense      4,267,086      4,306,953        1,608,037
Ship depreciation                     700,988        700,988          650,138
Gross Margin                        (124,314)      (116,719)      (1,610,189)
Ship depreciation                     700,988        700,988          650,138
Payroll and related                 1,088,639      1,089,184          537,439
Fuel                                  686,825        687,022          301,852
Food                                  263,807        267,500           62,999
Other                                 835,254        857,657          508,186
Adjusted Gross Margin             $ 3,451,199    $ 3,485,632    $     450,425

Gross Cruise Cost, Net Cruise Cost, Net Cruise Cost Excluding Fuel and Adjusted
Net Cruise Cost Excluding Fuel were calculated as follows (in thousands):

                                                           Year Ended December 31,
                                                                     2022
                                                                   Constant
                                                      2022         Currency         2021
Total cruise operating expense                     $ 4,267,086    $ 4,306,953    $ 1,608,037
Marketing, general and administrative expense        1,379,105      1,389,087        891,452
Gross Cruise Cost                                    5,646,191      5,696,040      2,499,489
Less:
Commissions, transportation and other expense        1,034,629      1,047,658        143,524
Onboard and other expense                              357,932        357,932         54,037
Net Cruise Cost                                      4,253,630      4,290,450      2,301,928
Less: Fuel expense                                     686,825        687,022        301,852
Net Cruise Cost Excluding Fuel                       3,566,805      3,603,428      2,000,076
Less Non-GAAP Adjustments:
Non-cash deferred compensation (1)                       2,797          2,797          3,619
Non-cash share-based compensation (2)                  113,563        113,563        124,077
Restructuring costs (3)                                 12,140         12,140              -
Adjusted Net Cruise Cost Excluding Fuel            $ 3,438,305    $ 

3,474,928 $ 1,872,380

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

other crew expenses, which are included in payroll and related expense.

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

related expense.

(3) Restructuring costs related to the workforce reduction are included in

    marketing, general and administrative expense.


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

                                                               Year Ended December 31,
                                                                2022             2021
Net loss                                                    $ (2,269,909)    $ (4,506,587)
Non-GAAP Adjustments:
Non-cash deferred compensation (1)                                  4,048  

4,012

Non-cash share-based compensation (2)                             113,563  

124,077

Restructuring costs (3)                                            12,140                -
Extinguishment and modification of debt (4)                       193,374  

1,428,813

Adjusted Net Loss                                           $ (1,946,784)    $ (2,949,685)
Diluted weighted-average shares outstanding - Net loss
and Adjusted Net Loss                                         419,773,195      365,449,967
Diluted loss per share                                      $      (5.41)    $     (12.33)
Adjusted EPS                                                $      (4.64)    $      (8.07)

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

income (expense), net.

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

related expense.

(3) Restructuring costs related to the workforce reduction are included in

marketing, general and administrative expense.

(4) Losses on extinguishments and modifications of debt are primarily included in

interest expense, net.

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


                                            Year Ended December 31,
                                             2022             2021
Net loss                                 $ (2,269,909)    $ (4,506,587)
Interest expense, net                          801,512        2,072,925
Income tax (benefit) expense                   (6,794)            5,267

Depreciation and amortization expense 749,326 700,845
EBITDA

                                       (725,865)      (1,727,550)
Other (income) expense, net (1)               (76,566)        (123,953)
Other Non-GAAP Adjustments:
Non-cash deferred compensation (2)               2,797            3,619

Non-cash share-based compensation (3) 113,563 124,077
Restructuring costs (4)

                         12,140                -
Adjusted EBITDA                          $   (673,931)    $ (1,723,807)


(1) Primarily consists of gains and losses, net of foreign currency

remeasurements and derivatives not designated as hedges.

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

other crew expenses are included in payroll and related expense.

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

related expense.

(4) Restructuring costs related to the workforce reduction are included in

marketing, general and administrative expense.

Year Ended December 31, 2022 (“2022”) Compared to Year Ended December 31, 2021
(“2021”)


Revenue

Total revenue increased 647.5{6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667} to $4.8 billion in 2022 compared to $0.6 billion
in 2021. In 2022, revenue primarily increased as we returned to service with
12.8 million Passenger Cruise Days compared to 1.8 million in 2021.

