Norwegian Cruise Line Reports Results for First Quarter 2011

Company Posts 37.5% Increase in Adjusted EBITDA

Addition of Norwegian Epic and Improved Pricing Drive Results

MIAMI--(BUSINESS WIRE)-- Norwegian Cruise Line (NCL Corporation Ltd., "Norwegian" or the "Company") today reported results for the three months ended March 31, 2011.

Adjusted EBITDA for the first quarter of 2011 improved 37.5% to $81.9 million versus $59.5 million for the same period of 2010. Net Revenue for the quarter increased 20.7% to $368.0 million from $304.9 million in 2010 resulting from a 17.9% increase in Capacity Days, due to the addition of Norwegian Epic to the fleet in June 2010, coupled with an increase in Net Yield of 2.4%. The increase in Net Yield was a result of both improved passenger ticket pricing and increased onboard spend per Capacity Day. Occupancy Percentage for the period was 107.1% compared to 107.9% in the prior period.

Continued pricing discipline and cost control, along with economies of scale attributed to Norwegian Epic, allowed the Company to absorb a 6.6% increase in the per metric ton price of fuel in the period. The Company reported a decrease in Net Cruise Cost per Capacity Day of 1.3% versus prior year. The price of fuel for the first quarter of 2011 increased to $520 per metric ton from $488 in 2010. Excluding fuel expense, Net Cruise Cost per Capacity Day decreased 2.6%.

"I am pleased to see that pricing along with the impact of Norwegian Epic drove such a significant improvement in the quarter," said Kevin Sheehan, Norwegian's president and chief executive officer. "On top of the healthy pace our Net Yield grew in the quarter, we also rolled over a very lucrative one-month charter in February 2010 for the Winter Olympics in Vancouver. Excluding the pricing benefit of this charter, our Net Yield improvement would have been 3.8% for the quarter. In addition, our improved Adjusted EBITDA resulted not only from our increased revenue, but also our continued razor focus on controlling costs without affecting the guest experience."

Interest expense, net of capitalized interest, increased to $47.9 million in the quarter compared to $35.8 million in 2010 due to increased borrowings mainly attributable to the addition of Norwegian Epic. Other income was $2.4 million in 2011 versus expense of $0.6 million in 2010. Net loss for the quarter decreased to $10.6 million on revenue of $495.5 million compared to a net loss of $16.1 million on revenue of $416.5 million in 2010.


The first phase of enhancements at Great Stirrup Cay, the Company's 250-acre private island in the Bahamas, has been completed. A new marina and dining facility on the island opened in February, representing a significant milestone in the $25 million enhancement project. A new welcome pavilion is scheduled to open this month and construction on a new straw market is commencing. "Great Stirrup Cay was developed to provide our guests an extraordinary island experience and we are thrilled with the exceptionally positive feedback we are receiving on the recent enhancements," commented Sheehan.


Adjusted EBITDA. Earnings before interest, other income (expense) including taxes, impairment loss, depreciation and amortization and other supplemental adjustments.

Berths. Double occupancy capacity per cabin even though many cabins can accommodate three or more passengers.

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

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

Gross Yield. Total revenue per Capacity Day.

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 Per Diem. Net Revenue per Passenger Cruise Day.

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

Net Yield. Net Revenue per Capacity Day.

Occupancy Percentage or Load Factor. The ratio of Passenger Cruise Days to Capacity Days. A percentage in excess of 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.

Non-GAAP Financial Measures

We use certain non-GAAP financial measures, such as Net Revenue, Net Yield, Net Cruise Cost and Adjusted EBITDA to enable us to analyze our performance. We utilize Net Revenue and Net Yield to manage our business on a day-to-day basis and believe that it is the most relevant measure of our revenue performance because it reflects the revenue earned by us net of significant variable costs and is commonly used in the cruise industry to measure revenue performance. In measuring our ability to control costs in a manner that positively impacts net income, we believe changes in Net Cruise Cost and Net Cruise Cost Excluding Fuel to be the most relevant indicators of our performance and are commonly used in the cruise industry as a measurement of costs.

