2018 Annual Report for Norwegian Cruiseline Holdings - F-22

The effects on the consolidated financial statements of the foreign currency contracts which were not designated as hedging instruments were
as follows (in thousands):

Gain recognized in other income (expense), net

Year Ended December 31,
2018
2017
2016
- $
- $
4,179

Other
The carrying amounts reported in the consolidated balance sheets of all other financial assets and liabilities approximate fair value.
Long-Term Debt
As of December 31, 2018 and 2017, the fair value of our long-term debt, including the current portion, was $6,601.9 million and $6,448.6
million, respectively, which was $8.4 million higher and $23.5 million higher, respectively, than the carrying values. The difference between
the fair value and carrying value of our long-term debt is due to our fixed and variable rate debt obligations carrying interest rates that are
above or below market rates at the measurement dates. Market risk associated with our long-term variable rate debt is the potential increase
in interest expense from an increase in interest rates. The fair value of our long-term debt was calculated based on estimated rates for the
same or similar instruments with similar terms and remaining maturities, which represent Level 2 inputs in the fair value hierarchy.
Non-Recurring Measurements of Non-Financial Assets
Goodwill and other indefinite-lived assets, principally tradenames, are reviewed for impairment on an annual basis or earlier if there is an
event or change in circumstances that would indicate that the carrying value of these assets may not be fully recoverable.
We believe our estimates and judgments with respect to our long-lived assets, principally ships, and goodwill 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.
We estimate fair value based on the best information available utilizing estimates, judgments and projections as necessary. As of
December 31, 2018, our annual review supports the carrying value of these assets.
10. Employee Benefits and Share-Based Compensation
Share-Based Compensation
As a result of NCLH's adoption of ASU No. 2016-09, beginning in the first quarter of 2017, NCLH began accounting for forfeitures as they
occur, rather than estimating expected forfeitures. Pursuant to the modified-retrospective application, the net cumulative effect of this change
was recognized as a $2.2 million increase to retained earnings as of January 1, 2017. We refer you to our consolidated statements of changes
in shareholders' equity.
Amended and Restated 2013 Performance Incentive Plan
In January 2013, NCLH adopted the 2013 Performance Incentive Plan, which provided for the issuance of up to 15,035,106 of NCLH's
ordinary shares pursuant to awards granted under the plan, with no more than 5,000,000 shares being granted to one individual in any
calendar year. In May 2016, the plan was amended and restated ("Restated 2013 Plan") pursuant to approval from the Board of Directors and
NCLH's shareholders. Among other things, under the Restated 2013 Plan, the number of NCLH's ordinary shares that may be delivered
pursuant to all awards granted under the plan was increased by an additional 12,430,000 shares to a new maximum aggregate limit of
27,465,106 shares. Additionally, the expiration date of the Restated 2013 Plan was extended to March 30, 2026. Share options under the plan
are granted with an exercise price equal to the closing market price of NCLH shares at the date of grant. The vesting period for time-based
options is typically set at three, four or five years with a contractual life ranging from seven to 10 years. The vesting period for time-based
and performance-based restricted share units is generally three years. Forfeited awards will be available for subsequent awards under the
Restated 2013 Plan.

F-22

2018 Annual Report for Norwegian Cruiseline Holdings

Table of Contents for the Digital Edition of 2018 Annual Report for Norwegian Cruiseline Holdings