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Expense

Total cruise operating expense increased 165.4{6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667} in 2022 compared to 2021. In
2022, the year started with 16 ships operating with guests onboard and ended
with the entire 29-ship fleet in service compared to 2021, during which only 16
ships were returned to service in the second half of the year. In 2022, our
cruise operating expenses increased as more ships resumed voyages, resulting in
higher payroll, fuel, and direct variable costs of fully operating ships. Costs
for certain items such as food, fuel and logistics also increased related to
inflation. Gross Cruise Cost increased 125.9{6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667} in 2022 compared to 2021,
primarily related to the change in costs described above plus an increase in
marketing, general and administrative expenses primarily related to increased
marketing costs as we returned to service. Total other operating expense
increased 33.7{6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667} in 2022 compared to 2021 primarily due to the increase in
marketing, general and administrative expenses.

Interest expense, net was $0.8 billion in 2022 compared to $2.1 billion in 2021.
The decrease in 2022 primarily reflects lower losses from extinguishment of debt
and debt modification costs, which were $1.4 billion in 2021. Excluding these
losses, interest expense increased primarily as a result of higher debt balances
and higher rates partially offset by lower interest expense in connection with
refinancings.

Other income (expense), net was income of $76.6 million in 2022 compared to
$124.0 million in 2021. Other income in 2022 and 2021 was primarily due to gains
on fuel swaps not designated as hedges and foreign currency remeasurements.

Liquidity and Capital Resources

General


As of December 31, 2022, our liquidity consisted of cash and cash equivalents of
$0.9 billion and a $1 billion undrawn commitment, less related fees, available
through March 31, 2023. Our primary ongoing liquidity requirements are to
finance working capital, capital expenditures and debt service. As of
December 31, 2022, we had a working capital deficit of $3.2 billion. This
deficit included $2.5 billion of advance ticket sales, which represents the
total revenue we collected in advance of sailing dates and accordingly are
substantially more like deferred revenue balances rather than actual current
cash liabilities. Our business model, along with our liquidity and undrawn
export-credit backed facilities, allows us to operate with a working capital
deficit and still meet our operating, investing and financing needs.

In February 2022, we received additional financing through various debt
financings, collectively totaling $2.1 billion in gross proceeds, which was used
to redeem all of the outstanding 2024 Senior Secured Notes and 2026 Senior
Secured Notes and to make scheduled principal payments on debt maturing in 2022,
including, in each case, to pay any accrued and unpaid interest thereon, as well
as related premiums, fees and expenses.

In December 2022, we amended our Senior Secured Credit Facility to extend
approximately $1.4 billion of maturities by one year to January 2025, subject
to, if a one-time minimum liquidity threshold is not satisfied on September 16,
2024, a springing maturity date of September 16, 2024. The amendment also
updated certain financial covenants and increased our ability to incur
additional debt. Each of our export-credit backed facilities were also amended
to conform the financial covenants with the Senior Secured Credit Facility. In
February 2023, a commitment of $82.5 million in aggregate principal amount of
the Revolving Loan Facility that was not previously extended was obtained to
assign the commitment to a new lender under the same terms as the extending
lenders.

In February 2023, NCLC issued $600 million aggregate principal amount of 8.375{6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667}
senior secured notes due 2028. The proceeds from the notes were used to repay
the loans outstanding under our Term Loan A Facility that otherwise would have
become due in January 2024, including to pay any accrued and unpaid interest
thereon, as well as related premiums, fees and expenses.

In July 2022, we amended our $1 billion commitment, which provided additional
liquidity to the Company through March 31, 2023. In February 2023, the
commitment was further extended through February 2024, with an option for NCLC
to further extend the commitments through February 2025 at its election.
Simultaneously, the amount of the commitment was reduced to $650 million, which
may be drawn in up to two draws, and in connection with the execution

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of the amended commitment letter, NCLC issued $250 million aggregate principal
amount of senior secured notes due 2028. NCLC will use the net proceeds for
general corporate purposes.