We believe that Adjusted EBITDA is appropriate to provide additional information to investors as it enables us to analyze our performance. You are encouraged to evaluate each adjustment and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses similar to the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

Adjusted EBITDA is not a defined term under GAAP. Adjusted EBITDA is not intended to be a measure of liquidity or cash flows from operations or measures 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.

Our non-GAAP financial measures may not be comparable to other companies within our industry. Please see a historical reconciliation of these measures to items in our consolidated financial statements below in the "Results of Operations" section.

About Norwegian Cruise Line

Norwegian Cruise Line is the innovator in cruise travel with a 44-year history of breaking the boundaries of traditional cruising, most notably with the introduction of Freestyle Cruising which has revolutionized the industry by allowing guests more freedom and flexibility.

Today, Norwegian has 11 purpose-built Freestyle Cruising ships, providing guests the opportunity to enjoy a relaxed cruise vacation on some of the newest and most contemporary ships at sea. The Company has two 4,000-passenger vessels on order for delivery in spring 2013 and spring 2014.

Norwegian's largest and most innovative Freestyle Cruising ship, Norwegian Epic, debuted in June 2010. Norwegian Cruise Line is the official cruise line of Blue Man Group, appearing for the first time at sea on Norwegian Epic, as well as the official cruise line of Legends in Concert, Second City(R) Comedy Troupe, Howl at the Moon Dueling Pianos, Gibson Guitar, and Nickelodeon, the number-one entertainment brand for kids. Cirque Dreams(R) & Dinner is also featured on board Norwegian Epic as the first show of its kind at sea under a big top.

High resolution, downloadable images are available at For further information on Norwegian Cruise Line, visit, follow us on Facebook and Twitter, watch us on YouTube, or contact us in the U.S. and Canada at 888- NCL-CRUISE (625-2784).

Forward-Looking Statements

This release may contain statements, estimates or projections that constitute "forward-looking statements" as defined under U.S. federal securities laws. Generally, the words "expect," "anticipate," "goal," "project," "plan," "believe," "seek," "will," "may," "forecast," "estimate," "intend," "future," and similar expressions are intended to identify forward-looking statements, which are not historical in nature. Although management believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. Risks that could cause actual results to differ materially from those indicated by such forward-looking statements include, but are not limited to, the adverse impact of the worldwide economic downturn and related factors such as high levels of unemployment and underemployment, 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; changes in cruise capacity, as well as capacity changes in the overall vacation industry; intense competition from other cruise companies as well as non-cruise vacation alternatives which may affect our ability to compete effectively; our substantial leverage, including the inability to generate the necessary amount of cash to service our existing debt, repay our credit facilities if payment is accelerated and incur substantial indebtedness in the future; changes in fuel prices or other cruise operating expenses such as crew, insurance and security; the risks associated with operating internationally; the continued borrowing availability under our credit facilities and compliance with our financial covenants; our ability to incur significantly more debt despite our substantial existing indebtedness; the impact of 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, derivative instruments, contingent obligations, insurance contracts and new ship progress payment guarantees; adverse events impacting the security of travel that may affect consumer demand for cruises such as terrorist acts, acts of piracy, armed conflict and other international events; the impact of any future changes relating to how travel agents sell and market our cruises; the impact of any future increases in the price of, or major changes or reduction in, commercial airline services; the impact of the spread of contagious diseases; accidents and other incidents affecting the health, safety, security and vacation satisfaction of passengers or causing damage to ships, which could cause the modification of itineraries or cancellation of a cruise or series of cruises; our ability to attract and retain key personnel, qualified shipboard crew, maintain good relations with employee unions and maintain or renegotiate our collective bargaining agreements on favorable terms; the continued availability of attractive port destinations; the control of our Company by certain of our shareholders whose interests may not continue to be aligned with ours; the impact of problems encountered at shipyards, as well as, any potential claim, impairment loss, cancellation or breach of contract in connection with our contracts with shipyards; changes involving the tax, environmental, health, safety, security and other regulatory regimes in which we operate; our ability to obtain insurance coverage on terms that are favorable or consistent with our expectations; the lack of acceptance of new itineraries, products or services by our targeted customers; our ability to implement brand strategies and our shipbuilding programs, and to continue to expand our brands and business worldwide; the costs of new initiatives and our ability to achieve expected cost savings from our new initiatives; changes in interest rates and/or foreign currency rates; increases in our future fuel expenses related to implementing recently proposed IMO regulations, which require the use of higher priced low sulfur fuels in certain cruising areas; the delivery schedules and estimated costs of new ships on terms that are favorable or consistent with our expectations; the impact of pending or threatened litigation and investigations; the impact of changes in our credit ratings; the possibility of environmental liabilities and other damage that is not covered by insurance or that exceeds our insurance coverage; our ability to attain and maintain any price increases for our products; the impact of delays, costs and other factors resulting from emergency ship repairs as well as scheduled repairs, maintenance and refurbishment of our ships; the implementation of regulations in the U.S. requiring U.S. citizens to obtain passports for travel to additional foreign destinations; the impact of weather and natural disasters; and other risks discussed in the Company's filings with the Securities and Exchange Commission. You should not place undue reliance on forward-looking statements as a prediction of actual results. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in expectations or events, conditions or circumstances on which any such statements are based. In addition, certain financial measures in this release constitute non-GAAP financial measures as defined by Regulation G. A reconciliation of these items can be found attached hereto and on the Company's web site at



