2016 Annual Report for Norwegian Cruiseline Holdings - F-14

The unaudited pro forma financial information was as follows (in thousands, except per share data):
Year Ended December 31,
2014
2013

Total revenue
Net income (loss) attributable to Norwegian Cruise Line Holdings Ltd.
Earnings per share:
Basic
Dilutive

$

4,310,079
497,020

$

$
$

2.21
2.19

$
$

3,704,692
(683)
-
-

The unaudited pro forma financial information includes non-recurring pro forma adjustments of $57.5 million in acquisition related expenses
within marketing, general and administrative expense, a purchase price adjustment decreasing passenger ticket revenue by $48.9 million, $15.4
million of expenses related to financing transactions in conjunction with the Acquisition of Prestige within interest expense and $70.0 million of
amortization related to the backlog intangible asset in the year ended December 31, 2013.
Valuation of Contingent Consideration
The contingent consideration was valued using various projected 2015 Net Revenue scenarios weighted by the likelihood of each scenario
occurring. The probability-weighted payout was then discounted at an appropriate discount rate commensurate for the risk of meeting the
probabilistic cash flows. As the fair value was measured based upon significant inputs that are unobservable in the market, it was classified as
Level 3 in the fair value hierarchy. Level 3 consists of significant unobservable inputs we believe market participants would use in pricing the
asset or liability based on the best information available. The significant unobservable inputs used in the fair value measurement of the
Company's contingent consideration are the estimated annual Net Revenue and the probabilities associated with attaining the threshold and target
Net Revenue as defined by the Merger Agreement. A significant increase in the estimated Net Revenue or an increase in the probability
associated with reaching the target could have resulted in a significantly higher fair value measurement. The maximum fair value would not be
able to exceed $50 million, while an amount of Net Revenue less than 98% of target would result in no payout. For the year ended December 31,
2015, the fair value of the contingent consideration was reduced to zero based upon updates to the probability-weighted assessment of various
projected revenue scenarios. The Net Revenue target was not met, and accordingly, we recognized a $43.4 million fair value adjustment during
the year ended December 31, 2015, which was included in marketing, general and administrative expense.
The following table summarizes the change in fair value of the contingent consideration liability (in thousands):
Contingent
Consideration Liability

Balance as of December 31, 2014
Fair value adjustment (Level 3)
Balance as of December 31, 2015
5.

$
$

43,400
(43,400)
-

Accumulated Other Comprehensive Income (Loss)
Accumulated other comprehensive income (loss) for the year ended December 31, 2016 was as follows (in thousands):
Accumulated
Other
Comprehensive
Income (Loss)

Accumulated other comprehensive income (loss) at beginning of year
Current period other comprehensive income before reclassifications
Amounts reclassified
Accumulated other comprehensive income (loss) at end of year
(1)
(2)
(3)

$
$

(412,650) $
1,776
96,401
(314,473) $

Change
Related to
Cash Flow
Hedges

(405,298)
$
1,711
95,969(1)
(307,618)(3) $

Change
Related to
Shipboard
Retirement
Plan

(7,352)
65
432(2)
(6,855)

We refer you to Note 9-"Fair Value Measurements and Derivatives" for the affected line items in the consolidated statements of operations.
Amortization of prior-service cost and actuarial loss reclassified to payroll and related expense.
Of the existing amounts related to derivatives designated as cash flow hedges, approximately $31.9 million of loss is expected to be reclassified
into earnings in the next 12 months.

F-14
Table of Contents for the Digital Edition of 2016 Annual Report for Norwegian Cruiseline Holdings