In February 2023, NCLC entered into a Backstop Agreement with MS, pursuant to
which MS has agreed to provide backstop committed financing to refinance and/or
repay in whole or in part up to $300 million of amounts outstanding under the
Senior Secured Credit Facility at any time between October 4, 2023 and January
2, 2024.

Refer to Note 8 – “Long-Term Debt” for further details about the above financing
transactions.


The estimation of our future cash flow projections includes numerous assumptions
that are subject to various risks and uncertainties. Refer to Note 2 - "Summary
of Significant Accounting Policies" for further information on liquidity and
management's plan. Refer to Item 1A, "Risk Factors" for further details
regarding uncertainty related to Russia's ongoing invasion of Ukraine and other
risks and uncertainties that may cause our results to differ from our
expectations.

There can be no assurance that the accuracy of the assumptions used to estimate
our liquidity requirements will be correct, and our ability to be predictive is
uncertain due to the dynamic nature of the current operating environment,
including the impacts of the COVID-19 global pandemic, Russia's ongoing invasion
of Ukraine and current macroeconomic conditions such as inflation, rising fuel
prices and rising interest rates. Based on the liquidity estimates and our
current resources, we have concluded we have sufficient liquidity to satisfy our
obligations for at least the next 12 months. Nonetheless, we anticipate that we
will need additional equity and/or debt financing to fund our operations in the
future if a substantial portion of our fleet suspends cruise voyages or operates
at reduced occupancy levels for a prolonged period. There is no assurance that
cash flows from operations and additional financings will be available in the
future to fund our future obligations. Beyond 12 months, we will pursue
refinancings and other balance sheet optimization transactions from time to time
in order to reduce interest expense or extend debt maturities. We expect to
collaborate with financing institutions regarding these refinancing and
optimization transactions as opportunities arise in the short-term to amend
long-term arrangements.

We have received amendments to certain financial and other debt covenants,
including the modification of our free liquidity requirements. At December 31,
2022, taking into account such amendments, we were in compliance with all of our
debt covenants. If we do not continue to remain in compliance with our
covenants, we would have to seek additional amendments to or waivers of the
covenants. However, no assurances can be made that such amendments or waivers
would be approved by our lenders. Generally, if an event of default under any
debt agreement occurs, then pursuant to cross default and/or cross acceleration
clauses, substantially all of our outstanding debt and derivative contract
payables could become due, and all debt and derivative contracts could be
terminated, which would have a material adverse impact to our operations and
liquidity.

Since March 2020, Moody's has downgraded our long-term issuer rating to B2, our
senior secured rating to B1 and our senior unsecured rating to Caa1. In
September 2022, Moody's reaffirmed our current ratings. Since April 2020, S&P
Global has downgraded our issuer credit rating to B, lowered our issue-level
rating on our $875 million Revolving Loan Facility and $1.5 billion Term Loan A
Facility to BB-, our issue-level rating on our other senior secured notes to B+
and our senior unsecured rating to B-. If our credit ratings were to be further
downgraded, or general market conditions were to ascribe higher risk to our
rating levels, our industry, or us, our access to capital and the cost of any
debt or equity financing will be further negatively impacted. We also have
capacity to incur additional indebtedness under our debt agreements and may
issue additional ordinary shares from time to time, subject to our authorized
number of ordinary shares. However, there is no guarantee that debt or equity
financings will be available in the future to fund our obligations, or that they
will be available on terms consistent with our expectations.

As of December 31, 2022, we had advance ticket sales of $2.7 billion, including
the long-term portion, which included approximately $144.0 million of future
cruise credits. We also have agreements with our credit card processors that, as
of December 31, 2022, governed approximately $2.4 billion in advance ticket
sales that had been received by the Company relating to future voyages. These
agreements allow the credit card processors to require under certain
circumstances, including the existence of a material adverse change, excessive
chargebacks and other triggering events, that the Company maintain a reserve
which would be satisfied by posting collateral. Although the agreements vary,
these requirements may generally be satisfied either through a percentage of
customer payments withheld or providing cash

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funds directly to the card processor. Any cash reserve or collateral requested
could be increased or decreased. As of December 31, 2022, we had cash collateral
reserves of approximately $622.0 million with credit card processors, of which
approximately $118.4 million is recognized in accounts receivable, net and
approximately $503.6 million in other long-term assets. We may be required to
pledge additional collateral and/or post additional cash reserves or take other
actions that may reduce our liquidity.

