Bond NLC Corporation 5% ( US62886HAK77 ) in USD

Issuer NLC Corporation
Market price 100 %  ⇌ 
Country  United States
ISIN code  US62886HAK77 ( in USD )
Interest rate 5% per year ( payment 2 times a year)
Maturity 15/02/2018 - Bond has expired



Prospectus brochure of the bond NCL Corporation US62886HAK77 in USD 5%, expired


Minimal amount 2 000 USD
Total amount 299 780 000 USD
Cusip 62886HAK7
Standard & Poor's ( S&P ) rating BB- ( Non-investment grade speculative )
Moody's rating B2 ( Highly speculative )
Detailed description NCL Corporation Ltd. is a global provider of cruise vacations operating under the Norwegian Cruise Line brand, offering itineraries to various destinations worldwide.

The Bond issued by NLC Corporation ( United States ) , in USD, with the ISIN code US62886HAK77, pays a coupon of 5% per year.
The coupons are paid 2 times per year and the Bond maturity is 15/02/2018

The Bond issued by NLC Corporation ( United States ) , in USD, with the ISIN code US62886HAK77, was rated B2 ( Highly speculative ) by Moody's credit rating agency.

The Bond issued by NLC Corporation ( United States ) , in USD, with the ISIN code US62886HAK77, was rated BB- ( Non-investment grade speculative ) by Standard & Poor's ( S&P ) credit rating agency.







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Table of Contents
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-191270

PROSPECTUS
OFFER TO EXCHANGE


$300,000,000 aggregate principal amount of NCL Corporation Ltd.'s 5.00% Senior Notes Due 2018, which have been registered
under the Securities Act of 1933 (CUSIP No. 62886H AK7) for $300,000,000 aggregate principal amount of NCL Corporation Ltd.'s
outstanding 5.00% Senior Notes Due 2018 (CUSIP Nos. 62886H AJ0 and G6436Q AD8).
We hereby offer, upon the terms and subject to the conditions set forth in this prospectus and the accompanying letter of transmittal (which
together constitute the "exchange offer"), to exchange up to $300,000,000 aggregate principal amount of our registered 5.00% Senior Notes
Due 2018, which we refer to as the "Exchange Notes", for a like principal amount of our outstanding 5.00% Senior Notes Due 2018, which
we refer to as the "Old Notes". We refer to the Old Notes and the Exchange Notes collectively as the "Notes". The terms of the Exchange
Notes are identical to the terms of the Old Notes in all material respects, except for the elimination of certain transfer restrictions,
registration rights and additional interest provisions relating to the Old Notes. The issuer of the Notes is NCL Corporation Ltd.
We will exchange any and all Old Notes that are validly tendered and not validly withdrawn prior to 5:00 p.m., New York City time,
on November 7, 2013, unless extended.
We have not applied, and do not intend to apply, for listing of the Notes on any national securities exchange or automated quotation system.
Each broker-dealer that receives Exchange Notes for its own account pursuant to the exchange offer must acknowledge that it (i) has not
entered into any arrangement or understanding with the Issuer (as defined below) or an affiliate of the Issuer to distribute such Exchange
Notes and (ii) will deliver a prospectus in connection with any resale of such Exchange Notes. The letter of transmittal states that by so
acknowledging and delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act of 1933, as amended, or the Securities Act. This prospectus, as it may be amended or supplemented from time to time,
may be used by a broker-dealer in connection with resales of Exchange Notes received in exchange for Old Notes where such Old Notes
were acquired by such broker-dealer as a result of market-making activities or other trading activities. We have agreed that, for a period of
180 days after the consummation of the exchange offer, we will make this prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution."


See "Risk Factors" beginning on page 20 of this prospectus for a discussion of certain risks that you should
consider before participating in this exchange offer.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.