(unaudited, in thousands of dollars)

                                               Three Months Ended

                                               March 31,

                                               2011         2010


Passenger ticket                               $ 332,045    $ 279,032

Onboard and other                                163,465      137,470

Total revenue                                    495,510      416,502

Cruise operating expense

Commissions, transportation and other            89,614       78,826

Onboard and other                                37,870       32,822

Payroll and related                              70,317       62,135

Fuel                                             58,026       47,338

Food                                             30,982       24,751

Other                                            57,430       48,292

Total cruise operating expense                   344,239      294,164

Other operating expense

Marketing, general and administrative            70,202       64,199

Depreciation and amortization                    46,257       37,857

Total other operating expense                    116,459      102,056

Operating income                                 34,812       20,282

Non-operating income (expense)

Interest income                                  10           28

Interest expense, net of capitalized interest    (47,879 )    (35,839 )

Other income (expense)                           2,432        (603    )

Total non-operating income (expense)             (45,437 )    (36,414 )

Net income (loss)                              $ (10,625 )  $ (16,132 )



(unaudited, in thousands, except share data)

                                                   March 31,      December 31,

                                                   2011           2010


Current assets:

Cash and cash equivalents                          $ 49,199       $ 55,047

Accounts receivable, net                             10,760         7,879

Inventories                                          37,274         32,763

Prepaid expenses and other assets                    60,498         33,694

       Total current assets                          157,731        129,383

Property and equipment, net                          4,612,925      4,639,281

Goodwill and tradenames                              602,792        602,792

Other long-term assets                               190,523        192,057

       Total assets                                $ 5,563,971    $ 5,563,513

Liabilities and shareholders' equity

Current liabilities:

Current portion of long-term debt                  $ 89,030       $ 78,237

Accounts payable                                     62,173         64,399

Accrued expenses and other liabilities               250,187        216,501

Advance ticket sales                                 380,724        294,180

       Total current liabilities                     782,114        653,317

Long-term debt                                       2,992,800      3,125,848

Other long-term liabilities                          50,291         52,680

       Total liabilities                             3,825,205      3,831,845

Commitments and contingencies

Shareholders' equity:

Ordinary shares, $.0012 par value; 40,000,000
shares authorized, 21,000,000 shares issued and      25             25

Additional paid-in capital                           2,331,064      2,330,792

Accumulated other comprehensive income               21,760         4,309

Retained earnings (deficit)                          (614,083  )    (603,458  )

