2018 Annual Report for Norwegian Cruiseline Holdings - F-10

For our annual impairment evaluation, we performed a Step 0 Test for the Norwegian, Regent Seven Seas and Oceania Cruises reporting
units. As of December 31, 2018, there was $523.0 million, $462.1 million and $403.8 million of goodwill for the Oceania Cruises, Regent
Seven Seas and Norwegian reporting units, respectively. As of December 31, 2018, our annual review consisting of the Step 0 Test supports
the carrying value of these assets.
Revenue and Expense Recognition
Deposits on advance ticket sales are deferred when received and are subsequently recognized as revenue ratably during the voyage sailing
days as services are rendered over time on the ship. 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. A receivable is recognized for onboard goods and services rendered when the voyage is not
completed before the end of the period. All associated direct costs of a voyage are recognized as incurred in cruise operating expenses.
Disaggregation of Revenue
Revenue and cash flows are affected by economic factors in various geographical regions.
Revenues by destination consisted of the following (in thousands):
Year Ended December 31,
2018
2017
2016
$ 3,543,282 $ 3,285,903 $ 3,132,208
1,462,698
1,347,381
1,148,403
721,404
394,631
196,978
327,742
368,260
396,751
$ 6,055,126 $ 5,396,175 $ 4,874,340

North America
Europe
Asia-Pacific
Other
Total Revenues
Segment Reporting

We have concluded that our business has a single reportable segment. Each brand, Norwegian, Oceania Cruises and Regent, constitutes a
business for which discrete financial information is available and management regularly reviews the brand level operating results and,
therefore, each brand is considered an operating segment. Our operating segments have similar economic and qualitative characteristics,
including similar long-term margins and similar products and services; therefore, we aggregate all of the operating segments into one
reportable segment.
Although we sell cruises on an international basis, our passenger ticket revenue is primarily attributed to U.S.-sourced guests who make
reservations in the U.S. Revenue attributable to U.S.-sourced guests was 77%, 77% and 81% for the years ended December 31, 2018, 2017
and 2016, respectively. No other individual country's revenues exceeded 10% in any of our last three years.
Substantially all of our long-lived assets are located outside of the U.S. and consist primarily of our ships. We had 18 ships with Bahamas
registry with a carrying value of $9.1 billion as of December 31, 2018 and 17 ships with Bahamas registry with a carrying value of $8.0
billion as of December 31, 2017. We had seven ships with Marshall Island registry with a carrying value of $1.9 billion as of December 31,
2018 and 2017. We also had one ship with U.S. registry with a carrying value of $0.3 billion as of December 31, 2018 and 2017.
Debt Issuance Costs
Debt issuance costs related to a recognized debt liability are presented in the consolidated balance sheets as a direct deduction from the
carrying amount of that debt liability, consistent with debt discounts. For line of credit arrangements and for those debt facilities not fully
drawn we defer and present debt issuance costs as an asset. These deferred issuance costs are amortized over the life of the loan agreement.
The amortization of deferred financing fees is included in depreciation and amortization expense in the consolidated statements of cash
flows; however, for purposes of the consolidated statements of operations it is included in interest expense, net.

F-10

2018 Annual Report for Norwegian Cruiseline Holdings

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