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TABLE OF CONTENTS

TERMS USED IN THIS PROSPECTUS
ii

MARKET AND INDUSTRY DATA AND FORECASTS
v

PROSPECTUS SUMMARY
1

RISK FACTORS
20

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
33

THE EXCHANGE OFFER
35

USE OF PROCEEDS
44

CAPITALIZATION
45

SELECTED CONSOLIDATED FINANCIAL DATA
46

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
48

BUSINESS
59

MANAGEMENT
82

COMPENSATION DISCUSSION AND ANALYSIS
88

DIRECTOR COMPENSATION
106
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
107
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
112
DESCRIPTION OF OTHER INDEBTEDNESS
117
DESCRIPTION OF NOTES
124
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
176
CERTAIN BERMUDA TAX CONSIDERATIONS
179
CERTAIN ERISA CONSIDERATIONS
180
BOOK ENTRY; DELIVERY AND FORM
182
PLAN OF DISTRIBUTION
184
LEGAL MATTERS
185
EXPERTS
186
ADDITIONAL INFORMATION
187
SERVICE OF PROCESS AND ENFORCEABILITY OF CIVIL LIABILITIES
189
EXCHANGE RATE DATA
190
INDEX TO FINANCIAL STATEMENTS
F-1
We have not authorized anyone to give you any information or to make any representations about us or the transactions we discuss in this
prospectus other than those contained in this prospectus. If you are given any information or representations about these matters that is not
discussed in this prospectus, you must not rely on that information. This prospectus is not an offer to sell or a solicitation of an offer to buy
securities anywhere or to anyone where or to whom we are not permitted to offer or sell securities under applicable law. The delivery of
this prospectus does not, under any circumstances, mean that there has not been a change in our affairs since the date of this prospectus.
Subject to our obligation to amend or supplement this prospectus as required by law and the rules of the Securities and Exchange
Commission, or the SEC, the information contained in this prospectus is correct only as of the date of this prospectus, regardless of the time
of delivery of this prospectus or any sale of these securities.
Until January 7, 2014, broker-dealers that effect transactions in these securities, whether or not participating in this offering, may be
required to deliver a prospectus. This is in addition to the broker-dealers' obligation to deliver a prospectus when acting as underwriters
and with respect to their unsold allotments or subscriptions.
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TERMS USED IN THIS PROSPECTUS
Unless otherwise indicated or the context otherwise requires, references in this prospectus to (i) the "Company," the "Issuer," "we,"
"our," "us" and "NCLC" refer to NCL Corporation Ltd. and its subsidiaries and predecessors, (ii) "NCLH" refers to Norwegian
Cruise Line Holdings Ltd. and/or its subsidiaries (iii) "Norwegian Cruise Line" or "Norwegian" refers to the Norwegian Cruise Line
brand and its predecessors and "NCL America" or "NCLA" refers to our U.S.-flagged operations, (iv) "Apollo" refers to Apollo Global
Management, LLC and its subsidiaries and the "Apollo Funds" refers to one or more of 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., AAA Guarantor ­ Co-Invest VI (B), L.P., Apollo Overseas Partners
(Delaware) VI, L.P., Apollo Overseas Partners (Delaware 892) VI, L.P., Apollo Overseas Partners VI, L.P. and Apollo Overseas Partners
(Germany) VI, L.P., (v) "TPG Global" refers to TPG Global, LLC, "TPG" refers to TPG Global and its affiliates and the "TPG Viking
Funds" refers to one or more of TPG Viking, L.P., TPG Viking AIV I, L.P., TPG Viking AIV II, L.P., and TPG Viking AIV III, L.P. and/or
certain other affiliated investment funds, each an affiliate of TPG, (vi) "Genting HK" refers to Genting Hong Kong Limited and/or its
affiliates (formerly Star Cruises Limited and/or its affiliates), and (vii) "Affiliate(s)" or "Sponsor(s)" refers to Genting HK, the Apollo
Funds and/or the TPG Viking Funds. References to the "U.S." are to the United States of America, "dollars" or "$" are to U.S. dollars
and "euros" or "" are to the official currency of the Eurozone. For a reconciliation of our non-GAAP financial measures we refer you
to "Management's Discussion and Analysis of Financial Condition and Results of Operations--Results of Operations" and "Prospectus
Summary--Summary Consolidated Financial Data." Unless otherwise indicated in this prospectus, the following terms have the
meanings set forth below (all principal amounts refer to the original principal amount incurred or issued, as applicable):