       Total shareholders' equity                    1,738,766      1,731,668

       Total liabilities and shareholders' equity  $ 5,563,971    $ 5,563,513



(unaudited, in thousands)

                                                   Three Months Ended

                                                   March 31,

                                                   2011          2010

Cash flows from operating activities

Net income (loss)                                  $ (10,625  )  $ (16,132 )

Adjustments to reconcile net income (loss) to net
cash provided by operating activities:

Depreciation and amortization expense                51,753        42,582

Loss (gain) on derivatives                           (3,241   )    297

Share-based compensation expense                     297           630

Changes in operating assets and liabilities:

Accounts receivable, net                             (2,881   )    416

Inventories                                          (4,511   )    (2,398  )

Prepaid expenses and other assets                    (12,704  )    15,954

Accounts payable                                     (2,226   )    11,369

Accrued expenses and other liabilities               33,855        15,969

Advance ticket sales                                 86,544        64,781

      Net cash provided by operating activities      136,261       133,468

Cash flows from investing activities

Additions to property and equipment                  (19,901  )    (26,524 )

      Net cash used in investing activities          (19,901  )    (26,524 )

Cash flows from financing activities

Repayments of long-term debt                         (135,613 )    (65,527 )

Proceeds from long-term debt                         13,221        -

Other                                                184           (1,080  )

      Net cash used in financing activities          (122,208 )    (66,607 )

      Net increase (decrease) in cash and cash       (5,848   )    40,337

Cash and cash equivalents at beginning of period     55,047        50,152

Cash and cash equivalents at end of period         $ 49,199      $ 90,489




The following table sets forth selected statistical information:

                                                 Three Months Ended

                                                 March 31,

                                                 2011           2010

Passengers Carried                                 372,700        305,025

Passenger Cruise Days                              2,510,738      2,144,546

Capacity Days                                      2,343,768      1,988,280

Occupancy Percentage                               107.1     %    107.9     %

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

                                                 Three Months Ended

                                                 March 31,

                                                 2011           2010

Passenger ticket revenue                         $ 332,045      $ 279,032

Onboard and other revenue                          163,465        137,470

Total revenue                                      495,510        416,502


Commissions, transportation and other expense      89,614         78,826

Onboard and other expense                          37,870         32,822

Net revenue                                      $ 368,026      $ 304,854

Capacity Days                                      2,343,768      1,988,280

Gross Yield                                      $ 211.42       $ 209.48

Net Yield                                        $ 157.02       $ 153.33

Gross Cruise Cost , Net Cruise Cost and Net Cruise Cost Excluding Fuel were
calculated as follows

(in thousands, except Capacity Days and per Capacity Day data):

                                                 Three Months Ended

                                                 March 31,

                                                 2011           2010

Total cruise operating expense                   $ 344,239      $ 294,164

Marketing, general and administrative expense      70,202         64,199

Gross Cruise Cost                                  414,441        358,363


Commissions, transportation and other expense      89,614         78,826

Onboard and other expense                          37,870         32,822

Net Cruise Cost                                    286,957        246,715


Fuel                                               58,026         47,338

Net Cruise Cost Excluding Fuel                   $ 228,931      $ 199,377

Capacity Days                                      2,343,768      1,988,280

Gross Cruise Cost per Capacity Day               $ 176.83       $ 180.24

Net Cruise Cost per Capacity Day                 $ 122.43       $ 124.08

Net Cruise Cost Excluding Fuel per Capacity Day  $ 97.68        $ 100.28

Adjusted EBITDA was calculated as follows (in thousands):

                                                 Three Months Ended

                                                 March 31,

                                                 2011           2010

Net (income) loss                                $ (10,625   )  $ (16,132   )

Interest, net                                      47,869         35,811

Depreciation and amortization expense              46,257         37,857

Other (income) expense                             (2,432    )    603

Other (1)                                          792            1,386

Adjusted EBITDA                                  $ 81,861       $ 59,525

(1)Includes non-cash compensation and crew pension costs.

    Source: Norwegian Cruise Line