Sources and Uses of Cash

In this section, references to 2022 refer to the year ended December 31, 2022,
references to 2021 refer to the year ended December 31, 2021.


Net cash provided by operating activities was $210.0 million in 2022 compared to
net cash used in operating activities of $2.5 billion in 2021. The net cash used
in operating activities included net losses due to the suspension of global
cruise voyages from March 2020 through July 2021, the subsequent resumption of
cruise voyages through May 2022 and the timing differences in cash receipts and
payments relating to operating assets and liabilities. The net cash provided by
operating activities in 2022 included net losses of $(2.3) billion, an increase
in advance ticket sales of $928.9 million and loss on extinguishment of $188.8
million. The net cash used in operating activities in 2021 included net losses
of $(4.5) billion and a decrease of $1.2 billion in cash from accounts
receivable, which includes our collateral reserves with credit card processors,
offset by an increase in advance ticket sales of $521.9 million and loss on
extinguishment of $1.4 billion.

Net cash used in investing activities was $1.8 billion in 2022, primarily
related to the delivery of Norwegian Prima. Net cash used in investing
activities was $1.0 billion in 2021, primarily related to newbuild payments and
ship improvement projects and net purchases and maturities of short-term
investments.


Net cash provided by financing activities was $1.0 billion in 2022, primarily
due to newbuild loans and the proceeds of $2.1 billion from our various note
offerings partially offset by debt repayments and related redemption premiums
associated with extinguishment of certain senior secured notes. Net cash
provided by financing activities was $1.7 billion in 2021, primarily due to $2.6
billion in proceeds from the issuance of debt and $2.7 billion in proceeds from
issuance of NCLH's ordinary shares offset by $2.1 billion of debt principal
repayments and $1.4 billion of early redemption premiums.

For the Company's cash flow activities for the fiscal year ended December 31,
2020, see "Item 7, Management's Discussion and Analysis of Financial Condition
and Results of Operations" in the Company's Annual Report on Form 10-K for the
year ended December 31, 2021, which was filed with the U.S. Securities and
Exchange Commission on March 1, 2022.

Future Capital Commitments


Future capital commitments consist of contracted commitments, including ship
construction contracts. Anticipated expenditures related to ship construction
contracts are $2.4 billion, $0.5 billion and $1.8 billion for the years ending
December 31, 2023, 2024 and 2025, respectively. We have export-credit backed
financing in place for the anticipated expenditures related to ship construction
contracts of $1.9 billion, $0.1 billion and $1.1 billion for the years ending
December 31, 2023, 2024 and 2025, respectively. Anticipated non-newbuild capital
expenditures are $0.4 billion for the year ended December 31, 2023. Future
expected capital expenditures will significantly increase our depreciation and
amortization expense.

For the Norwegian brand, we have five Prima Class Ships on order, each ranging
from approximately 143,500 to 169,000 Gross Tons with 3,100 or more Berths, with
currently scheduled delivery dates from 2023 through 2028. For the Regent brand,
we have one Explorer Class Ship on order to be delivered in 2023, which will be
approximately 55,000 Gross Tons and 750 Berths. For the Oceania Cruises brand,
we have orders for two Allura Class Ships to be delivered in 2023 and 2025. Each
of the Allura Class Ships will be approximately 67,000 Gross Tons and 1,200
Berths.

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As of December 31, 2022, the combined contract prices of the eight ships on
order for delivery was approximately €6.7 billion, or $7.2 billion based on the
euro/U.S. dollar exchange rate as of December 31, 2022. Contract amendments for
certain of our ships that are or will become effective subsequent to December
31, 2022 will increase the contract cost by €1.2 billion, of which $0.5 billion
is included in the anticipated expenditures related to ship construction
contracts discussed above. We have obtained or expect to obtain fixed rate
export-credit backed financing which is expected to fund approximately 80{6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667} of
the contract price of each ship, subject to certain conditions. We do not
anticipate any contractual breaches or cancellations to occur. However, if any
such events were to occur, it could result in, among other things, the
forfeiture of prior deposits or payments made by us and potential claims and
impairment losses which may materially impact our business, financial condition
and results of operations.