·
$1.3 billion Senior Secured Credit Facility. $1.3 billion credit agreement, dated May 24, 2013, by and among NCL Corporation
Ltd., as borrower, Deutsche Bank Trust Company Americas, as administrative agent and as collateral agent, and various lenders,

and related guarantee by Norwegian Dawn Limited, Norwegian Gem, Ltd., Norwegian Pearl, Ltd., Norwegian Spirit, Ltd.,
Norwegian Star Limited and Norwegian Sun Limited, providing for a $675 million term loan facility and a $625 million
revolving credit facility.

·
$334.1 million Norwegian Jewel loan. $334.1 million secured loan agreement, dated as of April 20, 2004, as amended and

restated on June 21, 2013, by and among Norwegian Jewel Limited, as borrower, and a syndicate of international banks, and
related guarantee by NCL Corporation Ltd.


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


·
Adjusted EBITDA Margin. Adjusted EBITDA as a percentage of total revenue.


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


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

·
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 delivered in April 2013 and Norwegian Getaway scheduled for delivery in

January 2014.

·
Breakaway Export Credit Facility. 529.8 million credit agreement, dated November 18, 2010, as amended, by and among

Breakaway One, Ltd., as borrower, and a syndicate of international banks and a related guarantee by NCL Corporation Ltd.

·
Breakaway/Getaway Credit Facilities. Our Breakaway Export Credit Facility, Getaway Export Credit Facility and

Breakaway/Getaway Term Loan Facilities.

·
Breakaway/Getaway Term Loan Facilities. 126.1 million Pride of Hawai'i Credit Agreement, dated November 18, 2010, as
amended and restated on June 21, 2013, by and among Pride of Hawaii LLC and a syndicate of international banks and a related

guarantee by NCL Corporation Ltd. and 126.1 million Norwegian Jewel Credit Agreement, dated November 18, 2010, as
amended and restated on June 21, 2013, by and among Norwegian Jewel Limited and a syndicate of international banks and a
related guarantee by NCL Corporation Ltd.

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·
Breakaway Plus Class Ships. Two ships on order with Meyer Werft for delivery in the fourth quarter of 2015 and the first

quarter of 2017, respectively, which will be approximately 163,000 Gross Tons and 4,200 Berths each and will be similar in
design and innovation to our Breakaway Class Ships.

·
Breakaway Plus Newbuild Export Credit Facilities. 590.5 million credit agreement, dated October 12, 2012, by and among
Breakaway Three, Ltd. and KfW IPEX-Bank GmBH and a related guarantee by NCL Corporation Ltd. and 590.5 million credit

agreement, dated October 12, 2012, by and among Breakaway Four, Ltd. and KfW IPEX-Bank GmBH and a related guarantee by
NCL Corporation Ltd.


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


·
Charter. The hire of a ship for a specified period of time.

·
CLIA. Cruise Lines International Association, a non-profit marketing and training organization formed in 1975 to promote

cruising.

·
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 in order to eliminate the effects of the foreign exchange fluctuations.

·
Dry-dock. A process whereby a ship is positioned in a large basin where all 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.

·
258.0 million Pride of America loan. Euro 258.0 million secured loan agreement, dated as of April 4, 2003, as amended and

restated on June 21, 2013, by and among Pride of America Ship Holding, LLC, as borrower, and a syndicate of international
banks, and related guarantee by NCL Corporation Ltd.

·
308.1 million Pride of Hawai'i loan. Euro 308.1 million Pride of Hawai'i loan, dated as of April 20, 2004, as amended and

restated on June 21, 2013, by and among Pride of Hawaii, LLC, as borrower, and a syndicate of international banks, and related
guarantee by NCL Corporation Ltd.

