2018 Annual Report for Norwegian Cruiseline Holdings - 44

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

Net income
Interest expense, net
Income tax expense
Depreciation and amortization expense
EBITDA
Other (income) expense, net (1)
Non-GAAP Adjustments:
Non-cash deferred compensation expenses (2)
Non-cash share-based compensation expenses (3)
Secondary Equity Offering expenses (4)
Severance payments and other expenses (5)
Acquisition of Prestige expenses (6)
Deferred revenue (7)
Contract renegotiation and termination expenses (8)
Other (9)
Adjusted EBITDA

Year Ended December 31,
2018
2017
2016
954,843 $
759,872 $
633,085
270,404
267,804
276,859
14,467
10,742
7,218
561,060
509,957
432,495
1,800,774
1,548,375
1,349,657
(20,653)
10,401
8,302
2,167
115,983
883
-
-
-
-
(1,412)
1,897,742 $

3,292
87,039
949
2,912
500
-
-
3,886
1,657,354

3,167
66,414
-
8,223
6,395
1,057
1,000
217
1,444,432

(1) Primarily consists of gains and losses, net for forward currency exchanges.
(2) Non-cash deferred compensation expenses related to the crew pension plan and other crew expenses are included in payroll and related
expense.
(3) Non-cash share-based compensation expense related to equity awards are included in marketing, general and administrative expense and
payroll and related expense.
(4) Secondary Equity Offering expenses are included in marketing, general and administrative expense.
(5) Severance payments and other fees related to restructuring costs and other severance arrangements are included in marketing, general
and administrative expense.
(6) Acquisition of Prestige expenses are included in marketing, general and administrative expense.
(7) Deferred revenue fair value adjustments related to the Acquisition of Prestige that were made pursuant to business combination
accounting rules are primarily included in passenger ticket revenue.
(8) Contract renegotiation and termination expenses, net related to the Acquisition of Prestige are included in other cruise operating expense
and marketing, general and administrative expense.
(9) Other primarily related to expenses and reimbursement for certain legal costs included in marketing, general and administrative expense.
Year Ended December 31, 2018 ("2018") Compared to Year Ended December 31, 2017 ("2017")
Revenue
Total revenue increased 12.2% to $6.1 billion in 2018 compared to $5.4 billion in 2017 primarily due to an increase in Capacity Days and
improved pricing. Gross Yield increased 3.4%. Net Revenue increased 12.6% to $4.7 billion in 2018, from $4.2 billion in 2017, due to an
increase in Capacity Days of 8.5% and an increase in Net Yield of 3.7%. The increase in Capacity Days was primarily due to Norwegian Joy
and Norwegian Bliss joining our fleet in the second quarter of 2017 and 2018, respectively. The increase in Gross Yield and Net Yield was
primarily due to an increase in passenger ticket revenue and Occupancy Percentage. On a Constant Currency basis, Net Yield increased
3.5%.
Expense
Total cruise operating expense increased 10.2% in 2018 compared to 2017, primarily due to the increase in Capacity Days. Gross Cruise
Cost increased 11.4% in 2018 compared to 2017, due to higher total cruise operating expense and, to a lesser extent, higher marketing,
general and administrative expenses. Total other operating expense increased 13.7% in 2018 compared to 2017. Marketing, general and
administrative expenses increased primarily due to higher incentive compensation expense and higher advertising expenses. Depreciation
and amortization expense increased primarily due to the additions of Norwegian Joy and Norwegian Bliss and ship improvement projects.
Net Cruise Cost per Capacity Day increased 2.8% (2.5% on a Constant Currency basis) due to higher marketing, general and administrative
expenses, higher commissions and transportation fees, and, to a lesser extent, higher maintenance and repairs, including fuel and Dry-dock
expenses. Adjusted Net Cruise Cost Excluding Fuel per Capacity Day increased 2.9% (2.6% on a Constant Currency basis). We refer you to
the "Results of Operations" above for a reconciliation of total cruise operating expense to Adjusted Net Cruise Cost Excluding Fuel.

2018 Annual Report for Norwegian Cruiseline Holdings

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