NCL Corporation Reports Second Quarter Results for 2006

Financial Press Release

MIAMI - August 15, 2006 - NCL Corporation Ltd. ("NCL" or the "Company") today announced second quarter 2006 results, including a 9.2% increase in Net Yields; a reduction in controllable Net Cruise Costs per Capacity Day; significantly increased profitability at the operating income level; but steeply increased fuel and interest costs and foreign exchange translation losses, resulting in a net loss of $35.1 million.

Revenues for the second quarter of 2006 increased 33.5% to $499.1 million from $373.8 million in the second quarter of 2005. The increase in revenues was primarily attributable to a 19.5% increase in capacity and a 9.2% increase in Net Yields. The improvement in Net Yields in the second quarter of 2006 from the same quarter in 2005 was primarily a result of higher passenger ticket prices, which is partially due to the effect of increased capacity in our premium Hawaii business, and an increase in onboard spending. Gross Yields increased 11.8% from the second quarter of 2005.

Fuel prices continued to rise during the quarter, resulting in a year-over-year increase in fuel costs of 55.5%. Average fuel prices for the second quarter of 2006 increased approximately 33% to $365 per metric ton from $275 per metric ton in the second quarter of 2005. Despite this increase and the continued increase in payroll and start-up costs from the expansion of the Company's inter-island cruises in Hawaii, second quarter 2006 operating income increased to $19.6 million from $0.9 million for the same period in 2005. On a per Capacity Day basis, operating income increased to $9.89 from $0.53.

Net Cruise Costs per Capacity Day for the second quarter of 2006 increased 1.7% compared to the second quarter of 2005. Excluding fuel cost, Net Cruise Costs per Capacity Day decreased 1.8% primarily due to a 16.1% decrease in marketing, selling and administrative expenses per Capacity Day as well as various operating efficiencies. Gross Cruise Costs per Capacity Day increased 6.6% from the second quarter of 2005.

The Company also continued to feel the effect of rising interest rates and the weakening of the US Dollar versus the Euro. As a result of higher interest rates and an increase in average outstanding borrowings, interest expense increased approximately 100% to $33.9 million in the second quarter of 2006 from $17.0 million in the second quarter of 2005. With the Dollar/Euro exchange rate weakening to 1.2790 as of June 30, 2006, the Company reported a non-cash foreign exchange translation loss of $22.3 million for the second quarter. This non-cash foreign exchange translation loss compares to a non-cash foreign exchange translation gain of $15.3 million for the same period of 2005, or an adverse year-over-year swing of over $37 million. As a result, the Company reported a net loss of $35.1 million for its second quarter ended June 30, 2006, compared to net income of $0.6 million for the second quarter ended June 30, 2005. The Company's Net Loss Excluding Non-Cash Foreign Exchange Translation was $12.8 million in the second quarter of 2006 compared to $14.7 million in the second quarter of 2005.

"Though it is never pleasing to report a net loss, nevertheless we are pleased with our revenue performance and our cost control efforts," said Colin Veitch, president and chief executive officer of NCL Corporation Ltd. "We are clearly operating in a very challenging environment and despite the effects of softer pricing, significantly higher fuel costs and substantial start-up costs associated with our NCL America operations, we continue to show improvement in Operating Income per Capacity Day, particularly so in the non-US side of our operations that represents the great majority of our business. Unfortunately, we continue to see softer pricing in the Caribbean, which is now extending into the upcoming winter season. This softening, coupled with higher fuel prices, increased interest costs, and continued higher operating costs in our Hawaii operations, will continue to put pressure on our results in the back half of 2006."

The Company continues to experience a very competitive pricing environment, especially in the Caribbean. Bookings are closer to sailing date than at the same time last year. As a result of this challenging environment, the Company now expects Net Yields for the full year of 2006 to increase approximately 3% versus the Company's previous guidance of an increase of approximately 5%.

During the second quarter of 2006, the Company elected to change its method of accounting for dry-docking costs from the deferral method, under which costs associated with dry-docking a ship are deferred and charged to expense over the period to a ship's next scheduled dry-docking, to the direct expense method, under which we will expense all dry-docking costs as incurred. As a result of this change, dry-docking costs have been reflected retrospectively as a component of other operating expenses, consistent with our method of expensing repairs and maintenance costs. These costs were previously recorded as a component of depreciation and amortization expense. This change in the method in accounting for dry-docking costs had the effect of increasing the Company's net loss for the second quarter of 2006 by $7.4 million. For the second quarter of 2005, this change decreased the Company's net income by $4.8 million.

The Company has scheduled a conference call at 8:30 a.m. Eastern Daylight Time today to discuss its earnings. This call can be listened to live or on a delayed basis on the Company's web site at Earnings Call .

Terminology and Non-GAAP Financial Measures

Capacity Days
Capacity Days represent double occupancy per cabin multiplied by the number of cruise days for the period.