·
662.9 million Norwegian Epic loan. Euro 662.9 million syndicated loan facility, dated September 22, 2006, as amended and

restated on June 1, 2012, by and among Norwegian Epic, Ltd., as borrower, and a syndicate of international banks, and related
guarantee by NCL Corporation Ltd.

·
Existing Senior Secured Credit Facilities. Our $1.3 billion Senior Secured Credit Facility, our Breakaway Plus Newbuild

Export Credit Facilities, our Breakaway/Getaway Credit Facilities, our 308.1 million Pride of Hawai'i loan, our $334.1
million Norwegian Jewel loan, our 258.0 million Pride of America loan and our 662.9 million Norwegian Epic loan.


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

·
Getaway Export Credit Facility. 529.8 million Breakaway Two Credit Agreement, dated as of November 18, 2010, as

amended, by and among Breakaway Two, Ltd., as borrower, and a syndicate of international banks and a related guarantee by
NCL Corporation Ltd.


·
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 = 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.

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·
IPO. The initial public offering of 27,058,824 ordinary shares, par value $.001 per share, of NCLH, which was consummated on

January 24, 2013.


·
Jewel Class Ships. Norwegian Gem, Norwegian Jade, Norwegian Jewel and Norwegian Pearl.

·
Major North American Cruise Brands. Norwegian Cruise Line, Carnival Cruise Lines, Royal Caribbean International, Holland

America, Princess Cruises and Celebrity Cruises.

·
Management NCL Corporation Units. NCLC's previously outstanding profits interests issued to management (or former

management) of NCLC which have been converted into units in NCLC in connection with the Corporate Reorganization.


·
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.

·
Norwegian Sky Agreement. Memorandum of agreement, dated June 1, 2012, between Ample Avenue Limited, as seller, and

Norwegian Sky, Ltd., as buyer, related to our purchase of Norwegian Sky.

·
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.


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


·
Ship Contribution. Total revenue less total cruise operating expense.

·
Shipboard Retirement Plan. An unfunded defined benefit pension plan for certain crew members which computes benefits based

on years of service, subject to certain requirements.

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MARKET AND INDUSTRY DATA AND FORECASTS
This prospectus includes market share and industry data and forecasts that we obtained from industry publications, third-party surveys and
internal company surveys. Industry publications, including those from CLIA (as defined below), and surveys and forecasts generally state
that the information contained therein has been obtained from sources believed to be reliable. All CLIA information, obtained from the
CLIA website "cruising.org," relates to CLIA member lines, which currently represents 26 of the major North American cruise lines
including Norwegian, which together represent 97% of the North American cruise capacity. All other references to third party information
are publicly available at nominal or no cost. We use the most currently available industry and market data to support statements as to our
market position.
Although we believe that the industry publications and third-party sources are reliable, we have not independently verified any of the data
from industry publications or third-party sources. Similarly, while we believe our internal estimates with respect to our industry are
reliable, our estimates have not been verified by any independent sources. While we are not aware of any misstatements regarding any
industry data presented herein, our estimates, in particular as they relate to market share and our general expectations, involve risks and
uncertainties and are subject to change based on various factors, including those discussed under "Risk Factors," "Cautionary Statement
Concerning Forward-Looking Statements" and "Management's Discussion and Analysis of Financial Condition and Results of Operations"
in this prospectus.

