Negatively impacting 2006 results were significant increases in payroll and related costs, fuel expenses, interest costs, non-cash foreign exchange translation losses, and an impairment loss.

Results for the year ended Dec. 31, 2006 include non-cash foreign exchange translation losses of $38.9 million compared to non-cash foreign exchange translation gains of $28.7 million for the year ended Dec. 31, 2005, or an adverse year-over-year impact of $67.6 million. During the fourth quarter of 2006, the Company recorded an $8 million impairment charge on the Orient Lines tradename. Gross and Net Yields for 2006 increased 3.8 percent and 0.7 percent from the prior year, respectively.

For the fourth quarter of 2006, the Company reported a net loss of $116 million on total revenues of $449.5 million, compared to a net loss of $32.8 million on total revenues of $402.8 million for the same period in 2005.

The increase in revenues was primarily attributable to a 17.6 percent increase in Capacity Days, partially offset by a 7.2 percent decrease in Net Yields. Driving the decrease in Net Yields was downward pricing pressure in Hawaii, lower onboard revenues across our fleet, mainly due to the default of our art concessionaire, and lower occupancy levels. Gross Yields decreased 5.1 percent from the fourth quarter of 2005. Occupancy for the fourth quarter of 2006 was 100.1 percent compared to 104.6 percent in the same quarter of 2005.

Net Cruise Costs per Capacity Day for the fourth quarter of 2006 increased 3.2 percent compared to the fourth quarter of 2005.

The increase in these costs was primarily due to higher marketing, general and administrative expenses and an increase in our payroll and related costs, partially offset by lower dry-docking costs and fuel costs.

The increase in marketing, general and administrative expenses of 14.6 percent per Capacity Day is primarily attributable to the fourth quarter 2006 launch of a comprehensive national branding campaign, which includes new television commercials and print ads. The increase in payroll and related expenses was principally attributable to the high crew costs associated with U.S. crew in our inter-island Hawaii cruises which represented 26.6% of our fleet capacity during the fourth quarter of 2006 compared to 19.6 percent in the fourth quarter of 2005.

The impact of higher interest expenses and the weakening of the U.S. dollar continued to impact the Company's results during the fourth quarter of 2006. As a result of an increase in our average outstanding borrowings and higher interest rates, interest expense increased 41.1 percent or $11.4 million. With the Euro/U.S. Dollar exchange rate increasing to 1.3199 as of December 31, 2006, the Company reported non-cash foreign exchange translation losses of $14 million for the fourth quarter.

These non-cash foreign exchange translation losses compare to non-cash foreign exchange translation gains of $8 million for the same period of 2005, or an adverse year-over-year swing of over $22 million.

"The fourth quarter results continue to reflect the challenges we are experiencing from our expansion in inter-island Hawai'i cruises on our NCL America brand U.S.-flagged, U.S.-crewed ships," said Colin Veitch, president and chief executive officer of NCL Corporation Ltd.

"Severe downward pricing pressure, from consecutive quarters of 60 percent NCL America capacity growth and substantial increases in other mainstream cruise lines' lower cost foreign-flag capacity, have had a significant effect on the results of our higher-cost U.S.-flag operation for the quarter and the year. Looking ahead, we face the challenge of an unprecedented 1.6 million capacity days of low-cost foreign-flag competition in the Hawai'i trade during 2007, and published signs of further increases in 2008. We, therefore, are closely examining all options in our efforts to bring NCL America to profitability, and to reduce the negative impact of NCL America on the overall group result.

"The challenges in Hawai'i, coupled with the default of a concessionaire in Q4, and the further weakening of the U.S. dollar, produced very disappointing results for both the quarter and the year. We remain committed, however, to what we believe is a good overall strategy of continuing to order new ships for our Norwegian Cruise Line brand, and introducing purpose-built Freestyle Cruising ships into all of our international trades.

"We are encouraged by the strong performance of our new Norwegian Cruise Line ships during 2006, the very successful introduction of Norwegian Pearl at the end of the quarter, and the strongly positive response to the launch of our major new brand marketing campaign at the start of Q4."

Outlook

Since the start of what has been characterized as the industry's "wave period", we have seen a strong response to our new marketing campaign and an improvement in the pace of bookings following weak bookings during Q4.

On a capacity adjusted basis, we are significantly ahead of last year in terms of volumes booked for 2007 during the wave period. Demand for the summer programs continues to be solid, particularly for our European deployment, and demand in the Caribbean has shown modest improvement from the weak fourth quarter of 2006. As a result, we have been selectively increasing prices on many sailings and itineraries since the start of the wave period.

Because of a large year-over-year increase in our own capacity in inter-island Hawaii cruises, and substantially increased competitive capacity on other Hawaii itineraries, we continue to experience strong downward pricing pressure in this trade. It is clear that the addition of capacity – both ours and our foreign-flag competitors – has outstripped demand in the short term, and we are not achieving the pricing needed to support our higher U.S.-flag operating costs. Based upon these circumstances in Hawaii, and a weaker Caribbean than last year, more notably on our older ships, we currently expect Net Yields to be negative for the first half of 2007 compared to the first half of 2006.