Exhibit 99.2

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

The preliminary unaudited pro forma condensed consolidated financial information for the periods indicated gives effect to the consummation of the Transactions.

In connection with the Acquisition, it is anticipated that we will incur additional indebtedness including the New Term Loan A Facility, the New Term Loan B Facility and the Notes offered hereby (collectively, “New Norwegian Debt”), issue 20,296,880 Norwegian Ordinary Shares in the Share Issuance, and refinance a significant portion of Prestige’s historical debt.

The preliminary unaudited pro forma condensed consolidated balance sheet as of September 30, 2014 gives effect to the consummation of the Transactions as if they had occurred on that date. The preliminary unaudited pro forma condensed consolidated statements of operations give effect to the consummation of the Transactions as if they had occurred on January 1, 2013.

The pro forma information is preliminary, is being furnished solely for informational purposes and is not necessarily indicative of the combined financial position or results of operations that might have been achieved for the periods or dates indicated, nor is it necessarily indicative of the future results of the combined company. It does not reflect cost savings expected to be realized from the elimination of certain expenses and from synergies expected to be created or the costs to achieve such cost savings or synergies. No assurance can be given that cost savings or synergies will be realized. The pro forma adjustments contained in the preliminary unaudited pro forma condensed consolidated financial information are based on the latest available information and certain adjustments that management believes are reasonable. These preliminary unaudited pro forma adjustments include a preliminary allocation of the purchase price of Prestige to certain assets and liabilities based on fair value; however, the final allocation of the purchase price to acquired assets and liabilities will be based on a formal valuation analysis to be completed following the consummation of the Transactions. The actual results reported by the combined company in periods following the Transactions may differ materially from that reflected in this preliminary unaudited pro forma condensed consolidated financial information.

The preliminary unaudited pro forma condensed consolidated financial information presented is based on the assumptions and adjustments described in the accompanying notes. The preliminary unaudited pro forma condensed consolidated financial information gives effect to events that are (1) directly attributable to the Transactions, (2) factually supportable and (3) with respect to the statements of operations, expected to have a continuing impact on the combined company. The preliminary unaudited pro forma condensed consolidated financial information is presented for illustrative purposes and does not purport to represent what the financial position or results of operations would actually have been if the Transactions had occurred as of the dates indicated or what the financial position or results of operations would be for any future periods. The preliminary unaudited pro forma condensed consolidated financial information is based upon the respective historical audited and unaudited consolidated financial statements of NCLC and Prestige, and should be read in conjunction with the accompanying notes to the preliminary unaudited pro forma condensed consolidated financial information.

 

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2014
(in thousands)

 

		NCLC (As Reported)				Prestige(a)				Pro Forma Adjustments					Pro Forma
Assets
Current assets:
Cash and cash equivalents		$	54,808			$	274,850			$	(232,783	)	(b)		$	96,875
Accounts receivable, net			25,936				6,708				—					32,644
Inventories			51,263				12,173				—					63,436
Due from Affiliate			7,141				—				—					7,141
Prepaid expenses and other assets			57,214				58,452				9,690		(c)			125,356
Total current assets			196,362				352,183				(223,093	)				325,452
Property and equipment, net			6,319,933				2,053,281				168,418		(d)			8,541,632
Goodwill and tradenames			611,330				485,503				940,417		(e)			2,037,250
Other long-term assets			227,459				63,389				151,359		(c)			442,207
Total assets		$	7,355,084			$	2,954,356			$	1,037,101				$	11,346,541
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of long-term debt		$	381,565			$	92,149			$	55,903		(f)		$	529,617
Accounts payable			99,889				11,691				—					111,580
Accrued expenses and other liabilities			274,803				107,203				22,610		(g)			404,616
Due to Affiliate			36,928				—				—					36,928
Advance ticket sales			504,057				470,469				(48,079	)	(h)			926,447
Total current liabilities			1,297,242				681,512				30,434					2,009,188
Long-term debt			3,082,346				1,437,579				984,323		(f)			5,504,248
Due to Affiliate			36,978				752,742				(752,742	)	(i)			36,978
Other long-term liabilities			52,321				28,738				183,872		(j)			264,931
Total liabilities			4,468,887				2,900,571				445,887					7,815,345
Commitments and contingencies
Shareholders’ equity:
Ordinary shares			37				136				(136	)	(k)			37
Additional paid-in capital			2,848,212				309,157				407,729		(k)			3,565,098
Due from Management NCL Corporation Unit holders			(3,550	)			—				—		(k)			(3,550	)
Accumulated other comprehensive income (loss)			(59,213	)			(61,575	)			61,575		(k)			(59,213	)
Retained earnings (deficit)			100,711				(193,933	)			122,046		(k)			28,824
Total shareholders’ equity			2,886,197				53,785				591,214					3,531,196
Total liabilities and shareholders’ equity		$	7,355,084			$	2,954,356			$	1,037,101				$	11,346,541

 

 

See accompanying notes to unaudited pro forma condensed consolidated balance sheet.