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PROSPECTUS SUMMARY
The following summary includes highlights of the more detailed information and consolidated financial statements included
elsewhere in this prospectus. This summary sets forth the material terms of the offering but does not contain all of the information
that you should consider before investing in the Notes. For a more complete understanding of us, our business and the Notes, we
urge you to read this prospectus carefully, including the sections entitled "Risk Factors," "Cautionary Statement Concerning
Forward-Looking Statements" and "Additional Information" and our consolidated financial statements and related notes included
elsewhere in this prospectus, before making an investment.
Our Company
We are a leading global cruise line operator, offering cruise experiences for travelers with a wide variety of itineraries in North
America (including Alaska and Hawaii), the Mediterranean, the Baltic, Central America, Bermuda and the Caribbean. We strive to
offer an innovative and differentiated cruise vacation with the goal of providing our guests the highest levels of overall satisfaction on
their cruise experience. In turn, we aim to generate the highest guest loyalty and greatest numbers of repeat guests. We created a
distinctive style of cruising called "Freestyle Cruising" onboard all of our ships, which we believe provides our guests with the
freedom and flexibility associated with a resort style atmosphere and experience as well as more dining options than a traditional
cruise. We established the very first private island developed by a cruise line in the Bahamas with a diverse offering of activities for
guests. We are also the only cruise line operator to offer an entirely inter-island itinerary in Hawaii.
By providing such a distinctive experience and appealing combination of value and service, we straddle both the contemporary and
premium segments. As a result, we have been recognized for our achievements as the recipient of multiple honorary awards mainly
consisting of reviews tabulated from the readers of travel periodicals such as Travel Weekly, Condé Nast Traveler, and Travel +
Leisure. We were rated as the favorite cruise line by Budget Travel, and best for family cruises by Family Circle, Yahoo! Travel, and
Today Travel. In addition, we were recognized as Europe's leading cruise line six years in a row by the World Travel Awards and
identified as the cruise line with the best use of a social media platform by Travel + Leisure. Norwegian Epic, which was launched in
2010, was recognized as "Best Overall Individual Cruise Ship" by the Travel Weekly Readers' Choice Awards two years in a row.
We offer a wide variety of cruises ranging in length from one day to three weeks. During 2012, we docked at 114 ports worldwide, with
itineraries originating from 15 ports of which 11 are in North America. In line with our strategy of innovation, many of these North
American ports are part of our "Homeland Cruising" program in which we have homeports that are close to major population centers,
such as New York, Boston and Miami. This reduces the need for vacationers to fly to distant ports to embark on a cruise and helps
reduce our guests' overall vacation cost. We offer a wide selection of exotic itineraries outside of the traditional cruising markets of the
Caribbean and Mexico; these include cruises in Europe, including the Mediterranean and the Baltic, Bermuda, Alaska, and the
industry's only entirely inter-island itinerary in Hawaii with our U.S.-flagged ship, Pride of America. This itinerary is unparalleled in
the cruise industry, as all other vessels from competing cruise lines are registered outside the U.S. and are required to dock at a distant
foreign port when providing their guests with a Hawaii-based cruise itinerary.
Each of our 12 modern ships has been purpose-built to consistently deliver our "Freestyle Cruising" product offering across our entire
fleet, which we believe provides us with a competitive advantage. By focusing on "Freestyle Cruising," we have been able to achieve
higher onboard spend levels, greater customer loyalty and the ability to attract a more diverse clientele.
As a result of our strong operating performance over the last four years, the growing demand we see for our distinctive cruise offering
and the rational supply outlook for the industry, we believe that it is an optimal time to add new ships to our fleet. In 2010, we launched
a newbuild program for the next generation of Freestyle Cruising vessels. We placed an order with Meyer Werft GmbH of Papenburg,
Germany ("Meyer Werft") for two new cruise ships: Norwegian Breakaway, which was delivered in April 2013 and Norwegian
Getaway, which is scheduled for delivery in January 2014. This ship will be approximately 144,000 Gross Tons with 4,000 Berths at
an aggregate cost of approximately 625.9 million, or $814.3 million based on the euro/U.S. dollar exchange rate as of June 30, 2013.
We have also ordered two additional cruise ships from Meyer Werft for delivery in the fourth quarter of 2015 and the first quarter of
2017, respectively. These new Breakaway Plus Class Ships will be the largest in our fleet at approximately 163,000 Gross Tons and
4,200 Berths each and will be similar in design and innovation to our Breakaway Class Ships. The combined contract cost of the two
Breakaway Plus Class Ships is approximately 1.4 billion, or $1.8 billion based on the euro/U.S. dollar exchange rate as of June 30,
2013. We have export credit financing in place for these ships that provides financing for 80% of their contract price.


