2018 Annual Report for Norwegian Cruiseline Holdings - F-13

Revenue and Expense from Contracts with Customers

On January 1, 2018, we adopted Topic 606, which supersedes the revenue recognition requirements in Accounting Standards Codification
605-Revenue Recognition (Topic 605) ("Topic 605"). Using the modified retrospective method, we applied the new requirements to those
contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented below
under "- Financial Statement Presentation" and "- Impacts on Financial Statements," while prior period amounts are not adjusted and
continue to be reported in accordance with our historic accounting under Topic 605.
Nature of Goods and Services
We offer our guests a multitude of cruise fare options when booking a cruise. Our cruise ticket prices generally include cruise fare and a wide
variety of onboard activities and amenities, as well as meals and entertainment. In some instances, cruise ticket prices include round-trip
airfare to and from the port of embarkation, complimentary beverages, unlimited shore excursions, free internet, pre-cruise hotel packages,
and on some of the exotic itineraries, pre- or post-land packages. Prices vary depending on the particular cruise itinerary, stateroom category
selected and the time of year that the voyage takes place. Passenger ticket revenue also includes full ship charters as well as port fees and
taxes.
During the voyage, we generate onboard and other revenue for additional products and services which are not included in the cruise fare,
including casino operations, certain food and beverage, gift shop purchases, spa services, photo services and other similar items. Food and
beverage, casino operations and shore excursions are generally managed directly by us while retail shops, spa services, art auctions and
internet services may be managed through contracts with third-party concessionaires. These contracts generally entitle us to a fixed
percentage of the gross sales derived from these concessions, which is recognized on a net basis. While some onboard goods and services
may be prepaid prior to the voyage, we utilize point-of-sale systems for discrete purchases made onboard. Certain of our product offerings
are bundled and we allocate the value of the bundled goods and services between passenger ticket revenue and onboard and other revenue
based upon the relative standalone selling prices of those goods and services.
Timing of Satisfaction of Performance Obligations and Significant Payment Terms
The payment terms and cancellation policies vary by brand, stateroom category, length of voyage, and country of purchase. A deposit for a
future booking is required at or soon after the time of booking. Final payment is generally due between 120 days and 180 days before the
voyage. Deposits on advance ticket sales are deferred when received, and include amounts that are refundable. Deferred amounts are
subsequently recognized as revenue ratably during the voyage sailing days as services are rendered over time on the ship. Deposits are
generally cancellable and refundable prior to sailing, but may be subject to penalties, depending on the timing of cancellation. The inception
of substantive cancellation penalties generally coincides with the dates that final payment is due, and penalties generally increase as the
voyage sail date approaches. Cancellation fees are recognized in passenger ticket revenue in the month of the cancellation.
Goods and services associated with onboard revenue are generally provided at a point in time and revenue is recognized when the
performance obligation is satisfied. Onboard goods and services rendered may be paid at disembarkation. A receivable is recognized for
onboard goods and services rendered when the voyage is not completed before the end of the period.
Cruises that are reserved under full ship charter agreements are subject to the payment terms of the specific agreement and may be either
cancelable or non-cancelable. Deposits received on charter voyages are deferred when received and included in advance ticket sales.
Deferred amounts are subsequently recognized as revenue ratably over the voyage sailing dates.

F-13

2018 Annual Report for Norwegian Cruiseline Holdings

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