 

Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet

	(a)	Certain reclassifications have been made to the historical financial statements of Prestige to conform to NCLC’s presentation.
		The following material reclassifications have been made to the Prestige historical financial statements (in thousands):

		Reclassifications to Prestige Historical Financial Statements		As of September 30, 2014
		Reclassify in-transit credit card remittances from accounts receivable, net to cash and cash equivalents		$	10,057
		Reclassify advertising paper from inventories to prepaid expenses and other assets		$	1,710
		Reclassify spare parts from inventories to property and equipment, net		$	8,168
		Reclassify tradenames from other long-term assets to goodwill and tradenames		$	80,645
		Reclassify capital lease from accrued expenses and other liabilities to current portion of long-term debt		$	2,492
		Reclassify capital lease from other long-term liabilities to long-term debt		$	7,418

 

(b)

Represents estimated sources and uses of funds as follows (in thousands):

		Sources of Funds:
		New Norwegian Debt		$	1,730,000
		Total sources			1,730,000
		Uses of Funds:
		Purchase of Prestige–cash portion			1,108,798
		Refinancing of Prestige historical debt, including prepayment premium and accrued interest			744,683
		Estimated debt issue costs–New Norwegian Debt			45,540
		Estimated direct transaction fees and expenses			63,762
		Total uses			1,962,783
		Net use of historical cash		$	(232,783	)

 

(c)

The composition of the pro forma adjustments is as follows (in thousands):

				Prepaid Expenses and Other Assets				Other Long-Term Assets
		Historical deferred financing fees(1)		$	(11,735	)		$	(47,756	)
		New deferred financing fees(2)			21,425				24,115
		Amortizable intangible assets(3)			—				175,000
		Pro forma adjustment		$	9,690			$	151,359

(1)

Financing fees related to the historical Prestige debt to be extinguished upon the consummation of the Transactions.

(2)

Financing fees to be capitalized related to the New Norwegian Debt to be amortized in accordance with the term of the related debt, which is preliminarily expected to be 3 to 5 years. These fees were estimated based on the preliminary terms of the financing commitment.

(3)

Intangible assets consist of customer relationships and backlog, which are preliminarily expected to be amortized over 3 and 1 year(s), respectively. The actual adjustment may differ materially based on the final determination of fair value.

 

 

(d)

Primarily represents the estimated increase in the basis of the ships related to the preliminary valuation. The valuation of the ships considered the application of the market and cost approaches. The comparable sales method of the market approach is based on current market conditions and recent transactions of similar size vessels adjusted for the physical deterioration, and functional and economic obsolescence, if applicable. The cost approach recognizes that a prudent investor will pay no more for an asset than the cost to replace it new with an identical or similar unit of equal utility. The determination of the replacement cost is adjusted for physical deterioration, and functional and economic obsolescence, if applicable. Both methods were used in the estimation of the fair value of the ships and weighted on the relative appropriateness of each method given the specific facts and circumstances surrounding the ships including size, condition, current market conditions, comparison to other ships and other qualitative factors. The actual adjustment may differ materially based on the final determination of fair value.

(e)

Under the purchase method of accounting, the total estimated consideration will be allocated to Prestige’s tangible and intangible assets and liabilities based on the final determination of the estimated fair values as of the effective date of the Acquisition. The preliminary adjustment is calculated as follows (in thousands):

				As of September 30, 2014
		Calculation of Consideration:
		Purchase of Prestige–cash portion		$	1,108,798
		Purchase of Prestige–equity portion(1)			716,886
		Contingent consideration			43,038
		Total consideration		$	1,868,722
		Preliminary Allocation of Consideration:
		Total consideration		$	1,868,722
		Prestige book value of net assets			(53,785	)
		Adjustments to net book values:
		Property and equipment, net			(168,418	)
		Amortizable intangibles			(175,000	)
		Prepaid expenses and other assets–deferred financing/offering fees			11,735
		Other long-term assets–deferred financing fees			47,756
		Accrued expenses and other liabilities			46,304
		Advance ticket sales			(48,079	)
		Due to Affiliate			(752,742	)
		Long-term debt			23,090
		Other long-term liabilities			140,834
		Adjustment to goodwill and tradenames			940,417
		Less: adjustment to tradenames			(524,355	)
		Adjustment to goodwill		$	416,062