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As of June 30, 2013, we have one of the most modern fleets of cruise ships in the industry among the Major North American Cruise
Brands, with a weighted-average age of 7.5 years. Following the delivery of Norwegian Getaway, we will have the youngest fleet
among the Major North American Cruise Brands. Norwegian Getaway joins Norwegian Breakaway as the latest generation of
"Freestyle Cruising" ships and includes some of the most popular elements of our recently delivered ships together with new and
differentiated features.
Our senior management team has delivered consistent growth and has driven measurable improvements in operating metrics and cash
flow generation across several different operating environments. Under the leadership of our President and Chief Executive Officer,
Kevin M. Sheehan, we significantly differentiated the Norwegian brand, largely with the "Freestyle Cruising" concept that accelerated
revenue growth and contributed to improving our operating income margins by approximately 1,370 basis points since the beginning of
2008 through the end of 2012. Our management team was augmented in key areas such as Sales, Marketing, Hotel Operations and
Finance and has since implemented major initiatives such as enhancing onboard service and amenities across the fleet, expanding our
European presence and overseeing a newbuild program that included the successful launch in April 2013 of our most innovative ship to
date, Norwegian Breakaway.
For the twelve months ended June 30, 2013, we generated total revenue of $2,349.6 million, Net Revenue of $1,748.5 million, net
income of $27.7 million, Adjusted EBITDA of $580.3 million and an Adjusted EBITDA Margin of 24.7%. For the six months ended
June 30, 2013, we generated total revenue of $1,172.1 million, Net Revenue of $872.8 million, net loss of $101.5 million, Adjusted
EBITDA of $253.3 million and an Adjusted EBITDA Margin of 21.6%. For the six months ended June 30, 2012, we generated total
revenue of $1,098.7 million, Net Revenue of $816.1 million, net income of $39.3 million, Adjusted EBITDA of $228.6 million and an
Adjusted EBITDA Margin of 20.8%. This represents an increase of approximately 80 basis points in period over period Adjusted
EBITDA Margin as a result of improved ticket pricing and onboard spending coupled with various business improvement, product
enhancement and cost reduction initiatives. We refer you to note 5 under "Prospectus Summary--Summary Consolidated Financial
Data" included elsewhere in this prospectus for a reconciliation of Adjusted EBITDA to net income.
Our Industry
We believe that the cruise industry demonstrates the following positive fundamentals:
Strong Growth with Low Penetration and Significant Upside
Cruising is a vacation alternative with broad appeal, as it offers a wide range of products and services to suit the preferences of
vacationing guests of all ages, backgrounds and interests. Since 1980, cruising has been one of the fastest growing segments of the North
American vacation market. According to CLIA, in 2012 approximately 17.2 million passengers took cruises on CLIA member lines
versus 7.2 million passengers in 2000, representing a compound annual growth rate of approximately 7.5%. Based on CLIA's research,
we believe that cruising is under-penetrated and represents approximately 12% of the North American vacation market. As measured in
Berths, the cruise industry is relatively nascent compared to the wide variety of much more established vacation travel destinations
across North America.
According to the Orlando/Orange County Convention & Visitors Bureau and the Las Vegas Convention and Visitors Authority, there are
approximately 267,000 rooms in just Orlando and Las Vegas combined. By comparison, the estimated Major North American Cruise
Brands' capacity in terms of Berths is approximately 241,000. In addition, according to industry research, only 24% of the U.S.
population has ever taken a cruise and we believe this percentage should increase. The European vacation market, the fastest growing
market globally, remains under-penetrated by the cruise industry, with approximately 1% of Europeans having taken a cruise in a given
year, compared with 3% of the population in the U.S. and Canada. We believe that improving leisure travel trends along with a
relatively low supply outlook in the near term from the Major North American Cruise Brands lead to an attractive business environment
for our Company to operate in.
Attractive Demographic Trends to Drive Cruising Growth
The cruise market is comprised of a broad spectrum of guests and appeals to virtually all demographic categories. Based on CLIA's
2011 Cruise Market Profile Study, the target North American cruise market, defined as households with income of $40,000 or more
headed by a person who is at least 25 years old, is estimated to be 132.9