Capitalized interest for the year ended December 31, 2022 and 2021 was $58.4
million
and $43.6 million, respectively, primarily associated with the
construction of our newbuild ships.

Material Cash Requirements

As of December 31, 2022, our material cash requirements for debt and ship
construction were as follows (in thousands):

                   2023           2024           2025           2026           2027        Thereafter        Total
Long-term
debt (1)        $ 1,649,354    $ 3,060,269    $ 2,818,257    $ 2,338,101    $ 3,284,454    $ 2,990,190    $ 16,140,625
Ship
construction
contracts (2)     2,198,897        275,232      1,617,782      1,827,114        842,581              -       6,761,606
Total           $ 3,848,251    $ 3,335,501    $ 4,436,039    $ 4,165,215    $ 4,127,035    $ 2,990,190    $ 22,902,231

Includes principal as well as estimated interest payments with LIBOR/SOFR

held constant as of December 31, 2022. Includes exchangeable notes which can

be settled in shares. Excludes the impact of any future possible refinancings

and undrawn export-credit backed facilities. Subsequent to December 31, 2022,

we completed various capital market and financing transactions, including

issuing two series of notes totaling an aggregate principal amount of $850
(1) million of senior secured notes due in 2028, of which approximately $600

million was used to repay the loans outstanding under our Term Loan A

Facility that otherwise would have become due in January 2024. Additionally,

a commitment of $82.5 million in aggregate principal amount of the Revolving

Loan Facility was obtained, which will extend the maturity date of the

assigned commitments by one year to January 2025. See Note 8 – “Long-Term

Debt” for further information.

Ship construction contracts are for our newbuild ships based on the euro/U.S.

dollar exchange rate as of December 31, 2022. As of December 31, 2022, we

have committed undrawn export-credit backed facilities of $5.6 billion which
(2) funds approximately 80{6932ee47e64f4ce8eedbbd5224581f6531cba18a35225771c06e4f1b3f0d9667} of our ship construction contracts. After giving

effect to an amendment to our newbuild agreements for the last two Prima

Class Ships subsequent to December 31, 2022, our material cash requirements

    for ship construction contracts are as follows (in thousands):


                     2023          2024          2025           2026           2027         Thereafter        Total
Ship
construction
contracts         $ 2,204,378    $ 213,353    $ 1,573,183    $ 1,071,080    $ 1,021,461    $    952,200    $ 7,035,655

Excludes the impact of expected future ship construction contract amendments
noted above.


For other operational commitments for lease and port obligations we refer you to
Note 5 - "Leases" and Note 13 - "Commitments and Contingencies," respectively,
for further information.

Funding Sources
Certain of our debt agreements contain covenants that, among other things,
require us to maintain a minimum level of liquidity, as well as limit our net
funded debt-to-capital ratio and maintain certain other ratios. Approximately
$13.7 billion of our assets are pledged as collateral for certain of our debt.
We have received amendments to certain financial

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and other debt covenants, including the modification of our free liquidity
requirements. After taking into account such amendments, we believe we were in
compliance with these covenants as of December 31, 2022.


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

We believe our cash on hand, the impact of the undrawn commitment less related
fees, the backstop financing available from October 4, 2023 through January 2,
2024, the expected return of a portion of the cash collateral from our credit
card processors, expected future operating cash inflows and our ability to issue
debt securities or additional equity securities, will be sufficient to fund
operations, debt payment requirements, capital expenditures and maintain
compliance with covenants under our debt agreements over the next 12-month
period. Refer to "-Liquidity and Capital Resources-General" for further
information regarding the debt covenant waivers and liquidity requirements.

Other

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

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

We refer you to “-Liquidity and Capital Resources-General” for information
regarding collateral provided to our credit card processors.

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