(1)

The 20,296,880 Norwegian Ordinary Shares to be issued in the Share Issuance are valued at $35.32 per share, which is the closing share price of the Norwegian Ordinary Shares as of October 27, 2014. A $0.10 change in the share price will result in a $2.0 million change in the Merger Consideration.

 

(f)

Represents the adjustment necessary to reflect the issuance of New Norwegian Debt and refinancing certain historical Prestige debt. The estimated net change in outstanding indebtedness results from the following (in thousands):

		New Norwegian Debt		$	1,730,000
		Refinancing of historical Prestige debt:
		Debt principal, net of discounts			(712,864	)
		Fair market value adjustment on assumed debt			23,090
		Net change in debt		$	1,040,226

 

		The balance sheet classification is as follows:
		Current portion of long-term debt		$	55,903
		Long-term debt			984,323
		Net change in debt		$	1,040,226

 

(g)

The composition of the pro forma adjustment is as follows (in thousands):

				Accrued Expenses and Other Liabilities
		Estimated assumed seller transaction fees		$	23,840
		Accrued estimated transaction fees(1)			(15,730	)
		Unfavorable contracts(2)			22,700
		Other(3)			(8,200	)
		Pro forma adjustment		$	22,610

(1)

Represents transaction fees accrued as of September 30, 2014 that are expected to be paid from the Financing Transactions.

(2)

Short-term component related to unfavorable agreements assumed in the Transactions.

(3)

Primarily relates to accrued interest that will be paid at the consummation of the Transactions.

 

(h)

Represents the pro forma adjustment to decrease advance ticket sales to the amount representative of the combined company’s future performance obligation. The advance ticket sales were valued using a version of the Income Approach, known as the Build-Up Method, to estimate the cost necessary to fulfill the obligation, including an allowance for a reasonable profit on the fulfillment effort. These costs were based on an assumption that a certain portion of operating infrastructure would be necessary to fulfill these obligations. The costs were summed and a reasonable profit was added on the fulfillment effort. These adjusted costs were then discounted to present value using a discount rate commensurate of the liability.

(i)

The Merger Agreement contemplates a pre-closing recapitalization of Prestige, wherein all outstanding Company Notes and Company Warrants (each as defined in the Merger Agreement) issued by Prestige may be exchanged for newly-issued shares of Prestige Common Stock or shares of Class B common stock of Prestige prior to the consummation of the Transactions.

(j)

Represents (1) $43.0 million related to the contingent consideration payout, (2) $142.3 million related to the long-term portion of unfavorable contracts and (3) the reversal of a $1.4 million deferred tax liability that will not be incurred by the combined company. The contingent consideration was valued using various projected 2015 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.

 

(k)

The composition of the pro forma adjustments is as follows (in thousands):

				Ordinary Shares				Additional Paid-in Capital				Due from Management NCL Corporation Unit Holders				Accumulated Other Comprehensive Income (Loss)				Retained Earnings (Deficit)				Total Shareholders’ Equity
		Elimination of pre-merger Prestige equity balances		$	(136	)		$	(309,157	)		$	—			$	61,575			$	193,933			$	(53,785	)
		Share Issuance(1)			—				716,886				—				—				—				716,886
		Prestige historical debt prepayment premium			—				—				—				—				(23,854	)			(23,854	)
		Estimated transaction fees			—				—				—				—				(48,033	)			(48,033	)
		Pro forma adjustment		$	(136	)		$	407,729			$	—			$	61,575			$	122,046			$	591,214

(1)

The 20,296,880 Norwegian Ordinary Shares to be issued in the Share Issuance are valued at $35.32 per share, which is the closing share price of the Norwegian Ordinary Shares as of October 27, 2014. A $0.10 change in the share price will result in a $2.0 million change in the Merger Consideration.