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million people. Also according to the study, the average cruise customer has a household income of $109,000. It is our belief that
"Freestyle Cruising" will help us attract the younger generations who we believe are more likely to enjoy greater levels of freedom
from our "Freestyle Cruising" product offering than was traditionally offered within the cruise industry.
Significant Value Proposition and High Level of Guest Satisfaction
We believe that the cost of a cruise vacation, relative to a comparable land-based resort or hotel vacation in Orlando or Las Vegas,
offers an exceptional value proposition. When one considers that a typical cruise, for an all-inclusive price, offers its guests
transportation to a variety of destinations, hotel-style accommodations, a generous diversity of food choices and a selection of daily
entertainment options, this is compelling support for the cruise value proposition relative to other leisure alternatives. Cruises have
become even more affordable for a greater number of North American guests over the past few years through the introduction of
"Homeland Cruising," which eliminates the cost of airfare commonly associated with a vacation. According to CLIA's 2011 study,
approximately 70% of persons who have taken a cruise rate cruising as a high-value vacation alternative. In this same survey, CLIA
reported that approximately 80% of cruise passengers agree that a cruise vacation is a good way to sample various destinations that
they may visit again on a land-based vacation.
High Barriers to Entry
The cruise industry is characterized by high barriers to entry, including the existence of several established and recognizable brands, the
large investment to build a new, sophisticated cruise ship, the long lead time necessary to construct new ships and limited newbuild
shipyard capacity. Based on new ship orders announced over the past several years, the cost to build a cruise ship can range from
approximately $500 million to $1.4 billion or approximately $200,000 to $425,000 per Berth, depending on the ship's size and quality
of product offering. The construction time of a newbuild ship is typically between 27 and 36 months and requires significant upfront
cash payments to fund construction costs before revenue is generated. In addition, the shipbuilding industry is experiencing tightened
capacity as the size of ships increases and the industry consolidates, with virtually all new capacity added in the last 20 years having
been built by one of three major European shipbuilders.
Varied Segments and Brands
The different cruise lines that make up the global cruise vacation industry have historically been segmented by product offering and
service quality into "contemporary," "premium" and "luxury" brands. The contemporary segment generally includes cruises on larger
ships that last seven days or less, provides a casual ambiance and is less expensive on average than the premium or luxury segments.
The premium segment is generally characterized by cruises that last from seven to 14 nights with a higher quality product offering than
the contemporary segment, appealing to a more affluent demographic. The luxury segment generally offers the highest level of service
and quality, with longer cruises on the smallest ships. In classifying our competitors within the Major North American Cruise Brands,
the contemporary segment has historically included Carnival Cruise Lines and Royal Caribbean International. The premium segment has
historically included Celebrity Cruises, Holland America and Princess Cruises. We believe that we straddle the contemporary and
premium segments as well as offer a unique combination of value and leisure services to cruise guests. Our brand offers our guests a
rich stateroom mix, which includes single studios, private balconies, and luxury suites with personal butler and concierge service as
more recently enhanced by The Haven. As part of our "Freestyle Cruising" experience, we also offer various specialty dining venues,
some of which are exclusive to our suite and The Haven guests. Based on fleet counts as of June 30, 2013, the Major North American
Cruise Brands together represent approximately 90% of the North American cruise market as measured by total Berths.
Our Competitive Strengths
We believe that the following business strengths will enable us to execute our strategy:
Leading Cruise Operator with High-Quality Product Offering
We believe that our modern fleet provides us with operational and strategic advantages as our entire fleet has been purpose-built for
"Freestyle Cruising" with a wider range of passenger amenities relative to many of our competitors.
We believe that in recent years the distinction has been blurred between segments of the market historically known as premium and
contemporary, with the Major North American Cruise Brands each offering a wide range of


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