Gross Cruise Costs
Gross Cruise Costs represent the sum of total cruise operating expenses and marketing, general and administrative expenses.

Gross Yields
Gross Yields represent total revenues per Capacity Day.

Net Yields
Net Yields represent total revenues less commissions, transportation and other expenses, and onboard and other expenses per Capacity Day. The Company utilizes Net Yields to manage its business on a day-to-day basis and believes that it is the most relevant measure of its pricing performance and is commonly used in the cruise industry to measure pricing performance. The Company has not provided a quantitative reconciliation of projected Gross Yields to projected Net Yields due to the significant uncertainty in projecting the costs deducted to arrive at this measure. Accordingly, the Company does not believe that reconciling information for such projected figures would be meaningful.

Net Cruise Costs
Net Cruise Costs represent Gross Cruise Costs excluding commissions, transportation and other expenses and onboard and other expenses. In measuring the Company's ability to control costs in a manner that positively impacts net income/loss, the Company believes changes in Net Cruise Costs and Net Cruise Costs excluding fuel to be the most relevant indicators of its performance and are commonly used in the cruise industry as measurements of costs.

Net Income/Loss Excluding Non-Cash Foreign Exchange Translation
Net Income/Loss Excluding Non-Cash Foreign Exchange Translation represents net income/loss before the effect of non-cash foreign exchange translation gains and losses. The Company believes that this financial measure is useful because it excludes non-cash foreign exchange translation gains and losses related to the translation of balance sheet amounts which the Company believes are not relevant to understanding the trends of the Company's operational performance or its prospects for future operational performance. Management uses this measure to establish operational goals and believes that it may assist in analyzing the underlying trends of the Company's operational performance over time.

Passenger Cruise Days
Passenger Cruise Days represent the number of passengers carried for the period multiplied by the number of days in their respective cruises.

Occupancy Percentage
Occupancy Percentage, in accordance with cruise industry practice, represents the ratio of Passenger Cruise Days to Capacity Days. A percentage in excess of 100 indicates that three or more passengers occupied some cabins.

NCL is an innovative cruise company headquartered in Miami, Florida, with a fleet of 15 ships in service and under construction. The corporation oversees the operations of Norwegian Cruise Line, NCL America and Orient Lines. The company christened its newest ship, Pride of Hawai`i, on Saturday, May 20, 2006, the largest and most expensive U.S. flagged passenger ship ever built. It is currently building two ships, Norwegian Pearl scheduled for delivery in the fourth quarter of 2006 and Norwegian Gem scheduled for delivery in the fourth quarter of 2007.

For further information, please contact NCL in the U.S. and Canada at 800.327.7030; visit NCL's website at or on AOL at keyword: NCL; or to download high-resolution photography, visit

This earnings release may contain statements, estimates or projections that constitute "forward-looking statements" as defined under U.S. federal securities laws. Generally, the words "will," "may," "believes," "expects," "intends," "anticipates," "projects," "plans," "seeks," and similar expressions are intended to identify forward-looking statements, which are not historical in nature. Forward-looking statements involve risks and uncertainties that could cause actual results, performance or achievements to differ significantly from NCL's historical results or those implied in forward-looking statements. These risks include, but are not limited to, changes in cruise capacity, as well as capacity changes in the overall vacation industry; introduction of competing itineraries and other products by other companies; changes in general economic, business and geo-political conditions; reduced consumer demand for cruises as a result of any number of reasons, including armed conflict, terrorist attacks, geo-political and economic uncertainties or the unavailability of air service, and the resulting concerns over the safety and security aspects of traveling; lack of acceptance of new itineraries, products or services by our targeted customers; the Company's ability to implement brand strategies and our shipbuilding programs, and to continue to expand our business worldwide; changes in interest rates, fuel costs or foreign currency rates; delivery schedules of new ships; risks associated with operating internationally; the impact of spread of contagious diseases; accidents and other incidents affecting the health, safety, security and vacation satisfaction of passengers and causing damage to ships, which could cause the modification of itineraries or cancellation of a cruise or series of cruises; the Company's ability to attract and retain qualified shipboard crew and maintain good relations with employee unions; changes in other operating costs such as crew, insurance and security costs; continued availability of attractive port destinations; the impact of pending or threatened litigation; the ability to obtain financing on terms that are favorable or consistent with our expectations; changes involving the tax, environmental, health, safety, security and other regulatory regimes in which we operate; emergency ship repairs; the implementation of regulations in the United States requiring United States citizens to obtain passports for travel to additional foreign destinations; weather and natural disasters; and other risks discussed in NCL's filings with the Securities and Exchange Commission. You should not place undue reliance on forward-looking statements as a prediction of actual results. NCL expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in expectations or events, conditions or circumstances on which any such statements are based. In addition, certain financial measures in this earnings release constitute non-GAAP financial measures as defined by Regulation G. A reconciliation of these items can be found attached hereto and on the Company's web site at For Investors.

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