 

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 2014
(in thousands)

		NCLC				Prestige(a)				Pro Forma Adjustments					Pro Forma(b)
Revenue
Passenger ticket		$	2,071,065			$	1,081,486			$	—		(c)		$	3,152,551
Onboard and other			866,252				190,077				—					1,056,329
Total revenue			2,937,317				1,271,563				—					4,208,880
Cruise operating expense
Commissions, transportation and other			482,882				347,351				—					830,233
Onboard and other			214,875				49,445				—					264,320
Payroll and related			414,273				66,832				(22,700	)	(d)			458,405
Fuel			315,077				104,514				—					419,591
Food			160,789				119,305				—					280,094
Other			257,897				144,459				3,545		(e)			405,901
Total cruise operating expense			1,845,793				831,906				(19,155	)				2,658,544
Other operating expense
Marketing, general and administrative			323,056				194,193				(1,770	)	(f)			515,479
Depreciation and amortization			245,779				89,897				33,718		(g)			369,394
Total other operating expense			568,835				284,090				31,948					884,873
Operating income			522,689				155,567				(12,793	)				665,463
Non-operating income (expense)
Interest expense, net			(119,949	)			(136,107	)			39,704		(h)			(216,352	)
Other income (expense)			3,541				(1,829	)			—					1,712
Total non-operating income (expense)			(116,408	)			(137,936	)			39,704					(214,640	)
Net income before income taxes			406,281				17,631				26,911					450,823
Income tax benefit (expense)			2,198				(363	)			(189	)	(i)			1,646
Net income		$	408,479			$	17,268			$	26,722				$	452,469

 

 

See accompanying notes to unaudited pro forma condensed consolidated statements of operations.

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014
(in thousands)

		NCLC (As Reported)				Prestige(a)				Pro Forma Adjustments					Pro Forma(b)
Revenue
Passenger ticket		$	1,655,666			$	859,185			$	—		(c)		$	2,514,851
Onboard and other			681,306				146,404				—					827,710
Total revenue			2,336,972				1,005,589				—					3,342,561
Cruise operating expense
Commissions, transportation and other			374,716				270,758				—					645,474
Onboard and other			172,780				39,659				—					212,439
Payroll and related			321,386				50,991				(17,025	)	(d)			355,352
Fuel			236,753				80,802				—					317,555
Food			125,236				91,111				—					216,347
Other			197,133				113,189				3,276		(e)			313,598
Total cruise operating expense			1,428,004				646,510				(13,749	)				2,060,765
Other operating expense
Marketing, general and administrative			259,785				151,198				(2,011	)	(f)			408,972
Depreciation and amortization			188,885				68,605				12,036		(g)			269,526
Total other operating expense			448,670				219,803				10,025					678,498
Operating income			460,298				139,276				3,724					603,298
Non-operating income (expense)
Interest expense, net			(95,316	)			(101,116	)			28,672		(h)			(167,760	)
Other income (expense)			3,305				(8,387	)			—					(5,082	)
Total non-operating income (expense)			(92,011	)			(109,503	)			28,672					(172,842	)
Net income before income taxes			368,287				29,773				32,396					430,456
Income tax expense			(190	)			(426	)			(227	)	(i)			(843	)
Net income		$	368,097			$	29,347			$	32,169				$	429,613

 

 

See accompanying notes to unaudited pro forma condensed consolidated statements of operations.

 

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013
(in thousands)

		NCLC (As Reported)				Prestige(a)				Pro Forma Adjustments					Pro Forma(b)
Revenue
Passenger ticket		$	1,400,470			$	779,309			$	—		(c)		$	2,179,779
Onboard and other			569,479				138,053				—					707,532
Total revenue			1,969,949				917,362				—					2,887,311
Cruise operating expense
Commissions, transportation and other			347,650				247,248				—					594,898
Onboard and other			153,431				33,732				—					187,163
Payroll and related			247,543				46,703				(17,025	)	(d)			277,221
Fuel			225,115				77,978				—					303,093
Food			101,232				87,215				—					188,447
Other			164,899				83,062				532		(e)			248,493
Total cruise operating expense			1,239,870				575,938				(16,493	)				1,799,315
Other operating expense
Marketing, general and administrative			234,994				131,871				271		(f)			367,136
Depreciation and amortization			158,699				62,683				65,799		(g)			287,181
Total other operating expense			393,693				194,554				66,070					654,317
Operating income			336,386				146,870				(49,577	)				433,679
Non-operating income (expense)
Interest expense, net			(257,969	)			(106,103	)			32,146		(h)			(331,926	)
Other income			1,167				6,651				—					7,818
Total non-operating income (expense)			(256,802	)			(99,452	)			32,146					(324,108	)
Net income (loss) before income taxes			79,584				47,418				(17,431	)				109,571
Income tax benefit (expense)			(151	)			183				122		(i)			154
Net income (loss)		$	79,433			$	47,601			$	(17,309	)			$	109,725

 

 

See accompanying notes to unaudited pro forma condensed consolidated statements of operations.

 

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2013
(in thousands)

		NCLC (As Reported)				Prestige(a)				Pro Forma Adjustments					Pro Forma(b)
Revenue
Passenger ticket		$	1,815,869			$	1,001,610			$	—		(c)		$	2,817,479
Onboard and other			754,425				181,726				—					936,151
Total revenue			2,570,294				1,183,336				—					3,753,630
Cruise operating expense
Commissions, transportation and other			455,816				323,841				—					779,657
Onboard and other			195,526				43,518				—					239,044
Payroll and related			340,430				62,544				(22,700	)	(d)			380,274
Fuel			303,439				101,690				—					405,129
Food			136,785				115,409				—					252,194
Other			225,663				114,332				801		(e)			340,796
Total cruise operating expense			1,657,659				761,334				(21,899	)				2,397,094
Other operating expense
Marketing, general and administrative			298,265				174,866				512		(f)			473,643
Depreciation and amortization			215,593				83,975				87,481		(g)			387,049
Total other operating expense			513,858				258,841				87,993					860,692
Operating income			398,777				163,161				(66,094	)				495,844
Non-operating income (expense)
Interest expense, net			(282,602	)			(141,094	)			43,178		(h)			(380,518	)
Other income			1,403				13,209				—					14,612
Total non-operating income (expense)			(281,199	)			(127,885	)			43,178					(365,906	)
Net income (loss) before income taxes			117,578				35,276				(22,916	)				129,938
Income tax benefit			2,237				246				160		(i)			2,643
Net income (loss)		$	119,815			$	35,522			$	(22,756	)			$	132,581

 

 

See accompanying notes to unaudited pro forma condensed consolidated statements of operations.

 

 

Notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations

	(a)	Certain reclassifications have been made to the historical financial statements of Prestige to conform to NCLC’s presentation.
		The following material reclassification adjustments have been made to the Prestige historical financial statements (in thousands):

		Reclassifications to Prestige Historical Financial Statements		Twelve Months Ended September 30, 2014				Nine Months Ended September 30, 2014				Nine Months Ended September 30, 2013				Year Ended December 31, 2013
		Reclassify charter revenue to onboard and other revenue		$	10,573			$	5,840			$	14,046			$	18,779
		Reclassify the food component of payroll, related and food expense to food expense		$	119,305			$	91,111			$	87,215			$	115,409
		Reclassify other ship operating expense to other expense		$	105,691			$	82,323			$	74,694			$	98,062
		Reclassify loss on asset disposal from other expense to depreciation and amortization		$	1,055			$	909			$	—			$	146

 

(b)

The preliminary unaudited pro forma condensed consolidated statements of operations do not reflect an additional $71.9 million for estimated transaction costs, which consists of $23.9 million of estimated assumed seller transaction fees and $48.0 million in estimated transaction fees of NCLC, as these charges are not expected to have a continuing impact on the results of operations of the combined company. The pro forma financial statements do include $24.8 million of transaction fees that have been paid or accrued through September 30, 2014. Additionally, the preliminary unaudited pro forma condensed consolidated statements of operations do not reflect up to approximately $27.1 million of contingent payments that may be paid related to certain employment contracts.

(c)

The preliminary unaudited pro forma statements of operations do not adjust, in arriving at pro forma results, the impact of the advance ticket sales adjustment to record unearned revenue at fair value in purchase accounting, which is considered non-recurring as the period affected is within twelve months of the transaction date.

(d)

Represents an adjustment to reflect amortization of unfavorable contracts.

(e)

Represents an adjustment to direct expense for certain spare parts that historically have been capitalized by Prestige, but would have been expensed pursuant to NCLC’s accounting policies.

(f)

The composition of the pro forma adjustments is as follows (in thousands):

				Twelve Months Ended September 30, 2014				Nine Months Ended September 30, 2014				Nine Months Ended September 30, 2013				Year Ended December 31, 2013
		Service fee(1)		$	(875	)		$	(656	)		$	(656	)		$	(875	)
		Third-party fees(2)			(2,264	)			(2,052	)			(867	)			(1,079	)
		Non-cash stock compensation expense(3)			1,369				697				1,794				2,466
		Pro forma adjustment		$	(1,770	)		$	(2,011	)		$	271			$	512

(1)

Fees paid for services provided by a related party, which will be cancelled upon consummation of the Transactions.

(2)

Legal fees and other fees in connection with prior registration statements and other administrative services which will not impact the combined company.

(3)

Estimated compensation expense for new NCLH share options partially offset by reversal of Prestige historical compensation expense related to stock options that will vest upon the consummation of the Transactions.

 

 

(g)

A summary of the pro forma adjustments to depreciation and amortization are as follows (in thousands, except useful lives):

					Estimated Fair Value				Historical Book Value				Stepped-up Basis				Estimated Useful Life (years)				Twelve Months Ended September 30, 2014				Nine Months Ended September 30, 2014				Nine Months Ended September 30, 2013				Year Ended December 31, 2013
		Depreciable assets:
		Ships		$	2,192,890			$	2,025,405			$	167,485				24–30			$	65,783			$	49,337			$	49,337			$	65,783
		Other property and equipment			28,809				27,876				933				3–12				3,860				2,895				2,895				3,860
		Total depreciable assets		$	2,221,699			$	2,053,281			$	168,418							$	69,643			$	52,232			$	52,232			$	69,643
		Amortizable intangible assets:
		Customer relationships		$	110,000			$	—			$	110,000				3			$	36,667			$	27,500			$	27,500			$	36,667
		Backlog			65,000				—				65,000				1				16,250				—				48,750				65,000
		Total amortizable intangible assets		$	175,000			$	—			$	175,000							$	52,917			$	27,500			$	76,250			$	101,667
		Total pro forma depreciation and amortization																		$	122,560			$	79,732			$	128,482			$	171,310
		Elimination of historical depreciation and amortization																			(88,842	)			(67,696	)			(62,683	)			(83,829	)
		Pro forma depreciation and amortization adjustment																		$	33,718			$	12,036			$	65,799			$	87,481

 

		We expect to complete the allocation of the purchase price subsequent to the close of the Transactions. The allocation of purchase price presented herein is based on a preliminary valuation. The actual adjustment may differ materially based on the final determination of fair value. A change of 10% of the preliminary fair value of the ships would result in a change of $6.6 million in annual depreciation expense.
	(h)	Represents the pro forma interest expense, net adjustment to reflect the new debt structure. This adjustment is preliminary. The actual adjustment may differ materially based on the final determination of fair value. The composition of the pro forma adjustments for interest expense, net is as follows (in thousands):

				Twelve Months Ended September 30, 2014				Nine Months Ended September 30, 2014				Nine Months Ended September 30, 2013				Year Ended December 31, 2013
		Interest expense on New Norwegian Debt(1)		$	(72,358	)		$	(54,105	)		$	(54,788	)		$	(73,041	)
		Amortization of fair value adjustment(2)			152				114				114				152
		Amortization of deferred financing fees(3)			(7,379	)			(5,534	)			(5,534	)			(7,379	)
		Less: Prestige historical interest expense(4)			119,289				88,197				92,354				123,446
		Pro forma interest expense, net adjustment		$	39,704			$	28,672			$	32,146			$	43,178

(1)

Represents $1,730 million of New Norwegian Debt, which is comprised of $1,050 million of variable rate term loans and $680 million of Notes offered hereby. The variable rate portion of the New Norwegian Debt has an estimated weighted-average interest rate of 3.1% per annum. The impact of a 0.125% change in LIBOR on the variable portion of the New Norwegian Debt would affect annual interest expense by approximately $1.3 million.

(2)

Represents the amortization of the debt premium on the assumed debt facilities.

(3)

Represents the amortization of deferred financing fees related to the issuance of the New Norwegian Debt.

(4)

Represents historical interest expense related to the refinanced Prestige facilities and the outstanding Company Notes and Company Warrants (each as defined in the Merger Agreement).

(i)

The pro forma condensed consolidated income tax provision has been adjusted for the expected tax impact of the pro forma adjustments at Prestige’s historical implied effective rate of 0.7% for the periods presented. A 1% change in the effective tax rate would result in a change in annual tax expense of less than $0.3 million. The effective tax rate of the combined company could be significantly different depending on post-acquisition activities.